Kelbarch and Kelbarch (Child support) - [2024] AATA 4132

Kelbarch and Kelbarch (Child support) [2024] AATA 4132 (22 August 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2024/AC027446
APPLICANT:  Mr Kelbarch
OTHER PARTIES:  Child Support Registrar
Ms Kelbarch

TRIBUNAL:Senior Member S De Bono
DECISION DATE: 22 August 2024
DECISION:

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

For the period 1 January 2023 to 30 June 2023 Mr Kelbarch’s ATI is set at $83,356.
For the period 1 July 2023 to 31 December 2024 Mr Kelbarch’s ATI is set at $67,392.
For the period 1 January 2023 until [Child 1] finishes primary school Mr Kelbarch’s child support is increased by $3,375 annually being his contribution to [Child 1]’s school fees.

CATCHWORDS
CHILD SUPPORT – change of assessment – a ground for departure established – special circumstances exist – decision not to work is justified on the basis of his state of health – earning capacity is not greater than the income – mental health – 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 theChild Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

The issue to be considered in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.
Ms Kelbarch and Mr Kelbarch are the parents of [Child 1] and [Child 2] (the children). Ms Kelbarch is recorded as having 100% care and Mr Kelbarch is recorded as having 0% care, which has applied to the administrative assessment of child support from the start of the assessment on 11 March 2020. Mr Kelbarch has been the parent liable to pay child support. Child support has been collected from Services Australia (Child Support) from 8 July 2020.
There was a change of assessment determination made by the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) on 3 December 2021. The Tribunal established Reason 3 and Reason 8A and made the following departure determination:
·From 8 August 2020 to 16 September 2021, Mr Kelbarch’s adjusted taxable income is varied to $45,000 per annum;
·From 17 September 2021 to 31 December 2022, Mr Kelbarch’s adjusted taxable income is varied to $189,000 per annum;
·From 8 August 2020 to 31 December 2020, Mr Kelbarch’s rate of child support payable is increased by $2,850 per annum;
·From 1 January 2021 to 16 September 2021, Mr Kelbarch’s rate of child support payable is increased by $3,100 per annum; and
·From 17 September 2021 to 31 December 2022, Mr Kelbarch’s rate of child support payable is increased by $9,900 per annum.
On 14 June 2022 Mr Kelbarch applied for a change of assessment on the basis of Reason 8A – that the income, property and financial resources set by the Tribunal were not an accurate reflection of his current financial situation. On 30 August 2022 a Delegate of the Registrar made the decision that no reason was established to change the assessment and the change of assessment determined by the Tribunal on 3 December 2021 remained in place.
On 28 September 2022 Mr Kelbarch lodged an objection to this decision. On 24 November 2022 the objections officer partially allowed Mr Kelbarch’s objection and made the following change to the administrative assessment which followed on from the end of the departure determination set by the Tribunal on 3 December 2021:
·For the period 1 January 2023 to 31 December 2023 Mr Kelbarch’s income is set to $186,000.
Mr Kelbarch was not notified of this decision until 13 February 2024.
On 31 January 2024 Mr Kelbarch sought further review with the Social Services and Child Support Division of the Tribunal. Directions were issued to both parties on 10 July 2024. On 22 August 2024 a telephone hearing was held in which both Ms Kelbarch and Mr Kelbarch gave evidence under affirmation. The Tribunal considered the documents and information provided by Child Support and both parties prior to the hearing as well as the oral evidence from both parties.[1] Relevant aspects of the material and evidence will be referred to in the Tribunal’s Reasons for Decision.

CONSIDERATION

[1] Administrative Appeals Tribunal Act 1975, subsection 37(1) Statement and Documents numbered 1 to 364, section 38AA Request and Documents both provided by Child Support, Mr Kelbarch’s documents numbered A1–A345 and Ms Kelbarch’s documents numbered B1–B25.

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) Act 1989 (the Assessment Act). 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 of the Assessment Act establishes a three-step process to be satisfied: that there is a ground for departure; that it is just and equitable to depart; and that it is otherwise proper to make a departure determination. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Is there a reason to depart from the administrative assessment of child support?

