Lane and Carter-Lane (Child support) - [2019] AATA 2542

Lane and Carter-Lane (Child support) [2019] AATA 2542 (5 July 2019)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/MC015555
APPLICANT:  Mr Lane
OTHER PARTIES:  Child Support Registrar
Ms Carter-Lane

TRIBUNAL:Member R Anderson
DECISION DATE: 05 July 2019
DECISION:

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

· The annual rate of child support payable by Mr Lane is to be varied to $21,547 from 25 June 2018 to 17 July 2018; and
· The annual rate of child support payable by Mr Lane is to be varied to $3,000 from 18 July 2018 to 31 March 2020.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – whether earning capacity is to be considered - 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 removed 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

Mr Lane and Ms Carter-Lane are the parents of [Child 1] and [Child 2]. According to records of the Department of Human Services – Child Support (the Department), the child support assessment was registered on 22 February 2013. The Department has been responsible for the collection of child support from Mr Lane since that time.
The child support liability is generally calculated in accordance with the administrative assessment, as provided in the Child Support (Assessment) Act 1989 (the Act). The child support assessment is generally based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO), or the most recent estimate.
Following termination of his employment from [Employer 1], effective 13 November 2017, the Department accepted an estimate from Mr Lane in respect of his income from 8 January 2018 to 30 June 2018 of $0. Consequently, the annual rate of child support payable by Mr Lane reduced firstly to the annual rate of $2,780, later replaced by an annual rate of nil. Following acceptance by the Department of an estimate from Mr Lane of $4,000 per annum in respect of the 2018/2019 year, the annual rate of child support payable by Mr Lane remained at nil.
It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent. Ms Carter-Lane lodged such an application on 25 June 2018, on the basis that the administrative assessment produced an unfair outcome due to the income, property and financial resources available to Mr Lane (Reason 8A). In response, Mr Lane lodged a cross-application in respect of the earning capacity of Ms Carter-Lane (Reason 8B).
While a care decision in respect of [Child 1] was made in July 2018 attributing 100% care to Ms Carter-Lane from 1 December 2017, the effective date being 14 June 2018, there was no impact on the annual rate of child support payable by Mr Lane, which remained at nil under the administrative assessment.
On 17 August 2018, a delegate of the Child Support Registrar found that a ground was established and decided to vary the adjusted taxable income of Mr Lane to $63,558 per annum for the period 25 June 2018 to 31 December 2019. This resulted in an increase in the annual rate of child support payable by Mr Lane to Ms Carter-Lane in respect of [Child 1] and [Child 2] to $9,679.
Mr Lane lodged an objection in September 2018, which was subsequently disallowed by an objections officer on 12 November 2018.
On 4 December 2018, Mr Lane lodged an application to this tribunal for an independent review of the Department’s decision. The directions hearing was conducted by telephone with both parties on 23 April 2019. Following this hearing, directions were made to both parties requiring them to provide further information and documents. The hearing was held on 12 June 2019. Both parties participated by conference telephone and gave oral evidence on affirmation. On 12 June 2019, the tribunal decided to defer making a decision in this matter in order to enable both parties to provide additional information and to await further information from Centrelink.
The tribunal considered information in the documents provided by the Department in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 460, documents lodged by Mr Lane numbered A1 to A75 and documents lodged by Ms Carter-Lane numbered B1 to B63, which were sent to the parties prior to hearing. Following the hearing, further documents were received from Mr Lane numbered A76 to A124, from Ms Carter-Lane numbered B64 to B71 and from Centrelink numbered D1 to D6. All of these documents were sent to all parties for comment or information. The tribunal proceeded to make a decision on 5 July 2019.

ISSUES

When calculation of the rate of child support is based on the usual administrative formula as discussed above, it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. Section 98C of the Act allows for a decision maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:
·         whether a ground exists to depart from the administrative assessment; and if so
·         whether any proposed departure is fair to Mr Lane, Ms Carter-Lane, [Child 1] and [Child 2]; and if so
·         whether any proposed departure is fair to the public.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act. However, the tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are “out of the ordinary” and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC 90-433).

