Keysor and Keysor (Child support)

[2021] AATA 3177

Keysor and Keysor (Child support) [2021] AATA 3177 (21 July 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020167

APPLICANT:  Mr Keysor

OTHER PARTIES:  Child Support Registrar

Ms Keysor

TRIBUNAL:Member S Letch

DECISION DATE:  21 July 2021

DECISION:

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

(a)For the period 1 August 2019 to 31 March 2020, Mr Keysor’s adjusted taxable income is varied to $150,000

(b)For the period 1 April 2020 to 31 October 2021, Mr Keysor’s adjusted taxable income is varied to $38,000.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - 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

BACKGROUND

1. Mr Keysor and Ms Keysor are the parents of [the child], born 2007. Mr Keysor has been assessed by the Child Support Agency (CSA) as liable to pay child support to Ms Keysor.  Mr Keysor has sought review by this Tribunal of a decision of the CSA to “partly allow” his objection to the assessment of his liability for child support.

2. For the period 5 June 2019 to 31 July 2019, Mr Keysor was assessed to pay an annual rate of child support of $8,348. This assessment was based on a 2017/18 provisional income amount of $75,989 for Mr Keysor, and a 2017/18 adjusted taxable income of $29,473 for Ms Keysor.

3. For the period 1 August 2019 to 4 September 2019, Mr Keysor was assessed to pay an annual rate of child support of $1,443. This assessment was based on a 2018/19 adjusted taxable income of $19,882 for Mr Keysor, and a 2018/19 adjusted taxable income of $47,972 for Ms Keysor.

4. For the period 5 September 2019 to 31 October 2020, Mr Keysor was assessed to pay an annual rate of child support of $0. This assessment was based on a 2018/19 adjusted taxable income of $19,882 for Mr Keysor, and a 2018/19 adjusted taxable income of $47,972 for Ms Keysor. The change to the annual rate was due to a care change for [the child].

5. On 28 April 2020, Ms Keysor applied for a change of assessment under what the CSA refers to as reason 8A. On 23 June 2020,  the original decision-maker determined a ground to depart had been established, and decided that Mr Keysor’s adjusted taxable income was varied to $78,076 from 1 August 2019 until 31 December 2020; $100,000 from 1 January 2021 until 31 December 2021; and $150,000 from 1 January 2022 to 31 December 2022.

6. On 26 June 2020, Mr Keysor objected to the decision. On 30 October 2020, an objections officer “partly allowed” Mr Keysor’s objection, deciding the following:

   For the period 1 August 2019 to 31 December 2022, Mr Keysor`s income is set at $80 000.

   Impact on assessment:

   For the period 1 August 2019 to 4 September 2019, the annual rate is $8813.

   For the period 5 September 2019 to 22 December 2019, the annual rate is $5203.

   For the period 23 September 2019 to 31 July 2020, the annual rate is $4247.

   For the period 1 August 2020 to 13 September 2020, the annual rate is $4056.

   For the period 14 September 2020 to 31 December 2020, the annual rate is $5645.

7. On 3 November 2020, Mr Keysor sought further review by the Tribunal. Mr Keysor and Ms Keysor participated in the Tribunal’s hearing by conference telephone; the hearing was held in two parts following an adjournment of the original hearing in order for the Tribunal to seek and obtain additional evidence (discussed later in these reasons). In making its decision, the Tribunal took into account the CSA materials, the additional banking records obtained following the initial hearing, and the additional materials submitted by Mr Keysor and Ms Keysor.

CONSIDERATION

The legislative framework

1. 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 Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·      one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·      a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·      it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

11.If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

12.Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the CSA as reasons 8A and 8B, provide as grounds for departure:

(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

…

(ia)        because of the income, property and financial resources of either parent; or

(ib)        because of the earning capacity of either parent

13.The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:

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.

1. The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

2. The Tribunal observes it did not find Mr Keysor a particularly reliable witness. It was clear to the Tribunal that he has not been full and frank in his disclosures.