Reason 8A – the income, property and financial resources of Mr Kelbarch

The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Paragraph 117(2)(c) of the Assessment Act – commonly referred to as “Reason 8A” – states as follows: “that, in the special circumstances of the case, application in relation to the child … 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”.
The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman, 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.[2]
[2] [1991] FamCA 93.
Mr Kelbarch runs his own business; he is a [Occupation 1]. He provides his services through his company [name deleted] which is a corporate trustee for the Kelbarch Family Trust (the Kelbarch Trust). Following Ms Kelbarch and Mr Kelbarch’s separation, Mr Kelbarch changed the corporate trustee to the Kelbarch Family Trust (the Kelbarch Trust) early in the 2022/2023 financial year. Mr Kelbarch confirmed that he is the sole trustee and sole beneficiary of the Kelbarch Trust.
Mr Kelbarch explained that he is a [Occupation 1][Vehicle 1]. This means he needs to travel to the site [to] carry out this work. Mr Kelbarch said about 75% of this work is on site and the remaining work he carries out at his parents’ property. Mr Kelbarch confirmed he has not been an employee since 1 January 2023.
It has been well established that it can be a common situation of a self-employed person’s taxable income not corresponding with his or her income or financial resources for child support purposes. In Voss & Child Support Registrar & Anor, the Court said:[3]
There is a body of cases where simple reference to a person's tax return does not provide an appropriate quantification of their capacity to provide financial support. Most commonly this occurs in cases involving the self-employed, where it is well accepted that legal structures and arrangements may generate taxable income that doesn't properly reflect the realistic capacity of the person to provide financial support for their children.
[3] (SSAT Appeal) [2009] FMCAfam 1296.
Similarly, in Shearer & Benson & Anor, the Court said:[4]
when a person conducts their business through an intermediary company or trust, it is proper to lift the corporate veil to that person with regard to the determination of a parent's income for child support purposes[.]
[4] (SSAT Appeal) [2011] FMCAfam 623 at paragraph [29].
The 2022/2023 financial statements for the Kelbarch Trust show income of $2,500 with total expenses for that period of $14,935,[5] with cash assets of $536.[6] The Kelbarch Trust shows total income from sales of $268,379 with total expenses of $241,768, with a net profit of $26,611. The net profit of $26,611 was paid to Mr Kelbarch in the 2022/2023 financial year.
[5] A306 of Mr Kelbarch’s submissions.
[6] A307 of Mr Kelbarch’s submissions.
Of interest was the [depreciation] of $52,500 which is the depreciation of the [Vehicle 1] purchased on 22 August 2022. The purchase price of the [Vehicle 1] of $67,000 has been depreciated against the gross income of the Kelbarch Trust for the 2022/2023 financial year.[7]
[7] A316 of Mr Kelbarch’s submissions.
Mr Kelbarch said he purchased a new [Vehicle 2] on 15 November 2022. Mr Kelbarch said the purchase price was about $80,000 with $58,855 being depreciated in the 2022/2023 financial year.[8] The Tribunal notes that the purchase price was $70,317.[9]
[8] A317 of Mr Kelbarch’s submissions.
[9] A317 of Mr Kelbarch’s submissions.
The Tribunal asked Mr Kelbarch about this depreciation because both the [Vehicle 2][Vehicle 1] purchased on 15 November 2022 are under finance. Mr Kelbarch said they are both under hire purchase agreements. This is confirmed by loans [shown] in Mr Kelbarch’s business bank account and the Kelbarch Trust Financial Statements for the 2022/2023 financial year.[10]
[10] [BANK 1] Business Transaction account ending in account number [deleted].
The gross income from the business was reduced by the depreciation of [Vehicle 1] and the [vehicle]. Given that both vehicles are under finance the Tribunal considered how much of the depreciation should be included in the expenses of the Kelbarch Trust which in turn are added to the expenses of the Kelbarch Trust and are treated as expenses (deductions) of the Kelbarch Trust. In coming to a conclusion about this, the Tribunal considered Mr Kelbarch’s personal and business expenses.
The Kelbarch Trust Financial Statements for the 2022/2023 financial year also showed the costs of running the motor vehicles which include fuel, registration and repairs totalling $13,226.[11] Mr Kelbarch submitted that he used the vehicles for about 5% of personal use. Ms Kelbarch submitted that she thought the figure was closer to 35% for personal use. Mr Kelbarch said he also has a [Vehicle 3] which he uses for personal use and is registered in his name only. Mr Kelbarch said he kept this vehicle as part of the financial settlement between himself and Ms Kelbarch. Ms Kelbarch said she had not seen Mr Kelbarch driving the [Vehicle 3] and did not accept that Mr Kelbarch was using the [Vehicle 3] for personal use.
[11] A316 of Mr Kelbarch’s submissions.
On balance the Tribunal considered that 10% for personal use was reasonable given that Mr Kelbarch conducts the majority of his business on location. Accordingly, $1,322 is considered a personal benefit to Mr Kelbarch and is to be added back to the deductions.
The objections officer set Mr Kelbarch’s income to $189,000 based on Mr Kelbarch’s assessment from the Tribunal in December 2021 and included the period in which he was still an employee rather than self-employed. Mr Kelbarch is now self-employed and has been since 1 January 2023.
The administrative assessment of child support has reverted back to the formula assessment from 1 January 2024. This was initially based on a provisional income of $113,419 for Mr Kelbarch and from 1 July 2024 a 2022/2023 ATI of $26,613. Accordingly, the formula assessment meant Mr Kelbarch was assessed to pay child support of $519 annually from 1 July 2024.[12]
[12] Page 369 of the section 38AA Request and Documents.
The following bank statements were before the Tribunal:
·[BANK 1] Business transaction account ending in account number [deleted];
·[BANK 1] Business transaction account ending in account number [deleted];
·[BANK 1] Everyday offset account ending in account number [deleted];
·[BANK 1] Home loan statements ending in account number [deleted].
Mr Kelbarch said the business account ending in [number] was for the Kelbarch Trust while the business account ending in [number] was for the Kelbarch Trust. Mr Kelbarch provided a breakdown of the account activity on these two accounts. For the period 1 June 2022 to 29 June 2024 (a period of 108 weeks) Mr Kelbarch indicates the following income and expenses that he had extrapolated from these two accounts:[13]
[13] A44 and A58 of Mr Kelbarch’s submissions.