Reasons 8A and 8B – the earning capacity, income, property and financial resources of each parent

Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by Mr Lane because of the available income, property and financial resources available to him. The Act goes on to state in subsection 117(7A) that the decision maker must have regard to “the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of the parent that do not produce, but are capable of producing, income” and disregard “the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child”.
At hearing, Mr Lane submitted that in his view, given his current circumstances, a child support liability of nil is fair. He is desperately trying to return to a position that is financially viable and reiterated numerous times that he does not have the capacity at this time to pay child support. Following the hearing, Mr Lane submitted that in his view a fair proposal is that he pays approximately $3,000 to cover the outstanding school fees of the children and commence paying more than a nil rate of child support on a regular basis after he secures employment or is in regular receipt of government benefits. In the meantime he does not consider that the children are missing out on anything but “discretionary” needs such as holidays. While acknowledging the limitations of the issues that can be dealt with by this tribunal, he noted that there were many things that in his view were unfair, such as withheld care of the children.
Mr Lane also raised the issues he was facing in dealings with the Department in regard to collection of child support. As discussed at the directions hearing and the hearing, such issues in respect of the administrative process of the Department do not fall within the jurisdiction of this tribunal.
Ms Carter-Lane maintains that Mr Lane is evading his child support obligations by not accepting “any job”, so as to prioritise meeting his own lifestyle choices over the needs of the children.
It is common ground that prior to 8 January 2018, when Mr Lane lodged an estimate of nil, the administrative assessment calculated a fair rate of child support payable by Mr Lane. Consequently, it is the 2017/2018 year and beyond that is the period relevant to this review.
Mr Lane gave oral evidence that prior to being made redundant from 13 November 2017 he had been employed by [Employer 1] for almost seven years as an [Occupation 1]. He holds a degree in [Discipline 1].
According to the separation certificate completed by a representative of [Employer 1] on 2 July 2018, Mr Lane received the equivalent of 37.05 weeks of his regular weekly wage of $2,105 from 13 November 2017, totalling $77,893. This was inclusive of unused annual leave and a non-taxable redundancy component of $40,623. The tribunal calculates the 37.05-week period to end on 17 July 2018.
In this case, the tribunal considers that termination payments received by Mr Lane are properly considered income, despite being paid in a lump sum. They do not constitute a capital sum resulting from the liquidation of assets. The lump sum termination payments received by Mr Lane upon cessation of his employment are clearly income paid in advance for a certain period (which can be ascertained by reference to the number of weeks to which the payments refer as set out in the separation certificate) and, accordingly, it is entirely appropriate that such payments are denuded over the corresponding period to meet an obligation usually met from income.
Therefore, the tribunal considers there to be two distinct periods in this review in which to consider the income, property and financial resources of Mr Lane, being before and after 17 July 2018. In respect of the period from 8 January 2018 to 17 July 2018, Mr Lane was clearly in receipt of an income equivalent to his regular wages prior to redundancy.
Mr Lane is yet to lodge his 2017/2018 tax return with the ATO. However, he provided the tribunal with a copy of his 2018 pre-filling report from the ATO. It is evident that other income derived by Mr Lane in the 2017/2018 year consists of dividends and franking credits from [Company 1] shares and distributions from [Managed Fund 1] and [Managed Fund 2]. While the details in respect of [Super Fund 1] are not before the tribunal, the income reinvested in respect of [Managed Fund 1] and [Managed Fund 2] in the 2017/2018 year exceeds $5,200. Further income derived from [Super Fund 1] is not reflected in the pre-filling report, yet is recorded on his 2016/2017 tax return. Based on Mr Lane’s 2016/2017 tax return, the income reinvested in his managed fund investments exceeded $7,500.
Mr Lane also receives rental income from an investment property in [Suburb 1], NSW. Given that it is negatively geared, the tribunal is satisfied that it does not provide a source of income to Mr Lane. As discussed at hearing, his choice to meet the annual shortfall is considered to be a discretionary one. As such, the administrative assessment correctly adds back any investment loss to his taxable income. The tribunal is satisfied that Mr Lane’s provisional 2018 adjusted taxable income, as deemed by the Department, of $113,643 per annum is a reasonably accurate reflection of his available income until 17 July 2018. The tribunal finds accordingly.
Given that the redundancy payment received by Mr Lane of $40,623 will not be recorded on his 2017/2018 tax return, a reconciliation of his estimate following lodgement of his 2017/2018 tax return will not result in an accurate assessment. Despite Mr Lane fully expecting a reconciliation and likely adjustment to his child support in respect of the 2017/2018 year, based on the oral evidence of the parties, the issue of the non-taxable redundancy component was not addressed by the Department in their initial advice in respect of the reconciliation process.
In the period commencing 18 July 2018, the financial circumstances of Mr Lane changed significantly. He told the tribunal that he had not anticipated that he would be unemployed for such a long period of time and is trying to manage as best he can with what he has. He refutes the assertion of Ms Carter-Lane that he has not applied for all types of jobs, insisting that he has applied for positions that are [Discipline 1]-related through to packing a box. He further stated that he will soon commence an NEIS program through Centrelink with a view to possibly commencing a sole trader business to use his skills, should he continue to be unsuccessful in his attempts to secure employment.
