Kuzner and Kersley (Child support) - [2022] AATA 3678

Kuzner and Kersley (Child support) [2022] AATA 3678 (27 September 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/SC023235
APPLICANT:  Ms Kuzner
OTHER PARTIES:  Child Support Registrar
Mr Kersley

TRIBUNAL:Member M Douglas
DECISION DATE: 27 September 2022
DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of orthodontic costs for the children – 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 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

Ms Kuzner and Mr Kersley are the parents of [Child 1] and [Child 2], for whom child support assessments have been issued, with the first commencing on 4 April 2012.
On 22 June 2021 Mr Kersley applied to Services Australia under section 98B of the Child Support (Assessment) Act 1989 (the Act) for a determination to be made to depart from the provisions of the Act with respect to the assessment of child support. Services Australia describes such an application as a “change of assessment application”. The ground for departure upon which Mr Kersley relied in support of his application was that which Services Australia describes as Reason 2, being that provided in subparagraph 117(2)(b)(ia) of the Act. That ground may provide a basis for Services Australia to make a departure determination if the costs of maintaining a child are significantly affected because of the special needs of the child.
As at the time Mr Kersley lodged his change of assessment application, the assessments of child support obligated him to pay child support to Ms Kuzner, as follows:
(a) for the period 10 June 2021 to 30 June 2021, an annual rate of $14,670, based on an adjusted taxable income for Ms Kuzner of $73,834, being her 2020 taxable income, and an adjusted taxable income of $164,876 for Mr Kersley, which was what Mr Kersley estimated his 2021 taxable income would be and which he elected to be his adjusted taxable income;
(b) for the period after 1 July 2021, at an annual rate of $15,460. This rate was calculated on the same adjusted taxable for Mr Kersley as above, which Mr Kersley also estimated would be his taxable income for the 2022 year, and he also elected that this figure be used as his adjusted taxable income for this period. Ms Kuzner’s adjusted taxable income was as above.
The assessment for the period 10 June 2021 to 30 June 2021 was subsequently amended after Mr Kersley lodged his tax return for the 2021 year. His taxable income for that year was assessed to be greater than the amount Mr Kersley had elected as his adjusted taxable income. In accordance with sections 64 and 64AA of the Act, Services Australia amended the assessment so as to reconcile the amount Mr Kersley elected to be used as his adjusted taxable income with his actual taxable income.
On 26 August 2021, Services Australia considered Mr Kersley’s change of assessment application and refused to make a departure determination in response to it. Services Australia found the ground Mr Kersley had relied upon in support of his application was established, but Services Australia was not satisfied that it would be just and equitable as regards the children, Mr Kersley and Ms Kuzner to make a departure determination. In accordance with subparagraph 98C(1)(b)(ii)(A) of the Act, that is a requirement for a departure determination to be made.
On 19 September 2021 Mr Kersley objected to that decision. On 17 January 2022 Services Australia allowed his objection and made the following departure determination:
· For the period 1 January 2022 to 31 December 2022, the annual rate of child support otherwise payable by [Mr Kersley] is to be decreased by $4,200.
· If at any time in the period 1 January 2022 to 31 December 2022, [Mr Kersley] becomes the parent liable (sic: eligible) to receive child support, the annual rate of child support otherwise payable by [Ms Kuzner] is to be increased by $4,200.
The purpose of that departure determination was to effect a contribution from Ms Kuzner of 40% of the net cost Mr Kersley had incurred for orthodontic treatment that had been dispensed to the children.
On 7 February 2022 Ms Kuzner applied to the Tribunal for a review of Services Australia’s objection decision.
The Tribunal heard Ms Kuzner’s application on 27 September 2022. Both Mr Kersley and Ms Kuzner participated in that hearing and both gave affirmed oral evidence. The Tribunal has had regard to that evidence and also to documentary evidence that Ms Kuzner, Mr Kersley and Services Australia provided. Ms Kuzner’s documents were marked A1-A67 and Mr Kersley’s documents were marked B1-B55. The documents Services Australia provided were those in its file relevant to its objection decision. Services Australia provided those documents to the Tribunal in accordance with its obligation under subsection 37(1) of the Administrative Appeals Tribunal Act 1975. Services Australia also provided a copy of that file to both Mr Kersley and Ms Kuzner.