Business income

Business expenses

Personal expenses

Internal transfers

[Suburb 1] home loan

BAS

Account [number] Kelbarch Trust

$41,762.92

$90,536

$5,225.41

$60,635

$9,108

$4,278

Account[number]Kelbarch Trust

$433,582.86

$226,635.85

$104,349.38

$47,510.43

$700

$45,878

$1,573

Total

$475,345.81

Or

$4,401.35 weekly

$421,521.23

Or

$3,902.97 weekly

$52,735.84

Or

$488.29 weekly

$61,335

Or

$567.91 weekly

$54,986

Or

$509.12 weekly

$5,851

Or

$112.51 weekly

Extrapolating these figures for a period of 52 weeks (as an indicative 2023/2024 financial year) shows the following:

Business income	Business expenses	Personal expenses	Internal transfers	[Suburb 1]	BAS
Total	$228,870	$202,954.44	$25,391.08	$31,091.32	$26,474.24	$5,850.52

Ms Kelbarch raised concerns about a couple of transactions that Mr Kelbarch said were business expenses. The first was for [a company] of $589.44. Mr Kelbarch explained that this was to build an area at his parents’ house to store his [cars].[14]
[14] A17 of Mr Kelbarch’s submissions.
Ms Kelbarch also questioned the payment for [a company].[15] Mr Kelbarch said this was [for] work. The Tribunal accepts both of these transactions as business transactions.
[15] A18 of Mr Kelbarch’s submissions.
Mr Kelbarch was of the view that his income prior to ceasing work due to his mental health concerns was more accurately reflected as a net income of about $55,000 for the 2022/2023 financial year. Mr Kelbarch said his income has now reduced because he is no longer working in the capacity he was previously working due to his mental health issues. A net income of $55,000 is equivalent to a gross income of $67,392.
Mr Kelbarch said the house at [Suburb 1] formed part of the property settlement between himself and Ms Kelbarch. This home was transferred into Mr Kelbarch’s name on settlement and he was responsible for the home loan. Mr Kelbarch said he refinanced the home loan taking out extra funds to assist during this period. Mr Kelbarch said he lived at [Suburb 1] but this is now rented; it is negatively geared. The Tribunal is satisfied that Mr Kelbarch commenced renting [Suburb 1] in the 2023/2024 financial year because there is no rent shown on Mr Kelbarch’s 2022/2023 tax return.
Mr Kelbarch said he rents [Suburb 1] at $1,250 a month and his home loan repayments are currently about $3,000 a month. Mr Kelbarch said he is currently managing the shortfall between his home loan repayments and rent by borrowing funds from his parents. The Tribunal notes that the only credits going into the business account ending in [number] are deposits of fortnightly rent for [Suburb 1] from 31 December 2023 until 2 May 2024 when there is a deposit of $9,367.60 on 3 May 2024.[16] It seems that Mr Kelbarch has been supplementing his personal expenses from the business account ending in account number [number] to meet expenses that are personal nature rather than borrowing funds from his parents.[17] Mr Kelbarch confirmed that his statement of financial circumstances is an accurate reflection of his income, liabilities and expenses.
[16] A106 of Mr Kelbarch’s submissions.
[17] A103–A110 of Mr Kelbarch’s submissions.
The Tribunal is satisfied that the current formula assessment based on Mr Kelbarch’s 2022/2023 ATI of $26,613 does not take into account the financial resources available to Mr Kelbarch. Accordingly, in the special circumstances of the case, the formula assessment results in an unjust and inequitable determination of the level of financial support to be provided by Mr Kelbarch to the children. Accordingly, a ground for departure in accordance with subparagraph 117(2)(c)(ia) of the Assessment Act, commonly known as Reason 8A, is established.