The tribunal is satisfied that the income available to Mr Lane since 18 July 2018 has been limited to the distributions from his managed funds and dividends on his [Company 1] shares, which combine to fall below the self-support amount in the 2019 year of $25,038. As noted above, the rental income does not fully meet the associated expenses. Based on the 2016/2017 tax return and allowing for non-cash expenses of depreciation and borrowing expenses, the tribunal calculates that the shortfall exceeds $6,000 per annum. Information provided after the hearing indicated that the tenant is in arrears, only serving to increase the shortfall required to be funded by Mr Lane. Mr Lane has continued to meet such a shortfall and has continued to reinvest the distributions issued from his managed funds.
Mr Lane further stated that while being verbally advised of his entitlement to newstart allowance, he is yet to receive confirmation in writing or a payment. Following the hearing the tribunal sought confirmation from Centrelink in respect of the status of Mr Lane’s newstart allowance application. Centrelink provided a report at 21 June 2019 recording no entitlement by Mr Lane to any government benefits.
The tribunal considered the assets and liabilities of Mr Lane. According to his Statement of Financial Circumstances, completed 8 January 2019, Mr Lane’s assets consist of his residence, valued at $600,000 and his investment property, valued at between $325,000 and $350,000. The corresponding mortgages at 13 June 2019 are $14,753 and $344,612 respectively. It was evident that Mr Lane transferred $270,000 from his offset account to his home loan account in late 2018. The tribunal accepts that these funds had largely resulted from an initial increased mortgage balance so as to gain a reduced interest rate, as was the case with Ms Carter-Lane as discussed below.
As noted above, Mr Lane held managed funds valued at approximately $110,000, has approximately $2,000 to $3,000 in the bank and household contents of $5,000. Based on recent dividend yield of $0.80 per share, the tribunal estimates that Mr Lane holds around 105 [Company 1] shares, currently valued at approximately $2,963. Other than the mortgages noted above, Mr Lane has no liabilities. Therefore, the tribunal calculates the net asset position of Mr Lane to be approximately $700,000 and finds accordingly.
The tribunal accepts the written evidence of Mr Lane that at 25 March 2019, he held a balance in his [Super Fund 2] account of $160,943. Mr Lane gave oral evidence of his plan to roll the balance into his existing [Super Fund 3], which at present has a balance in the vicinity of $101,700, following the transfer of $70,000 from his managed funds in late May 2019. The tribunal is satisfied that no additional personal contributions have been made by Mr Lane in recent times.
Mr Lane told the tribunal that he shares his residence with a friend, who is awaiting finalisation of an occupancy dispute in relation to her new home before moving out. He also shares it with [Child 2] for 14% of the time. Mr Lane acknowledged that until more recently his friend had not contributed to the running costs of the house. However, she has allowed him exclusive use of her daughter’s car for several years until her return from overseas later this year. More recently, due to the decline in Mr Lane’s financial circumstances, his housemate has been contributing $100 per week to the household costs. Mr Lane estimates the average weekly household expenses to be $538. After apportioning household costs between Mr Lane and [Child 2], Mr Lane’s weekly expenses are approximately $424. Of this amount, discretionary costs in respect of entertainment are $50. Accordingly, the estimated average weekly “necessary” costs as recorded by Mr Lane are $374 or $19,448 per annum. This is less than the self-support amount used in the administrative formula in the 2019 year of $25,038, largely as a result of the small mortgage repayment of less than $25 per week. It is unclear to the tribunal why it took until June 2019 for the monthly repayments to reduce from $2,107 to $107 on an outstanding loan since October 2018 of less than $27,000. Furthermore, after allowing for contributions more recently of $100 per week ($5,200 per annum), Mr Lane’s weekly “necessary” costs of self-support are significantly less than $25,038.
In addition, as already discussed, the rental shortfall is approximately $125 per week. Clearly, such costs are discretionary and are not necessary for Mr Lane’s self-support (Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144). In response to a question from the tribunal, Mr Lane stated that he has expended his savings and relied on loans from family to meet his living expenses. The tribunal notes that this was during the same period in which he continued to reinvest distributions from his managed funds.
Mr Lane gave oral evidence that he is generally in good health. However, he is awaiting a specialist appointment through the public health system to address [specified] issues, yet he does not incur significant costs in respect of associated medication. Mr Lane further stated that he has been forced to cease private health insurance previously held for him and the children in recent times due to his financial difficulties.
While the tribunal accepts that Mr Lane has made a genuine effort to find work, and continues to do so, the tribunal does not accept that he has not had access to financial resources from significant assets upon which to draw to meet his own and his share of the children’s “necessary” expenses. As noted in the case of Hampson & Bailey [2013] FCCA 1004, “…contributions by parents to the support of children is not based solely on the income of the parent but also on property and financial resources as income capacity”. Furthermore, in Dwyer v McGuire (1993) FLC 92-420, Lindenmayer J referenced the fact that, “Different occupational groups and asset holdings will engender different ways and means by which a child's needs and entitlements for child support can be met”.
In the tribunal’s view, Mr Lane has had the scope to arrange his financial affairs such that he did have the capacity to contribute to the needs of [Child 1] and [Child 2] at a level greater than $0 per annum from 8 January 2018 to date. In the period from 17 July 2018, following the expiration of his lump-sum payout, Mr Lane continued to have financial resources available to him through his investments.
In response to a question from the tribunal, Mr Lane stated that he has been through a long and drawn-out process in respect of his application for newstart allowance. Having had his initial refusal remitted by the AAT, Centrelink have since rejected his claim on the basis of the assets test. Mr Lane gave oral evidence that upon the advice of a Centrelink financial services officer and after repaying family loans of almost $25,000, he has now transferred the balance of his managed funds to his [Super Fund 3].

