Leatham and Hickey (Child support)

[2020] AATA 4279

Leatham and Hickey (Child support) [2020] AATA 4279 (7 August 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC017272

APPLICANT:  Mr Leatham

OTHER PARTIES:  Child Support Registrar

Ms Hickey

TRIBUNAL:Member F Hewson, Member R Anderson

DECISION DATE:  7 August 2020

DECISION:

The tribunal decided to set aside the decision under review and substitute its decision to depart from the administrative assessment of child support so that:

• For the period from 1 February 2019 to 14 January 2020, the annual rate of child support payable by Mr Leatham is varied to $8,000 per annum; and

• For the period from 15 January 2020 to 31 October 2022, the annual rate of child support payable by Mr Leatham is varied to $10,500 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – benefits derived from business – 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

1. Mr Leatham and Ms Hickey are the parents of [Child 1] aged 13 (the child), in respect of whom there is a child support assessment. This application for review is about whether there should be a change in the assessment of child support.

2. The Child Support Assessment Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable income, the percentages of care of the children and the costs of the children. At the date of lodgement of Ms Hickey’s application for a departure from the administrative assessment (change of assessment), in December 2018, the child support liability was assessed on the basis that Ms Hickey had a percentage of care of the child of 93% and Mr Leatham had a percentage of care of 7%.

3. The Act provides for a departure from the administrative assessment of child support in limited circumstances. The administrative assessments in this case are as follows:

   ·     in the period from 17 July 2018 to 31 January 2019, Mr Leatham was assessed to pay an annual rate of child support of $12,000 per annum, on the basis of an earlier change of assessment decision.

   ·     In the period from 1 February 2019 to 16 October 2019 Mr Leatham was assessed to pay an annual rate of child support of $427 per annum, on the basis of his 2017/18 provisional adjusted taxable income of $20,000 and an adjusted taxable income for 2017/18 for Ms Hickey of $40,172.

4. On 17 December 2018 Ms Hickey lodged an application for a change of assessment on the basis that the assessment was not fair because of the income property and financial resources of Mr Leatham (Reason 8A).

5. On 17 April 2019 a decision maker of Services Australia (formerly the Department of Human Services) – Child Support (the Department) concluded that a ground for departure was established on the basis of Reason 8A, in relation to Mr Leatham’s income property and financial resources, and decided to change the assessment of child support by varying Mr Leatham’s adjusted taxable income in the child support assessment to $18,000 for the period from 1 February 2019 to 31 October 2022.

6. Mr Leatham lodged an objection to the change of assessment decision. On 28 July 2019 an objections officer partly allowed the objection. The objections officer was satisfied that a ground for departure from the administrative assessment was established on the basis of Mr Leatham’s income, property and financial resources, and decided to depart from the administrative assessment so that for the period from 1 February 2019 to 31 October 2022 Mr Leatham’s adjusted taxable income was varied to $126,000 per annum. This reduced the child support arrears owed by Mr Leatham.

7. On 29 August 2019 Mr Leatham lodged an application for review of the change of assessment decision by the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT). Following a directions hearing on 6 February 2020, the application was heard on 28 May 2020. Mr Leatham spoke to the tribunal by conference telephone and gave evidence on affirmation. Ms Hickey also spoke to the tribunal by conference telephone and gave evidence on affirmation. The Child Support Registrar did not attend the hearing. As well as the evidence of Mr Leatham and Ms Hickey at the hearing, the tribunal also had regard to the documents provided by the Department (1-656), Mr Leatham (A1-A103) and Ms Hickey (B1-B52).

ISSUES

1. A liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the administrative assessment of child support under Part 6A of the Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the administrative assessment. The Registrar, and the tribunal standing in place of the Registrar, must be satisfied:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part …

2. The grounds for departure from the administrative assessment of child support are set out in subsection 117(2) of the Act. If satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations in section 98S of the Act. That section permits a range of determinations, including varying the annual rate of child support payable or a parent’s adjusted taxable income.

CONSIDERATION

Does a ground exist to depart from the administrative assessment?

1. 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).

Reason 8A – the income, property and financial resources of each parent

1. 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 either parent because of the available income, property and financial resources available to them. 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’.