Would departure from the administrative assessment be just and equitable?

Having found that special circumstances exist such that the administrative assessment has resulted in an unjust and inequitable result, so a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Assessment Act, the next step for the Tribunal is to consider whether it is just and equitable to depart from the administrative assessment.
In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to whom they have a duty.

The proper needs of the children

In relation to the proper needs of the child, the Assessment Act provides that regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Assessment Act).
Both children attend [School 1] ([School 1] [School)]. Ms Kelbarch said Mr Kelbarch signed the enrolment forms for [Child 1] but not for [Child 2]. Mr Kelbarch said while it was intended when he and Ms Kelbarch were married that both children would attend [School 1] School, Mr Kelbarch said his situation has changed and he can no longer afford the school fees. Ms Kelbarch agreed that Mr Kelbarch did not sign the school enrolment form for [Child 2], but when they signed the forms for [Child 1] it was indicated on her enrolment form that [Child 2] was her sibling that would be attending [School 1] School. [Child 1] is currently in Year 5 and [Child 2] is in Year 2.
Neither parent provided information about the school fees, but Ms Kelbarch said she is the parent who has been paying the school fees since the previous change of assessment had ended. The Tribunal notes that the administrative assessment of child support set by the Tribunal in December 2021 included a liability for school fees for Mr Kelbarch until 31 December 2022.
The fee schedule for [School 1] School shows Year 5 fees for the first child to be $6,750 annually and $4,900 for the second child in Year 2 for 2024.[18] The Tribunal accepts that Mr Kelbarch and Ms Kelbarch wanted the children to be educated at [School 1] School at least for their primary school education. However, the Tribunal accepts that Mr Kelbarch did not sign the enrolment forms for [Child 2] and accepts that while there may have been mutual intent for [Child 2] to attend [School 1] School, Mr Kelbarch did not sign her enrolment forms and therefore, the Tribunal is satisfied that he should not be liable for school fees in relation to [Child 2].
[18] [school fees website deleted]
The cost of school fees for [Child 1] is $6,750 annually, representing 38% of the cost of [Child 1] (using Mr Kelbarch’s income of $186,000 set by the objections officer) of $17,507. This is a high proportion of the costs of caring for [Child 1] and as such, the Tribunal is satisfied that the costs of caring for [Child 1] are significantly affected by the costs of educating her. Accordingly, a ground for departure in accordance with subparagraph 117(2)(b)(ii) of the Assessment Act is established. Accordingly, Mr Kelbarch should pay half of [Child 1]’s school fees until she finishes primary school.

Ms Kelbarch also said both children participate in [a sport] at the elite level. Currently this costs about $610 a month for both children. Ms Kelbarch explained that [Child 1] was successful in qualifying for the South Australian team to represent South Australia [but] she was unable to attend because of passport issues that existed between herself and Mr Kelbarch.
Ms Kelbarch said [Child 1] was seeing a counsellor following separation from Mr Kelbarch but that this has now ceased. She also said that [Child 2] had surgery [in] [2022]. Ms Kelbarch said expenses were incurred prior to 1 January 2023. As such they will not be considered in this decision which will apply from 1 January 2023.
The Tribunal is satisfied that the children have no other needs beyond the usual needs of clothing, shelter and food. Apart from school fees the costs of the children do not extend beyond the usual costs necessary to support a child. Both parents indicated that they do not have another person they have a legal duty to support.