Based on evidence provided to the tribunal prior to the transfer, the combined balance of [Managed Fund 1], [Managed Fund 2] and [Super Fund 1] is approximately $110,000. Evidence provided after the hearing records $70,000 of non-concessional contributions deposited into Mr Lane’s [Super Fund 3] in late May 2019. The tribunal finds it somewhat concerning that a government department would advise such an action without full consideration of Mr Lane’s liabilities, in particular outstanding child support.
The tribunal considered the financial circumstances of Ms Carter-Lane, who gave oral evidence that she has been employed at [Employer 2] for over seven years on a part-time basis. She further stated that more recently she has managed to negotiate her roster so that while retaining 15 hours per week, she works more often on public holidays and weekends so as to attract the higher penalty rates. Based on her 2017/2018 tax return, the gross wages received by Ms Carter-Lane were $23,445. In addition, she also received newstart allowance totalling $7,202. After minimal income from bank interest and a single [Company 1] shareholding and reasonable work-related deductions, the taxable income of Ms Carter-Lane was $30,221.
Based on her most recent payslips, the tribunal estimates the gross wages of Ms Carter-Lane in the 2018/2019 year to approach $26,000. According to Centrelink information, her newstart allowance varies on a fortnightly basis depending on her gross wages earnings reported in relation to the same period. At 5 June 2019 the newstart allowance payments received by Ms Carter-Lane since 1 July 2018 totalled $6,848. There is no dispute that the income available to Ms Carter-Lane is accurately reflected in her annual tax returns. The discrepancy evident between the 2017/2018 and 2018/2019 years has little, if any impact on the child support assessment. Ms Carter-Lane foresees little change in her income going forward. Therefore, the tribunal finds that use of the most recently lodged income tax return in respect of Ms Carter-Lane remains the most accurate way to assess her available income.
While Mr Lane raised the issue of earning capacity in respect of Ms Carter-Lane, a parent's earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Act, This section requires the tribunal to consider three matters in determining that the parent's earning capacity is greater than is reflected in his or her income used in the administrative assessment.
·Whether the parent is:
o   not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
o   has reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
o   has changed their occupation, industry or working pattern (subparagraph117(7B)(a)(iii)); and
·If the parent's decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii)); and
·If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).
All three criteria must be met before a departure determination can be made to take into account whether the parties have a greater earning capacity. If the above criteria are satisfied then the tribunal must determine the actual earning capacity of the parent.
As discussed at hearing, it is undisputed that Ms Carter-Lane has not changed her occupation or working hours of 15 per week since prior to separation. While the tribunal is satisfied that there is not necessarily a temporal limitation in considering whether or not subsection 117(7B) of the Act applies to Ms Carter-Lane (Waites & Lawson (SSAT Appeal) [2011] FMCAfam 42), medical evidence in the form of a Centrelink medical certificate records Ms Carter-Lane as suffering from two permanent conditions that limit her working capacity to 15 hours per week. The tribunal acknowledges that the certificate is dated 7 January 2013, however, her conditions are “permanent”. While Mr Lane accepts the medical diagnoses, he questioned the inability of Ms Carter-Lane to extend her working hours or to gain higher paid employment. The tribunal points out that in order to meet the eligibility requirements for newstart allowance, Ms Carter-Lane must meet the required activity tests and be working to her capacity. As such, the second criterion under subsection 117(7B) of the Act is not met and all three criteria cannot be satisfied. Therefore, it is not open to the tribunal to consider the earning capacity of Ms Carter-Lane. Furthermore, in order to meet the eligibility requirements for newstart allowance, the tribunal is satisfied that Ms Carter-Lane is working to her capacity.
In respect of Mr Lane there is no question that he ceased work as a result of being made redundant by [Employer 1]. Mr Lane continued to pay the assessed child support until January 2018. The tribunal is satisfied that no decision was made by Mr Lane with the major purpose being to affect the administrative assessment of child support (paragraph 117(7B)(c)). As the third criterion under subsection 117(7B) of the Act is not met, it follows that all three criteria cannot be satisfied. Therefore, it is not open to the tribunal to consider the earning capacity of Mr Lane.
