Ladams and Wadburn (Child support)

The matter of *Ladams and Wadburn* concerned an application for a departure determination under the *Child Support (Registration and Collection) Act 1988* (Cth). The applicant, the father, sought to have his child support assessment varied on the basis that his actual income was significantly lower than that determined by the standard assessment formula. The dispute centred on how to treat certain financial transactions and expenditures by the father, who was self-employed. The decision was made by Senior Member D Benk.

The primary legal issue before the Senior Member was whether the father's adjusted taxable income for child support purposes should be reduced to reflect his actual financial position. This involved determining whether certain payments made from his company, including a large taxation debt and legal fees, as well as numerous private expenses paid for the mother and children, should be taken into account. The Senior Member also had to consider the impact of ongoing property proceedings between the parties.

The Senior Member found that the decision under review, which had not allowed for deductions for the taxation debt and legal fees paid from company funds, was incorrect. While director loans were added back, the Senior Member reasoned that the father's company had effectively discharged personal liabilities and funded private expenses, which should be reflected in his adjusted taxable income. The Senior Member applied the principles of assessing a party's true financial capacity, noting that the payment of private expenses from company funds, even if not directly for the benefit of the children, indicated a reduced capacity to pay child support. The ongoing property proceedings were also considered relevant to the overall financial picture.

The Senior Member set aside the decision under review and remitted the matter for redetermination.