2. As Mr Leatham’s working hours since separation have remained at full time and continue to do so, it is not open to the tribunal to consider his earning capacity.

3. Mr Leatham confirmed at hearing his association with some seven different entities, being [Company 1], [Company 2], [Company 3], [Company 4] ([Company 4]), [Company 5], [Company 6] and [Trust 1].  Of these entities, only the financial information in respect of [Company 3] was before the tribunal.  An email to Mr Leatham from his previous accountant, [Ms A] of [Firm 1], dated 28 February 2020, states that as [Trust 1], [Company 5] and [Company 2] are not trading and [Company 1] is in liquidation, no financial statements have been prepared for these entities.  Furthermore, Mr Leatham is yet to lodge an individual income tax return since the 2016/2017 year.

4. [Company 1] was in the business of mortgage broking. The tribunal accepts the ASIC evidence before it that [Company 1] is in external administration.  Evidence indicates that the liquidation process was initiated by the Australian Taxation Office (ATO) and the court appointed a liquidator in April 2019.  At that time Mr Leatham was the sole director and owned one third of the shareholding.  The tribunal is satisfied that in the relevant period [Company 1] is not in the position to provide any type of financial resource to Mr Leatham. While he is yet to receive a formal director’s penalty notice, he is expecting to do so in the future in respect of unpaid PAYG withholding and superannuation of he and his business partner in excess of $10,000.

5. Mr Leatham told the tribunal that [Company 2] was set up initially to undertake property development projects.  While he was the sole director, he held 40% of the shareholding.  However, the project did not eventuate, despite significant outlay in relation to compliance costs.  The tribunal accepts the ASIC evidence before it that [Company 2] was deregistered [in] August 2019.  In response to a question from the tribunal, Mr Leatham stated that a transfer of funds from [Company 2] to [Company 3] paid in the 2018/2019 year of almost $38,000 represented what was left at wind up. As director, it was his decision to provide further cashflow for [Company 3] at the time. No financial documents in respect of [Company 2] are before the tribunal, so it is unclear whether a director’s loan existed such that Mr Leatham may have also had the option of repaying that loan. 

6. In a letter to the Department on 10 May 2019, Mr Leatham stated that [Company 4] was in a growth phase and is yet to turn a profit.  However, of all the entities he expects this one to be the most likely to succeed.  He went on to state that [Company 4] provides him with an income through irregular drawings and the benefit of provision of a [specified] motor vehicle and an iPad.  At hearing, Mr Leatham gave oral evidence that [Company 4] has since been wound up on initiation by the ATO in April 2019 as a result of tax debt in excess of $400,000.  The ASIC records indicate that strike-off action is in progress. 

7. Bank statements provided to the Department by Mr Leatham record drawings from [Company 4] in the period 24 January 2019 to 10 May 2019 of $23,510, annualising to over $80,000.  While the tribunal acknowledges that the drawings may have been irregular, this does not alter the fact that Mr Leatham received monies from [Company 4] within a period of less than four months that equates to over $80,000 per annum. Mr Leatham contended that the drawings were used to repay loans from friends and family and therefore should not be counted as income.  As discussed at hearing, regardless of the use of the funds, they remain a financial resource for the purposes of subparagraph 117(2)(c)(ia) of the Act.  His commitments will be considered later in these Reasons for Decision. 

8. Mr Leatham told the tribunal that the [motor vehicle] finance contract payments had initially been met by [Company 1], later by [Company 4] and he is currently negotiating a payment plan for the remaining $10,000 for which he is personally liable to [Bank 1].  In response to a question from the tribunal, Mr Leatham stated that all operating costs of the [motor vehicle] had also been met by [Company 4] prior to windup. He estimated the business use of the motor vehicle at 90%.  Therefore 10% of the total costs of the [motor vehicle] represent a benefit to Mr Leatham, which the tribunal estimates to be at least $1,000 per annum.