3. The Tribunal found compelling the text message exchanges between Mr Keysor’s business associate [Mr A] and Ms Keysor in which [Mr A] advised details of a bank account to which $3,000 was being paid to Mr Keysor for his work with [Company 1]; [Mr A] suggests that particular bank account ([Bank 1] bank account) was closed by Mr Keysor as he did not want the CSA to discover those payments. [Mr A] advises those payments were then directed to Mr Keysor’s partner’s ([Ms B]) bank account. The information in those exchanges was corroborated by the banking records obtained by the Tribunal recording weekly deposits of $3,000 to Mr Keysor’s bank account until May 2019; from May 2019, those deposits started to appear in [Ms B]’s [Bank 2] bank account on a weekly basis (described as “PYMT [Company 1] Salary”. Those payments persisted on a weekly basis until 19 February 2020 (around the time the pandemic began and a breakdown in the relationship between Mr Keysor and [Mr A], and just prior to Mr Keysor claiming a jobseeker payment from Centrelink, which he continues to receive).     

4. Consistent with Mr Keysor’s representations in family law proceedings in March 2019, the Tribunal is satisfied that he had access to financial resources amounting to at least $150,000 per annum in 2019, and into 2020. His adjusted taxable income had been assessed on a much lower sum rendering a significantly lower annual rate of child support liability; in the special circumstances of the case, the child support assessment is rendered unfair, and there is a ground to depart from the formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

1. The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Simply put, Mr Keysor told the Tribunal that his income is fairly represented by his 2018/19 income of some $20,000. Ms Keysor told the Tribunal she is happy with the CSA assessment.

3. Mr Keysor tried to explain the banking records recoding the receipt of $3,000 per week to his bank account as “being quite simple” – [Ms B] is from [Country 1] and she could not open a bank account. When she opened an account in Australia, the funds from [Company 1] – which he maintains were her funds – were directed to her own account. Mr Keysor said he understood why it would “look like he was moving money around”; however, maintained the sums were not his income. He discredited [Mr A]’s observations in his texts to Ms Keysor on the basis he was seeking retribution following their “falling out”. He said he and [Mr A] were now on better terms and said he had acknowledged he had made unfounded allegations. He referred to the email he produced to the Tribunal (folio A13) advising that “[Company 2] was contracted to [Company 1]…to perform a variety of management tasks from 1^st September 2019 to March 2020”.

4. Ms Keysor told the Tribunal that Mr Keysor was “very smart” at hiding his income. She suggested [Ms B] had no relevant qualifications which would qualify her to earn $3,000 per week; Mr Keysor disputed that was so, pointing to [Ms B]’s senior management experience in [Country 2].  

5. Ms Keysor said that [the child] is now residing primarily with Mr Keysor, and that she is aware that in addition to his jobseeker payment, he is running a [business 1].  Mr Keysor said he had been attempting to build a small business, which he is encouraged to do; he said there is very little activity in winter. He said he has been applying for 10 jobs a fortnight and attends regular meetings with [Employment services provider] – he said he would “love to find work and be on a decent income”. Mr Keysor said he receives less than $500 per fortnight “in hand” in jobseeker; he said they are about to move out of their current house to a house where they can pay less rent as they cannot afford the current home. [Ms B] is running a relatively new [business 2], which is slowly building. He said he does not have a car any longer; a $3,000 car loan has been “written off”, which has impacted his credit rating. In response to the Tribunal’s questions, he said he had not declared any money to Centrelink as his [business 1] is new and not deriving a profit. Mr Keysor said his partner’s business was not making a “heck of a lot of income”; it appeared to the Tribunal that Mr Keysor had not disclosed to Centrelink the existence of his, or his partner’s, businesses as if that was so, the Tribunal understands he would be required to regularly provide profit and loss statements to Centrelink, regardless of whether a profit was being derived. The Tribunal observes any failure on Mr Keysor’s part to fail to fully inform Centrelink of his circumstances would be generally consistent with his habitual aversion to full and proper financial disclosure.

6. The parties advised that the CSA has been made aware of a care change from March 2021 which is presently being “sorted through”; as Ms Keysor is presently having every second weekend and half school holiday care. Mr Keysor said the CSA presently has his care recorded as 91%, and he indicated that is likely to be changed to reflect the current pattern of care.

7. In relation to their respective statements of financial circumstances, neither party identified any particularly unusual expenses for themselves, or [the child]. Ms Keysor advised there has been no change to her employment arrangements or income.

8. The CSA decided to vary Mr Keysor’s income from 1 August 2019 when his reduced 2018/19 adjusted taxable income of some $20,000 took effect in the assessment. As a general rule, there needs to be a compelling basis to backdate the effect of a change of assessment (Ms Keysor made application on 28 April 2020). Here, the Tribunal is satisfied Mr Keysor has not fully disclosed his financial arrangements, and that the sums of $3,000 are attributable to him as income; whilst the Tribunal could backdate the variance of Mr Keysor’s income of $150,000 to the start of the case in April 2019 (as it is within an 18 month period prior to the change of assessment application being made), the Tribunal considers fair balance, consistent with the CSA approach, would be to vary Mr Keysor’s adjusted taxable income from 1 August 2019.