According to Centrelink information, Ms Carter-Lane currently receives family tax benefit in respect of [Child 1] and [Child 2] at the fortnightly rate of $324. As an income-tested benefit, it is not defined as a tax-free benefit under section 5 of the Act to be included in adjusted taxable income (paragraph 43(1)(e) of the Act). Consequently, for child support purposes, it is not considered to be a part of Ms Carter-Lane’s adjusted taxable income (subparagraph 117(7)(b)(ii) of the Act).
Ms Carter-Lane is also in receipt of carer allowance in respect of [Child 1] at the fortnightly rate of $129.80. While carer allowance is a non-taxable payment, it is not included in the list of tax-free benefits to be included in the calculation of adjusted taxable income as defined in section 5 of the Act. Accordingly, carer allowance payments received by Ms Carter-Lane are not considered to be a part of her adjusted taxable income for child support purposes.
The tribunal accepts the written evidence of Ms Carter-Lane that at 31 December 2018, she held a balance in her [Super Fund 4] account of $183,780. The tribunal is satisfied that no personal contributions have been made by Ms Carter-Lane in recent times.
The tribunal considered the assets and liabilities of Ms Carter-Lane. She shares her residence with [Child 1] for 100% of the time and [Child 2] for 86% of the time. According to her Statement of Financial Circumstances, her home is valued at $880,000 with a corresponding mortgage at 6 May 2019 of $127,790. Other assets consist of a small bank balance ($281), a single [Company 1] share ($28), a [vehicle] ($3,000) and household contents ($6,000).
Ms Carter-Lane told the tribunal that her offset account of $38,866 is directly related to an increase in her initial mortgage amount so as to gain a reduced interest rate. This was initiated with a view to having funds on hand for emergency purposes. She maintains that the purpose was never to use these funds for general living expenses and her requirement to do so in recent times has placed her in a more precarious financial position. Other than outstanding education costs of almost $3,000, Ms Carter-Lane has no other liabilities. Therefore, the tribunal calculates the net asset position of Ms Carter-Lane to be approximately $720,000. The tribunal finds accordingly.
In respect of her expenses, Ms Carter-Lane estimated the current average weekly household expenses to be $1,060. After attributing household costs between Ms Carter-Lane and the children, the weekly costs attributable to Ms Carter-Lane are approximately $330, or $17,160. This amount includes negligible discretionary costs in respect of entertainment, holidays and gifts. While this is less than the self-support amount used in the administrative formula in the 2019 year of $25,035, it is essentially the result of allocating 66% of the rent to the children. Ms Carter-Lane disputed Mr Lane’s assertion that she is assisted financially by her parents. She gave oral evidence that while her mother contributes to holiday costs for her and the children, she does not contribute to day-to-day living costs. Ms Carter-Lane reiterated that she has been unable to meet the costs of her and the children on a weekly basis, without dipping into the offset account, serving only to place her in a more vulnerable financial position.
Ms Carter-Lane’s health was addressed above. In response to a question from the tribunal, she stated that she does not incur significant out-of-pocket medical costs in respect of her ongoing conditions.
Based on the tribunal’s findings above, it is clear that Mr Lane’s provisional 2018 adjusted taxable income, as deemed by the Department, of $113,643 per annum is an accurate reflection of his available income until 17 July 2018. The tribunal finds accordingly.
It is also clear that the income and financial resources available to Mr Lane are such that he has had the ability to meet discretionary expenses throughout the entire period under review of more than $6,000 per annum and continues to do so.
The tribunal is also cognisant of the level of liquid assets that were held by Mr Lane in the weeks prior to the hearing, noting the negative equity in the investment property. The question then becomes whether the reduced income of Mr Lane, together with his level of assets in excess of $100,000 creates special circumstances and renders the current administrative assessment unjust and inequitable.
Section 2.6.14 of the Child Support Guide states as follows:
In some cases a parent might have substantial property and assets but a low income used in the child support assessment. The Registrar may consider the parent's property and assets, as well as any income, in deciding the appropriate rate of child support to be paid ('Abela and Abela (1995) FLC 92-568' and 'Bendeich and Bendeich (1993) FLC 92-355').
Accordingly, while the period will be discussed later in these reasons for decision, based on Mr Lane’s assets and discretionary spending, the tribunal finds that an annual rate of child support payable by him of $0 per annum in the period 8 January 2018 to 30 June 2019, as assessed in accordance with the administrative assessment, is unfair. Therefore, the tribunal finds that special circumstances do exist in this case. As such, the tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.