9. Mr Leatham confirmed that he holds 50% of [Company 3]’s shareholding and while a joint director in the past his business partner is currently the sole director.  He further stated that the Royal Commission has negatively impacted the original business plan in the area of financial planning.  Financial statements in respect of [Company 3] were before the tribunal for the 2017/2018 and 2018/2019 years.  It appeared that the bad debt expense in the 2018/2019 year included outstanding loans to [Company 1] and [Company 4] in excess of $400,000.  As discussed at hearing, this is clearly not a physical expense met by [Company 3] in the 2018/2019 year.  As such, the tribunal concludes that after an adjustment for the bad debts, [Company 3] turned a cash profit of around $75,000 in the 2018/2019 year, albeit accumulated losses remain from prior years.  It is evident from the tax return of [Company 3] that wages were paid to associated persons in the amount of $17,438.  As Mr Leatham received wages from [Company 3] in the vicinity of 50% in 2016/2017, as evidenced in his tax return, the tribunal considers it is reasonable to attribute 50% of these wages to Mr Leatham.  This conclusion was not disputed by Mr Leatham. 

10. The balance sheet of [Company 3] records significant debt to the ATO in excess of $200,000.  Mr Leatham told the tribunal that a payment arrangement is currently in place for $10,000 per month, which is being met by [Company 3].  He further stated that as a financial planning business it is just managing to meet the wages of the staff and other commitments.  He further stated that the Trail Book Asset of $145,000 has been taken as security, leaving a significant deficiency in assets.

11. [Company 6] represents a private investment fund offered to clients.  Mr Leatham is a 40% shareholder.  Mr Leatham gave oral evidence that 100% of the asset base was introduced by a Chinese investor.  As noted above, no financial statements were before the tribunal.  Mr Leatham explained that a developer has invested the asset base and the projects are yet to be completed.  The first project was planned to be completed around August 2020, however, given the current climate that timeframe is likely to “blow out”.   The tribunal accepts that to date [Company 6] is not in a position to provide any type of financial resource to Mr Leatham.

12. Mr Leatham told the tribunal that his shareholdings in all of the abovementioned entities are held in [Trust 1].  As all of the entities have accumulated losses, there has been no distributions to [Trust 1].

13. Since the wind-up of [Company 4], Mr Leatham stated that he has done some private ad hoc consulting work whereby the clients pay him directly into his bank account.  While the tribunal does not have the benefit of Mr Leatham’s [Bank 2] bank statements between 11 May 2019 and 10 January 2020, it is evident that Mr Leatham received income from consulting between 11 January 2020 and 2 March 2020 in excess of $5,000, annualising to around $36,000.  [Bank 2] bank statements in respect of the period late January 2019 to late April 2019 also indicate that Mr Leatham was receiving private consulting income at the same time as he was receiving drawings from [Company 4], albeit not at the same level as he was in 2020.  There is no reason to expect that Mr Leatham would not continue with these private consulting arrangements.  Furthermore, he also received consulting income from [Business 1] until 1 February 2020 in the amount of $3,000, likewise annualising to around $36,000.  The bank statements also record payments from [Company 3] in January 2020 and February 2020 of $1,000 and $500 respectively, indicating that wages will continue into the 2019/2020 year.

14. Mr Leatham has since taken up full-time employment with [Business 1], a mortgage broking business, effective 1 February 2020.  Mr Leatham gave oral evidence that he is employed on a retainer of $5,454 per month (net of GST), in addition to receiving 15% of the trail commission.  He estimated his annual income to be $72,0000.  In a normal economic climate he would expect this to increase by around $8,000 per annum on account of commissions.  However, in the current climate it is difficult to predict.  His role at present is largely training other staff. He is hopeful that after COVID-19 he would return to processing finance applications.

15. The tribunal considered the assets and liabilities of Mr Leatham.  He gave oral evidence that he recently accessed $10,000 from his superannuation and used $8,000 of it to pay out the balance of [his credit card].  Accordingly, he has about $2,000 left in his bank account.  He has no other assets.  The remaining credit cards with [Bank 3] and [Bank 4] have outstanding balances of $53,000 and $19,000 respectively.  Following a recent hardship application to [Bank 4], it was agreed that the [personal] Loan of $20,000 would be written off while the remaining loan remains in the amount of around $49,500.  Mr Leatham told the tribunal that the credit card and loan debts are a direct result of monies injected into [Company 1] and for which he is now personally liable.  As noted above, Mr Leatham may yet be liable for ATO debts in respect of [Company 1] and [Company 4].  There is no question that Mr Leatham has a negative asset base.