THE REQUIREMENTS FOR A DEPARTURE FROM AN ASSESSMENT

A parent may, if there are special circumstances, apply to Services Australia under subsection 98B(1) of the Act for a determination to depart from the provisions of the Act relating to an assessment of child support. Services Australia, or the Tribunal in its place, if satisfied that the criteria of subsection 98C(1) are met, can make one or more of the determinations listed in subsection 98S(1) of the Act to depart from the provisions of the Act relating to an administrative assessment of child support. The criteria specified in subsection 98C(1) are that:

A ground for departure exists;
It would be just and equitable as regards the child, the liable parent, and the carer entitled to child support to make a determination [under subsection 98S(1)]; and
It would be otherwise proper to make a determination [under subsection 98S(1)].

The grounds for departure are listed in subsection 117(2) of the Act.
The matters that are to be considered in deciding whether it is just and equitable to make a determination to depart from the provisions of the Act are listed in subsection 117(4) of the Act. Broadly speaking, consideration of those matters ensures that any departure will be fair for both parents and fair for the child.
The matters to be considered regarding the third criterion are listed in subsection 117(5) of the Act, and broadly speaking, consideration of those matters ensures that any departure reflects that the parents of a child, rather than the Australian community through the social security system, have primary responsibility for the cost of their child’s care.

CONSIDERATION

Is a ground for departure established?

As mentioned, Mr Kersley relied on the ground for departure Services Australia describes as Reason 2, being the ground listed at subparagraph 117(2)(b)(ia) of the Act, and which reads as follows:
that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(ia) because of special needs of the child.
It is uncontroversial that the children received orthodontic treatment and that Mr Kersley met the cost of that. Services Australia found that the cost for that treatment amounted to $10,500 net of health insurance rebates, and Ms Kuzner did not demur from that finding at the hearing. What is controversial is whether the orthodontic treatment, which was braces being applied to the children’s teeth, was to meet a “special need” of the children or an aesthetic or cosmetic need. Mr Kersley contends the former and Ms Kuzner the latter.
In evidence before the Tribunal is a letter from the children’s dentist, namely [Dr A], to Ms Kuzner dated 20 July 2021, wherein [Dr A] advises Ms Kuzner as follows:
The orthodontic treatments not only improve facial aesthetic but also enhance chewing function due to gaining a correct bite, and better oral health because of reduced dental caries (sic; cavities), periodontal disease and others.
Ms Kuzner’s oral evidence to the Tribunal was that she also spoke with the children’s dentist and was advised that the treatment the children had, whilst not urgent, was necessary and would have to be done at some time.
A special need of a child is one that is necessary or at least desirable for the child’s welfare. It is a need outside the normal needs of the child, which are catered for within the statutory formula prescribed to assess a child support liability.[1]
[1] Lightfoot and Hampson (1996) FLC 92-663
The children’s dentist, whose education and experience qualifies her to provide an opinion on this issue, considered the orthodontic treatment that was dispensed to the children would both improve the facial aesthetics of the children and also enhance their chewing function by correcting the children’s bites. The fact that the treatment would correct their children’s bites and thereby enhance their chewing function satisfies the Tribunal that the treatment that was provided was desirable. Ms Kuzner’s own enquiry with the children’s dentist revealed that the treatment would at some stage have to be provided, although there was no urgency. The fact that the treatment was not urgent does not mean the need of the children for it was not special. That is not a requirement, in the Tribunal’s view, for the treatment to be special.
It follows that this ground for departure is established.

Is it just and equitable to make a determination?