Issue 2 – Is it fair or “just and equitable” in relation to Mr Lane, Ms Carter-Lane, [Child 1] and [Child 2] to make a particular departure determination?

As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The tribunal does not propose to explore every matter in detail, but will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Lane and Ms Carter-Lane have the primary duty to financially support [Child 1] and [Child 2].
In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs (subsection 117(6) of the Act). There was no dispute that the children are in good physical health and currently attend a government secondary college. However, [Child 1] suffers from [Medical Condition 1]. In response to a question from the tribunal, Ms Carter-Lane stated that his psychologist consultations are largely covered and she does not incur significant costs in respect of his medical needs. Dental issues are currently being addressed through the public dental system. Accordingly, the tribunal is satisfied that there are no special circumstances in respect of the needs of [Child 1] or [Child 2].
Based on the estimates of Mr Lane and Ms Carter-Lane and after apportioning the household costs to the children, the tribunal calculates the “necessary” costs of [Child 1] and [Child 2] to be approximately $724 ($660 + $64) per week or $37,648 per annum. Even if the adjusted taxable income of Mr Lane was assessed at his previous level of around $113,000, the costs for [Child 1] and [Child 2] according to the Costs of the Children Table are closer to $26,000 per annum. It is evident that the costs of the children as estimated by Ms Carter-Lane are over-stated and more aligned to their costs prior to the change in the financial circumstances of Mr Lane. Based on the current financial circumstances of the parties, this is clearly not sustainable.