16. The tribunal accepts the oral evidence of Mr Leatham, that he currently holds a balance in his [superannuation] account of approximately $36,000.  He confirmed that he has made no personal contributions since 2006/2007.

17. Mr Leatham shares a rented residence with his partner, who is employed and in receipt of an annual income of approximately $50,000.  He told the tribunal that they share the costs of the household.  According to his Statement of Financial Circumstances, completed on
    2 October 2019, he estimated his average weekly household expenses to be $659, or $34,268 per annum.  As discussed at hearing, it is evident from his bank statements that his expenses include a reasonable level of discretionary spending, in particular in relation to restaurants and various sports gambling sites.  In addition, he is meeting loan repayments to [Bank 4] of $69 per week ($300 per month), credit card payments to [Bank 3] and [Bank 4] of $325 and $80 per week, income protection/disability insurance premiums of $58 per week and private health insurance premiums in respect of him, his partner and [Child 1] of $120 per week.  Furthermore, his current PAYG withholding tax/Medicare levy on gross annual wages of $72,000 per annum is in the vicinity of $16,400, or $315 per week.  Consequently, the tribunal calculates the estimated current weekly expenses of Mr Leatham at $1,626, annualising to $84,552. 

18. Based on the discussions above in respect of Mr Leatham’s current annual salary, private consulting income and wages from [Company 3] and previous drawings from [Company 4], the tribunal is satisfied that Mr Leatham had and continues to have the ability to meet his “necessary” expenses and commitments of at least $85,000 per annum. In response to a question from the tribunal, Mr Leatham stated that he is generally in good health, other than requiring medication for his blood pressure.

19. The tribunal also considered Ms Hickey’s financial circumstances. The documents provided by the Department show that Ms Hickey’s adjusted taxable income in the 2018/19 year was $57,550. According to her Statement of Financial Circumstances, completed on 11 September 2019, Ms Hickey indicated that she receives gross weekly income of $1,560, comprising employment income of $1,100, gross rent of $360 and family assistance of about $100 a week.  In relation to her employment income, Ms Hickey said she works permanent part-time (12-15 hours a week) as a [Occupation 1] for [Employer 1] and is also employed on a casual basis for [Employer 2]. Her hours with [Employer 2] have increased since she completed her Statement of Financial Circumstances; she currently works about 30 hours per week. Ms Hickey submitted payslips that show her gross income from [Employer 2] for the fortnight ending 13 March 2020 was $2,464 for 52 hours, and her year to date income was $5,216. Ms Hickey said the year to date figure is incorrect and only shows the income earned since a new pay system was introduced. In the fortnight ending 17 April 2020 she earned $831 from [Employer 1], and her year to date income was $22,346. Ms Hickey agreed that the combined hours for both of her jobs is usually more than 40 hours a week. In relation to her rental income, Ms Hickey confirmed that the $360 per week recorded in her Statement of Financial Circumstances is the amount before expenses, which include mortgage repayments. Ms Hickey said the property has not had tenants since January 2020 and is on the market with an asking price of $450,000. She received an insurance payout in relation to damage to the property.

1. Ms Hickey said she estimated that the value of the rental property was $380,000 based on the amount on the rates notice. The balance of the mortgage against the property is about $240,000. She has no other liabilities. Ms Hickey’ other assets include savings of about $12,000, a 2011 [motor vehicle] valued at about $10,000 and superannuation of about $100,000.