The income, property and financial resources of Ms Kelbarch

Ms Kelbarch said she works as an [occupation]. She commenced this employment in March 2023 and works between 30 and 32 hours a week. Ms Kelbarch said after the birth of [Child 1] she remained a stay-at-home mum. She worked two days a week in her own [business] from 2021. Ms Kelbarch said during the COVID-19 pandemic she was unable to work.
Payslips before the Tribunal confirm Ms Kelbarch’s evidence that she is working 32.5 ordinary hours a week and her annual income is $47,320.[19] Ms Kelbarch’s 2022/2023 tax return shows an adjusted taxable income (ATI) of $43,602. During the 2022/2023 financial year Ms Kelbarch was also in receipt of parenting payment from Centrelink.[20]
[19] B11 to B16 of Ms Kelbarch’s submissions.
[20] B18 to B20 of Ms Kelbarch’s submissions.
Ms Kelbarch said following property settlement she kept the former marital home and was responsible for taking out a new home loan and maintained full responsibility for that home loan. Ms Kelbarch now owns her home outright. Ms Kelbarch confirmed that her statement of financial circumstances is an accurate reflection of her income, liabilities and expenses.

The earning capacity of Mr Kelbarch

Mr Kelbarch said that he has been unable to work due to mental health issues from 1 January 2024. Evidence before the Tribunal shows that Mr Kelbarch issued one tax invoice due on 24 April 2024.[21] Mr Kelbarch said this was for work done at an earlier period. It is evident that Mr Kelbarch has not issued further invoices for the remainder of the 2023/2024 financial year.
[21] A275 of Mr Kelbarch’s submissions.
Ms Kelbarch’s view is that Mr Kelbarch has ceased work in order to affect the administrative assessment of child support.
Subsection 117(7B) provides that if the Tribunal is satisfied that all three compulsory criteria are met, then Mr Kelbarch’s earning capacity may be greater than reflected in his income for the 2023/2024 financial year.
Subsection 117(7B) provides:
(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)      one or more of the following applies:
(i)       the parent does not work despite ample opportunity to do so;
(ii)       the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full - time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)      the parent has changed his or her occupation, industry or working pattern; and
(b) the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent's caring responsibilities; or
(ii) the parent's state of health; and
(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
The Tribunal is satisfied that Mr Kelbarch no longer works despite ample opportunity to do so, therefore the requirement in subparagraph 117(7B)(a)(i) is met.
Mr Kelbarch said he has suffered from depression since separation, and he has been placed on medication to assist in managing this. Mr Kelbarch said he is taking [medication]. He has also sought assistance from both a psychiatrist and a psychologist. Mr Kelbarch said he has had a total of 11 sessions with a psychologist for psychological support under a mental health care plan for periods during 2023 and 2024. Mr Kelbarch provided a letter from his GP [Dr A].
[Dr A] writes, that Mr Kelbarch “first came to see me in December 2023 with symptoms of reactive depression. He already had an existing mental health care plan from his previous GP and has been unable to work due to a deterioration in his mental health since 30 October 2023. He continues to take antidepressants … and has been seeing a psychologist for ongoing support”.[22]
[22] A353 of Mr Kelbarch’s submissions.
Based on the information before it and the evidence given by Mr Kelbarch at the hearing the Tribunal is satisfied that Mr Kelbarch’s decision not to work is justified on the basis of his state of health, therefore, the requirement in subparagraph 117(7B)(b)(ii) is not met. As all three criteria in subsection 117(7B) are not met, the Tribunal is satisfied that Mr Kelbarch’s earning capacity is not greater than the income reflected in the administrative assessment of child support and his income has reduced because of his health which has impacted his ability to work.