As already said, the matters the Tribunal must take into account when considering whether it is just and equitable to depart from the provisions of the Act with respect to the assessment of child support are listed in subsection 117(4) of the Act. The Tribunal is not required to go slavishly through each of those matters but must have regard to those that are relevant to the particular circumstances of this case and do so in a practical and flexible way.[2]
[2] Gyselman and Gyselman (1992) FLC 92-279; Ross v McDermott (1998) FLC 98-003; and Lawson and Edney [2017] FCWA 77
There is nothing within the evidence before the Tribunal to indicate that either child has an income or property of any relevance.
As mentioned above, one of the children’s proper needs included a special need that necessitated orthodontic treatment. That need of the children increased the cost of their care.
Ms Kuzner’s evidence was that the cost of maintaining [Child 2] in the 2018 to 2021 academic years was significantly increased as a consequence of [Child 2] attending private schools. Ms Kuzner’s evidence was that Mr Kersley did not sign any enrolment forms for [Child 2] to attend the private schools; she did in those years. Ms Kuzner said that she discussed [Child 2] going to the private schools a “few times” with Mr Kersley and that he approved of [Child 2] going to the schools. Ms Kuzner said that it was necessary for [Child 2] to go to a private school because she had relocated to [Suburb 1] and [Child 2] could not “adjust” to going to the public school at [Suburb 1]. Ms Kuzner said that she subsequently relocated to [Suburb 2] and [Child 2] similarly could not “adjust” to going to the public school at [Suburb 2]. She said that [Child 2] was bullied at the public schools she initially attended.
Mr Kersley disputed that he ever endorsed or approved of [Child 2] going to a private school. He confirmed that he never signed an enrolment form for [Child 2] to attend a private school. He said that he only ever became aware that [Child 2] was attending a private school months after she had commenced at the school. He said it was never his expectation that [Child 2] be educated at a private school. He said that their son, [Child 1], who lives with him, has always attended a public school and that was always his intention for [Child 2]. He did not concede that [Child 2] was bullied at any public school she attended, and he said that if that were the case, there were numerous other public schools near where she resided that she could have attended. He said that [Child 2] now goes to a public school.
The Tribunal is not satisfied on the evidence before it that it was Mr Kersley’s expectation that [Child 2] would be educated at a private school. Further, absent any evidence, such as from clinicians in mental health who may have treated [Child 2] or correspondence or reports from any teachers who taught [Child 2] indicating concern for [Child 2] due to the behaviour of others, the Tribunal is not persuaded that one of [Child 2]’s proper needs was that she attend a private school. In other words, based on the evidence presently before the Tribunal, the Tribunal is not satisfied that it was necessary or desirable for [Child 2] to attend a private school.
With respect to Ms Kuzner’s financial circumstances, her evidence was that she has fulltime employment, which she has held for 16 years, and this is her only source of income. She provided a copy of her tax return for the 2022 year, which revealed that her taxable income for the year will be assessed at $77,643, which roughly correlates with her adjusted taxable income. Her gross income in the year was $81,143. Her expenses in the year to receive that income amounted to $3,500.
Ms Kuzner also produced several payslips, the most recent being for the month of August 2022, which revealed that her gross monthly pay is $6,800. That extrapolates to an annual figure of $81,600, which is approximately the same as her gross income in the 2022 financial year.
Mr Kersley contended that Ms Kuzner may have other sources of income or financial resources because she drives a recent model [Make] car. In other words, he inferred that if Ms Kuzner can afford to have such a car, she would need more income than that which she receives from her employment. Ms Kuzner denied receiving any income other than from her employment. She said she purchased the [Car] through a lease arrangement, which she finances through a monthly deduction made from her pay. She referred to the payslips that she provided to the Tribunal which confirmed that deduction.
The Tribunal accepts Ms Kuzner’s evidence that her only income is that which she receives from her employment.
Ms Kuzner provided the Tribunal with a Statement of Financial Circumstances that she had completed on 23 February 2022 declaring the contents to be complete and correct. In that, she revealed that she does not have any assets of significance and certainly none that she could sell so as to provide her with cash. Her only substantial liability is that related to her purchase of a motor vehicle.
Within her Statement of Financial Circumstances she listed her weekly expenditure. Nothing within her list revealed that she indulges herself. In the Tribunal’s view, that accords with the fact that she has a relatively modest income and has financial responsibilities relating to the care of the children.
The Tribunal is satisfied that were it to make a determination to depart from the provisions of the Act with respect to the assessment of child support, such that Ms Kuzner would receive a lesser amount of child support from Mr Kersley, then hardship would be caused to her.