2. In her Statement of Financial Circumstances, Ms Hickey reported that her personal expenditure includes health insurance premiums of $35 per week and income tax of $258 per week. It is evident that Ms Hickey’s income tax has risen with the increase in her hours of employment. Ms Hickey reported that her household expenditure amounts to $1,635 per week. At the hearing she said this includes some expenditure for her adult son, who is not currently employed. He is receiving jobseeker payment and contributes to the cost of food for the household. In relation to the amount of $166 per week for children’s activities, Ms Hickey said this was for the child’s [Hobby 1] expenses, including travel and costumes, which she is no longer doing. She had taken up [Hobby 2] instead, which is less expensive, but has stopped temporarily due to COVID-19. Ms Hickey also reported some discretionary expenditure for entertainment ($20/wk) and holidays ($50/wk). Ms Hickey also included an amount of $290 per week for the mortgage payment and $40 per week for the rates for the rental property, both of which are included as an expense against her rental income. Ms Hickey lives in rented accommodation for which she pays $250 per week.

3. It was undisputed that the administrative assessment, whereby Mr Leatham is liable to pay child support at the minimum annual rate of $427 (based on an adjusted taxable income of $20,000 per annum), creates an unfair outcome and the tribunal finds accordingly.  This finding was also supported by Mr Leatham’s suggestion that after making an allowance for his provision of private health insurance at the top level of cover for [Child 1], he considered $9,000 per annum to be a fair amount of child support. 

4. While the period will be discussed later in these reasons for decision, for the reasons outlined above, 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.

Just and equitable

1. The tribunal considered whether it would be just and equitable to make a particular departure determination having regard to the matters in subsection 117(4) of the Act.

2. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the proper needs of the children, the parents’ income, earning capacity, property and financial resources, their commitments and any hardship that would be caused by departing or not departing from the administrative assessment.

Mr Leatham

1. Mr Leatham’s income, property and financial resources are discussed above. The tribunal was satisfied that in December 2018, when Ms Hickey lodged her change of assessment application, Mr Leatham’s income was significantly greater than the provisional ATI of $20,000 used for him in the child support assessment. Mr Leatham, as noted above, did not dispute that this was, and remains, the case.

2. Based on the discussions above in respect of Mr Leatham’s current annual salary, private consulting income and wages from [Company 3] and previous drawings from [Company 4], the tribunal is satisfied that Mr Leatham had and continues to have the ability to meet his “necessary” expenses and commitments of at least $85,000 per annum.

3. Mr Leatham submitted that, making allowance for payments he makes for top hospital cover for the child, which he said amounts to about $160 a month, it would be reasonable for him to pay child support of $750 per month. He said this would reduce his child support arrears and was a liability he could “make work” going forward.

Ms Hickey

1. Ms Hickey’s financial circumstances are set out above. Her adjusted taxable income in 2018/19 was $57,550, which is a significant increase on her income for 2016/17 of $40,172, and is likely to be greater still for the 2019/20 year. Based on the current pattern of her working hours, and not taking into account loadings and other allowances, her gross income from employment is equivalent to an income of at least $60,000 per annum (12 hours at $27.39 and 30 hours at $28.19). The evidence indicates that she has more than $100,000 equity in her investment property, which is currently on the market. She indicated that if it does not sell within about three months, she will rent it out again.

2. Ms Hickey acknowledged the improvement in her financial situation. It is evident, however, that despite that improvement, her personal expenditure and household expenditure exceed her income, even after discretionary expenditure and expenditure related to the investment property are removed. She said it was particularly difficult when she was working less and couldn’t always afford basic needs for herself and the child. The tribunal was satisfied that Ms Hickey requires a reasonable amount of child support from Mr Leatham, taking into account his capacity to make such payments, so that she can meet the child’s needs in a way that reflects the financial circumstances of both parents.

3. In relation to Mr Leatham’s suggestion that child support of $750 a month is reasonable, Ms Hickey said she would leave that to the tribunal to determine. She said she had agreed to an amount of child support with Mr Leatham in the past, but he stopped paying. She indicated that what she needs is a regular payment upon which she can rely. She said that, particularly as her income has increased, it would not cause her hardship if the child support was reduced to something like the amount suggested by Mr Leatham, so long as it was paid regularly.

The child

1. The child in this case is aged 13. There is no evidence that they have any income or financial resources of their own.

2. Ms Hickey said the child is in very good health and does not have any special needs. Ms Hickey indicated that she does not incur any expenses for the child that are out of the ordinary, although the extra-curricular activities – [Hobby 1] and [Hobby 2] – have been a financial drain. Those expenses, however, are not currently being incurred due to the COVID-19 situation and, in any case, Ms Hickey did not assert that they are a special need.