Conclusion

Mr Kelbarch thought his income would be more accurately reflected in the administrative assessment of child support as notionally $55,000 net or as the Tribunal has established $67,392 gross. Ms Kelbarch was of the view that the ATI of $186,000 set by the objections officer more accurately reflected Mr Kelbarch’s income and financial resources from the business.
The Tribunal notes that Mr Kelbarch has essentially been using the funds in the business transaction account ending in account number [number] to meet both his personal and business expenses during the period in which he has ceased work. From 31 December 2023 to 30 June 2024 funds in the account ending in account number [number] reduced from $72,009.75 to $13,690.89.[23] Mr Kelbarch said he has been paying the mortgage for the home at [Suburb 1] from the business transaction account ending in account number [number]; annually this is a cost of $36,000. Mr Kelbarch receives $15,000 in rent, leaving a shortfall of $21,000. Mr Kelbarch was paid an income from the Kelbarch Trust of $26,613 in the 2022/2023 financial year.
[23] A79 to A110 of Mr Kelbarch’s submissions
For the 2022/2023 financial year evidence before the Tribunal shows Mr Kelbarch had personal expenses of approximately $25,391.08, [Suburb 1] home loan repayments of $36,000 (when Mr Kelbarch was living at [Suburb 1]) and internal transfers of $31,091.32. Mr Kelbarch received a distribution from the Kelbarch Trust of $26,613; this amount is subtracted from the expenses outlined by Mr Kelbarch as it is already accounted for as a financial resource available to Mr Kelbarch (as it is his ATI for the 2022/2023 financial year).
For the 2022/2023 financial year the Tribunal is satisfied that Mr Kelbarch had access to approximately $65,869 net in funds from the business to meet his personal expenses. This means Mr Kelbarch’s net income for the 2022/2023 financial year was equivalent to approximately $83,356 gross.
The Tribunal is satisfied that from 1 July 2023 to 31 December 2024 Mr Kelbarch’s income is more accurately reflected as $67,392. This is based on Mr Kelbarch’s income estimation of $55,000 net which grossed up is $67,392 which includes income earnt at the start of the 2023/2024 financial year and funds used from the business account to support both Mr Kelbarch’s personal and business expenses. The Tribunal finds this is a fair assessment based on the financial resources available to Mr Kelbarch during this period.
Accordingly, the Tribunal is satisfied that the change of assessment should be as follows:
·For the period 1 January 2023 to 30 June 2023 Mr Kelbarch’s ATI is set at $83,356.
·For the period 1 July 2023 to 31 December 2024 Mr Kelbarch’s ATI is set at $67,392.
·For the period 1 January 2023 until [Child 1] finishes primary school Mr Kelbarch’s child support is increased by $3,375 annually as his contribution to [Child 1]’s school fees.

Will there be resulting hardship from a departure from the administrative assessment?

The decision of the objections officer to set Mr Kelbarch’s income at $186,000 meant Mr Kelbarch was liable to pay $33,622 annually for the 2023 financial year. Setting Mr Kelbarch’s income at $83,356 will reduce Mr Kelbarch’s child support to approximately $13,212 annually, applied for the period 1 January 2023 to 30 June 2023. Setting Mr Kelbarch’s income to $67,392 will reduce Mr Kelbarch’s child support to approximately $9,524 annually for the period 1 July 2023 to 31 December 2024.
The Tribunal extended the departure period so that there exists certainty for both Mr Kelbarch and Ms Kelbarch in providing support to the children. The Tribunal is also satisfied that the new departure determination more adequately reflects the financial resources available to Mr Kelbarch throughout the relevant period. The Tribunal is also satisfied that while the decision may cause some hardship to Mr Kelbarch in extending the departure period it is a fairer reflection of the income and financial resources that have been available to him during the 2022/2023 and 2023/2024 financial years, which has included the depletion of funds in the business account which Mr Kelbarch has used to pay both business and personal expenses during the period he has been unable to work.
The Tribunal is also satisfied that this departure determination will not cause hardship to Ms Kelbarch and the children because the departure determination has been extended to 31 December 2024, even though Mr Kelbarch has not really earnt an income for about the last six months. This departure determination will reduce some of Mr Kelbarch’s child support liability that he has accumulated. Mr Kelbarch also has some access to assets which may be sold (such as an additional motor vehicle) in order to raise additional funds if required during the period he is unable to work which could assist in reducing his child support arrears and assist with his daily living expenses.

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) of the Assessment Act sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Assessment Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
The Tribunal notes that it is open to either party to lodge further change of assessment applications should 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 as follows:

For the period 1 January 2023 to 30 June 2023 Mr Kelbarch’s ATI is set at $83,356.
For the period 1 July 2023 to 31 December 2024 Mr Kelbarch’s ATI is set at $67,392.
For the period 1 January 2023 until [Child 1] finishes primary school Mr Kelbarch’s child support is increased by $3,375 annually being his contribution to [Child 1]’s school fees.