The earning capacity, income, property and financial resources and commitments of each parent

As found earlier in these Reasons for Decision, the tribunal is satisfied that Mr Lane has had access to income and financial resources to 17 July 2018 of approximately $113,643. In the period commencing 18 July 2018, Mr Lane has had access to income below the cost of self-support. However, given his managed funds and [Company 1] shares, valued in excess of $112,000, the tribunal does not accept that Mr Lane’s only option to meet his necessary expenses was through drawing down on his savings and borrowing from family.
The tribunal also found earlier that Ms Carter-Lane’s income and financial resources are accurately reflected on her annual tax returns. Given her restricted working capacity due to medical conditions, it will likely remain in the vicinity of $30,000 to $35,000 per annum in the next few years.
Based on the findings earlier in these Reasons for Decision, it is evident that the net asset position of the parties is closely aligned, contrary to Mr Lane’s submission to the Department.

Conclusion

After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Lane and Ms Carter-Lane and the needs of the children, the tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Act. The tribunal may make one of the determinations set out in section 98S of the Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support.
Mr Lane is clearly struggling to deal with the extended period of unemployment he has faced, both financially and emotionally. As already discussed, the tribunal is satisfied that he is making a constant effort to find employment and regain financial control. However, the tribunal does not accept Mr Lane’s submission that as the children have not suffered hardship and in his view, have not been deprived of “necessary” expenses, that a nil child support assessment is justified until he secures employment. There is no question that Ms Carter-Lane requires the assistance of Mr Lane, in accordance with his capacity, which in the tribunal’s view exceeds nil. It is also clear that Mr Lane’s capacity to contribute to the needs of the children has declined significantly since 18 July 2018, while the capacity of Ms Carter-Lane is limited as a result of her medical conditions.
Mr Lane submits that he should not be discriminated against because of his decision to retain an investment portfolio rather than invest the majority of his share of the property settlement into his residential home, as was the choice of Ms Carter-Lane. However, his financial choices have clearly not prioritised the children’s current needs, albeit some were made on less than satisfactory advice. The tribunal also notes the choice of Mr Lane to lock away all of his excess monies held in his offset account when he was well aware of his financial difficulties. In the meantime, Ms Carter-Lane has been forced to draw on her emergency funds in her offset account to meet, in-part, the weekly costs of her and the children.
The tribunal observes that Mr Lane has since repaid family loans and retained an additional amount for his own expenses through sale of a portion of his managed funds. This resulted in the overall value of his shares and managed funds prior to the transfer to [Super Fund 3] reducing to approximately $73,000. The tribunal notes again the legal duty placed on Mr Lane to prioritise the needs of [Child 1] and [Child 2] over all other costs aside from his own “necessary” costs of self-support (Dwyer v McGuire (1993) FLC 92-420). This means that child support is to be prioritised over repayment of loans to family and provision for his own future benefits.
The tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). While the tribunal has already found that Mr Lane continued to have access to an adjusted taxable income in excess of $113,000 from 8 January 2018, Ms Carter-Lane did not lodge a departure application until 25 June 2018, despite initial notification by the Department in January 2018 of the annual rate of child support decreasing to $2,780 and on 23 April 2018, reducing further to $0. The tribunal does not consider it just and equitable that Mr Lane should be in a state of increased arrears in the vicinity of an additional $10,000 as a result of backdating a departure decision to 8 January 2018, particularly given his current circumstances and his right to rely on the child support assessment applied to him unless otherwise put on notice that it may change.
The tribunal is also cognisant of providing some degree of certainty for the parties moving forward. However, the future employment status of Mr Lane is far from predictable. As discussed at hearing, whether the tribunal shortens the end period of this decision or lengthens it, the likelihood of the necessity for a change of assessment application in the future is highly probable. Therefore, the tribunal proposes to end the departure decision at 31 March 2020, in the hope that Mr Lane’s circumstances are more stable by this time.
The tribunal proposes to vary the annual rate of child support payable by Mr Lane to Ms Carter-Lane in respect of [Child 1] and [Child 2] to $21,547 in respect of the period 25 June 2018 to 17 July 2018. In respect of the period 18 July 2018 to 31 March 2020, the tribunal proposes to vary the annual rate of child support payable by Mr Lane to Ms Carter-Lane in respect of [Child 1] and [Child 2] to $3,000.