With respect to Mr Kersley’s situation, he also is employed on a fulltime basis and his only source of income is that which he receives from his employment. He produced a copy of his tax return for the 2021 financial year, which revealed that he received gross wages in the year of $175,907. The Services Australia file revealed that his taxable income in the 2021 year was assessed by the ATO at $172,923[3] meaning that he would have incurred expenditures of just under $3,000 to earn his income in the 2021 year.
[3] Services Australia file, page 399
Mr Kersley also produced his final payslip for the 2022 financial year. That revealed that in that year his gross wages amounted to $208,816.73. That amount included an “annual leave cash out” of $22,566.67 and a bonus of $10,000. Absent those two amounts, his gross wages would have been $176,250, which is only marginally higher than his gross income in the 2021 financial year. Mr Kersley’s evidence was that in the current financial year, he will not be “cashing out” any annual leave as he has no further annual leave from prior years accrued to do so. Further, he does not expect a bonus in this year. In other words, his income in the current financial year is likely to be the same as it was in the 2021 year.
Nevertheless, his income in the 2022 financial year was far in excess of the amount that he elected to be used as his adjusted taxable income for the child support assessment that covered that year. When his taxable income is assessed by the ATO, that will consequently result in Services Australia being required to reconcile the amount he elected to be used for his adjusted taxable income with his actual taxable income and Services Australia amending the assessment so as to calculate it on the reconciled income amount. Because the reconciled amount will be greater, that will result in an increase in his child support obligation.
Mr Kersley’s evidence was that his assets consist of the house in which he resides, which he estimates to be worth $1,000,000, household contents and his car. He said his car is 7 years old and he did not estimate the value of it to be greater than $10,000. He advised that his only significant liability is a mortgage loan of approximately $670,000.
As the Tribunal understood his evidence, he does not have any unusual expenses to meet for his support other than out of pocket expenses that he incurred for surgery he had earlier this year. He also has surgery scheduled for later in the year. He said his out of pocket expenses for these surgeries amount to around $3,000.
In December 2015, the Federal Circuit Court, at the request of Mr Kersley and Ms Kuzner, made an order pursuant to paragraph 123(1)(a) of the Act that Mr Kersley meet 60% and Ms Kuzner meet 40% of all “payments of school fees, expenses to be paid directly to the school and enrolment fees, tuition fees, sporting fees, medical expenses and medical insurance”.[4]
[4] Services Australia file, pages 255 and 258
As has been discussed above, the Tribunal is satisfied that the costs of maintaining the children have been increased because of a specific medical need relating to their teeth. That need was for one of their proper needs. The Tribunal considers the fact that the Court made an order at the request of the parties that the cost associated with that type of need be apportioned between the parties, such that Mr Kersley met 60% of it and Ms Kuzner 40% of it, is a relevant matter to consider when determining whether it is just and equitable to make a determination departing from the provisions of the Act with respect to the assessment of child support.
Having regard to the circumstances outlined above, the Tribunal considers that it would be just and equitable to make a determination to depart from the provisions of the Act with respect to the assessment of child support in the terms that Services Australia made by way of its objection decision of 17 January 2022. That is, the Tribunal considers it is just and equitable to apportion the cost related to the orthodontic treatment the children received in the manner ordered by the Court. As mentioned above, the Tribunal is cognisant of the fact that there is a discrepancy between Mr Kersley’s actual taxable income and his adjusted taxable income used in the assessment of child support for the bulk of the 2022 financial year, but in the Tribunal’s view the correction of that issue is best left to the usual provisions of the Act, which will occur upon Mr Kersley lodging his tax return for the year, rather than rectifying that by means of making a departure determination. That will ensure that that correction is done more precisely.

Is it otherwise proper to change the assessment?

In deciding whether it is otherwise proper to depart from the administrative assessment, the Tribunal must have regard to the fact that the primary obligation to support the children rests with Mr Kersley and Ms Kuzner, and also have regard to whether, and if so, how, any determination it makes would affect the entitlement of Ms Kuzner or the children to an income tested pension, allowance or benefit.
The evidence does not indicate that either of the children receives an income tested pension, allowance or benefit. That circumstance will not change if the determination the Tribunal considers it is just and equitable to make, is made.
Ms Kuzner did not indicate in her Statement of Financial Circumstances that she receives family tax benefit from the Commonwealth Government. Noting her income and the age of [Child 2], it may be that she gets a small amount of family tax benefit. The decision that the Tribunal considers it is just and equitable to make (to affirm Services Australia’s objection decision of 17 January 2022) will result in her receiving less child support for the 2022 calendar year than she would receive based on an assessment issued in accordance with the usual provisions of the Act. That may result in an increase in her family tax benefit. In the circumstances outlined, the Tribunal considers that would be an otherwise proper outcome.

DECISION

The decision under review is affirmed.