3. As noted above, Mr Leatham said he pays health insurance premiums for top hospital cover, which includes the child. He said the premiums would be about $160 a month less if the child were not also included in the policy.

Conclusion

1. Having regard to the particular circumstances of this case, the tribunal concluded that it is just and equitable to depart from the administrative assessment of child support. In making such a determination the tribunal can, in accordance with section 98S of the Act, vary the rate of child support payable or it can vary any of a number of variables that are used in the administrative formula.

2. It is difficult to determine the extent of Mr Leatham’s income, property and financial resources with precision. Although he is linked to various entities, the evidence, discussed above, indicates that most are not operating. Mr Leatham, in his capacity as director/shareholder has significant tax debts. Nevertheless, he has been able to generate some income and financial resources from his business interests, and that is now supplemented by his salary from his current employment. The administrative assessments which applied at the commencement of these proceedings used Mr Leatham’s provisional adjusted taxable incomes for 2017/18 of $20,000 and Ms Hickey’ adjusted taxable income for 2017/18 of $40,172 resulting in a child support liability for Mr Leatham of $427 per annum, being the minimum annual rate.

3. As discussed above, the tribunal concluded that throughout the period under review Mr Leatham had the capacity to meet commitments of at least $85,000 from a variety of sources. Furthermore, Mr Leatham gave oral evidence that his future employment is reasonably secure. The tribunal acknowledges Mr Leatham’s contribution in providing private health cover for the child under his own policy at an additional cost of $160 per month.  However, Ms Hickey also provides private health cover for the child under her policy.  Given that the child is in good health, provision of private health cover must be seen as a discretionary expense in relation to both parties.  Overall, the tribunal is not persuaded that the child support liability payable by Mr Leatham, which is to provide for the ”necessary” costs of the child, should be reduced on the basis of provision of private health cover.

4. Furthermore, taking into account the discrepancy in incomes of the parties, regardless of the increased financial resources of Ms Hickey from the 2018/2019 year; the negative asset base of Mr Leatham as compared with the favourable asset base of Ms Hickey; and the child turning 13 years of age on 15 January 2020, the tribunal proposed to depart from the administrative assessment of child support so that:

• For the period from 1 February 2019 to14 January 2020, the annual rate of child support payable by Mr Leatham is varied to $8,000 per annum; and

• For the period from 15 January 2020 to 31 October 2022, the annual rate of child support payable by Mr Leatham is varied to $10,500 per annum

1. The tribunal was satisfied that it is appropriate in this case for the departure decision to apply from 1 February 2019, the date on which Ms Hickey lodged her change of assessment application. This will reduce the amount of the child support arrears owed by Mr Leatham, and the period of the departure will give the parties some certainty about the liability in the short to medium term. The tribunal decided not to depart from the administrative assessment beyond October 2022 as the nature of Mr Leatham’s income, including income from his business interests, is uncertain.

2. The tribunal concluded that, having regard to the available evidence, including the evidence of Mr Leatham and Ms Hickey at the hearing, the departure determination will not cause hardship to the parties or to the child, and is just and equitable.  This is particularly so given the level of discretionary spending indicated by both parties and their ability to rearrange their financial circumstances and to prioritise the “necessary” costs of themselves and the child.

Otherwise proper

1. 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 their child.

2. Ms Hickey receives family tax benefit. The income used for Mr Leatham in the administrative assessment resulted in greater outlays of public monies than, in the tribunal’s view, is justified based on Mr Leatham’s income, property and financial resources. The proposed departure determination results, in the tribunal’s view, in an appropriate apportionment of financial responsibility between the parents and the community. Such a result is otherwise proper.

DECISION

The tribunal decided to set aside the decision under review and substitute its decision to depart from the administrative assessment of child support so that:

• For the period from 1 February 2019 to 14 January 2020, the annual rate of child support payable by Mr Leatham is varied to $8,000 per annum; and

• For the period from 15 January 2020 to 31 October 2022, the annual rate of child support payable by Mr Leatham is varied to $10,500 per annum.