9. By the end of March 2020, the evidence reveals Mr Keysor commenced receiving jobseeker payment. There is no direct evidence that Mr Keysor receives any income from the business structures he is, and was, associated with. The evidence of both parties was that there had been a “falling out” between Mr Keysor and [Mr A] by around February 2020, which coincided with the cessation of payments from [Company 1]. 

10. The evidence from Mr Keysor concerning his [business 1] was that he was not presently deriving a profit; it did not appear Mr Keysor has advised Centrelink of the existence of that business, which he is obliged to do. In the ordinary course, Centrelink would require him to submit a profit and loss statement every three months. Similarly, it did not appear Mr Keysor has advised Centrelink of his wife’s [business 2], as he would be required to do.

11. However, the Tribunal accepted that Mr Keysor’s financial circumstances were such that he and his family are relocating to pay less rent. It seems clear enough Mr Keysor’s financial resources are significantly less than they were in 2019. 

12. The Tribunal considers Mr Keysor’s financial capacity from April 2020 has likely been supplemented to some degree by his [business 1]; given the Tribunal’s assessment concerning the general unreliability of Mr Keysor’s evidence, it is entirely possible he may be deriving some other income as part of his association with the various business structures uncovered by the CSA. However, there is no evidence before the Tribunal of additional income which would permit Mr Keysor’s financial capacity to be calculated with any precision. The Tribunal observes that Mr Keysor has an obligation to fully disclose his financial position to Centrelink; criminal penalties exist for those found to have made misrepresentations.

13. The parties did not raise any particularly unusual expenses for themselves, or in respect of the children. The assessment for Ms Keysor – who is on a steady wage – is properly reflected under the rolling formula arrangements, and no adjustment to her income is necessary. 

14. The Tribunal’s objectives set out in section 2A of the Administrative Appeals Tribunal Act 1975 require it to conduct proportionate reviews in a manner that is fair, just, economical, informal and quick.  Varying Mr Keysor’s income to $150,000 from 1 August 2019 to 30 March 2020 will almost double his child support liability for that period. From 1 April 2020 (and after the payments from [Company 1] ceased), the maximum partnered rate of jobseeker payment was some $510 per fortnight, and the coronavirus supplement was $550 (which reduced to $250 from 25 September 2020, ending on 31 March 2021). On that income alone (some $28,000 per annum), and when care was recorded as 62% to Ms Keysor and 38% to Mr Keysor, in 2020, Ms Keysor would be liable to pay a small amount of child support to Mr Keysor (some $600). If a conservative sum of $10,000 were added to Mr Keysor’s income in respect of his fledgeling [business 1] (varying his annual income to a total of $38,000), Mr Keysor would be liable to an even smaller amount (around $300 per annum on the Tribunal’s calculations) to Ms Keysor.

15. The evidence from the parties was that Mr Keysor has been recorded as having 91% care of [the child] from around March this year; in the event Mr Keysor’s income continued to be assessed as $38,000 per annum (and Ms Keysor at $47,972), Ms Keysor would be liable for some $3,000 per annum; if her care were to be recorded as falling between 14% and 34%, her liability would reduce to some $1,700 per annum (and if she loses her relevant dependent allowance from June 2021, some $2,400 per annum).

16. Notwithstanding the reduction and ultimate loss of the coronavirus supplement, the Tribunal considers it likely Mr Keysor has been deriving some undisclosed income from his business activity; a fair and conservative approach in circumstances where Mr Keysor has not been full and frank would be to assess his available financial capacity at $38,000 from 1 April 2020 until 31 October 2021. The Tribunal considers a shorter period going forward more appropriate given Mr Keysor’s hopes of finding work, and/or further establishing his [business 1]. Either party will be at liberty to make a fresh application for a change of assessment at that time.

17. In the circumstances, the Tribunal considers that it would be just and equitable to depart from the formula in the terms outlined above.

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

35.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.

36.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

37.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.

DECISION

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

(a)For the period 1 August 2019 to 31 March 2020, Mr Keysor’s adjusted taxable income is varied to $150,000

(b)For the period 1 April 2020 to 31 October 2021, Mr Keysor’s adjusted taxable income is varied to $38,000.