As detailed in the report, “In the Best Interests of Children Report of the Ministerial Taskforce on Child Support — Reforming the Child Support Scheme”, where a parent is in genuine need, they are entitled to government support. The purpose of the social security legislation is also based on Parliament’s intention that payments are made on the basis of need. To date, Centrelink’s assessment has clearly been that Mr Lane does not have a need, on the basis of the availability of his liquid assets to assist in meeting his own expenses and those to which he has a duty to maintain, being [Child 1] and [Child 2]. In addition, as already discussed, Mr Lane has had the capacity to meet discretionary expenses of almost three times the amount of the proposed annual rate from 18 July 2018. The tribunal acknowledges that he has borrowed from family. However, as discussed above, given his financial assets the tribunal does not consider this to have been necessary.
The proposed decision results in an ongoing child support liability of approximately $57 per week. At hearing both parties agreed that Mr Lane’s outstanding child support arrears were currently around $8,000 to $9,000. The proposed decision will result in a decrease in the arrears at 31 May 2019 by more than $5,000 to approximately $3,800.
Subsection 117(4) of the Act requires the tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.
Mr Lane told the tribunal that while he does not have detailed knowledge of Ms Carter-Lane’s finances, he is certain that she receives assistance from her parents and as such neither she nor the children would be experiencing financial hardship as a result of a nil child support assessment. In contrast, if the child support were to increase, Mr Lane stated that he would definitely experience hardship as he is already unable to make ends meet.
Ms Carter-Lane reiterated her need over more recent times to dip into the offset account in order to meet the needs of her, [Child 1] and [Child 2], leaving her financially vulnerable. She maintains that Mr Lane has simply moved his assets around in order to avoid his child support obligations and does not accept that his lifestyle reflects hardship.
As discussed at hearing, access to funds from family cannot be relied on as a financial resource, nor do Ms Carter-Lane’s parents have a legal obligation to support the children. The tribunal does not consider that Mr Lane is living a lavish lifestyle and accepts his oral evidence that his interstate trips to [State 1] have been to care for his elderly mother when needed. He has however, accepted financial advice which in the tribunal’s view has not been in the best interest of the children.
The tribunal is satisfied that it is open to Mr Lane to arrange his financial circumstances in such a way that he is able to meet his child support obligations without experiencing hardship. Clearly he has no equity in his investment property and may even have additional costs to meet at sale. However, had Mr Lane not made the personal contributions to superannuation of $70,000, there is no question that he would have had sufficient funds to meet his own costs of self-support and contributed to those of [Child 1] and [Child 2] beyond the proposed period of this decision. The tribunal observes that he holds almost $3,000 in [Company 1] shares, has an accessible unrestricted non-preserved component in his [Super Fund 1] of over $4,000 and notes Mr Lane’s own submission that he would pay $3,000 to address the overdue school fees. As such, the tribunal is satisfied that Mr Lane will not incur hardship in meeting the arrears and ongoing child support payments as a result of this decision.

Issue 3 – 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 Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination.
In this case Ms Carter-Lane is in receipt of family tax benefit Part A and Part B. As a sole parent, a change in the child support payable by Mr Lane will have no impact on her entitlement to family tax benefit Part B. In respect of family tax benefit Part A, given that Ms Carter-Lane’s income is well below the threshold at which family tax benefit is reduced from the maximum rate, an increase in the child support payable by Mr Lane will have no impact on the rate of family tax benefit Part A payable to Ms Carter-Lane. Therefore, the tribunal considers that it is otherwise proper to make the particular proposed determination.
It is open to either party to lodge a further change of assessment application should the 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 that:

· The annual rate of child support payable by Mr Lane is to be varied to $21,547 from 25 June 2018 to 17 July 2018; and
· The annual rate of child support payable by Mr Lane is to be varied to $3,000 from 18 July 2018 to 31 March 2020.