Leith and Proctor (Child support)

[2024] AATA 883

Leith and Proctor (Child support) [2024] AATA 883 (19 February 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/SC026602

APPLICANT:  Ms Leith

OTHER PARTIES:  Child Support Registrar

Mr Proctor

TRIBUNAL:Member M King

DECISION DATE:  19 February 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – application for departure determination – income, property and financial resources of the child – income, property, financial resources and earning capacity of the parents – no ground for departure established – decision not to depart - decision under review affirmed

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. Ms Leith and Mr Proctor are the parents of [Child 1], born 2005. Mr Proctor was recorded as having 100% care of [Child 1], and Ms Leith 0% care, up until the child support assessment ended on 3 November 2023. 

2. The administrative assessment for the period 1 March 2022 to 28 September 2022 is based on an adjusted taxable income of $95,367 for Ms Leith (based on her 2020/21 income) and an adjusted taxable income of $98,436 for Mr Proctor (based on his 2020/21 income). Ms Leith is assessed to pay child support at a rate of $12,190 per annum.

3. The administrative assessment for the period 29 September 2022 to 2 March 2023 is based on an adjusted taxable income of $79,935 for Ms Leith (an estimate of income) and an adjusted taxable income of $98,436 for Mr Proctor (based on his 2020/21 income). Ms Leith is assessed to pay child support at a rate of $9,950 per annum.

4. The administrative assessment for the period 3 March 2023 to 30 April 2023 is based on an adjusted taxable income of $51,100 for Ms Leith (an estimate of income) and an adjusted taxable income of $98,436 for Mr Proctor (based on his 2020/21 income). Ms Leith is assessed to pay child support at a rate of $5,032 per annum.

5. The administrative assessment for the period 1 May 2023 to 30 May 2023 is based on an adjusted taxable income of $51,100 for Ms Leith (an estimate of income) and an adjusted taxable income of $99,785 for Mr Proctor (based on his 2021/22 income). Ms Leith is assessed to pay child support at a rate of $4,964 per annum.

6. The administrative assessment for the period 31 May 2023 to 30 June 2023 is based on an adjusted taxable income of $44,112 for Ms Leith (an estimate of income) and an adjusted taxable income of $99,785 for Mr Proctor (based on his 2021/22 income). Ms Leith is assessed to pay child support at a rate of $3,611 per annum.

7. The administrative assessment for the period 1 July 2023 to 31 July 2023 is based on an adjusted taxable income of $98,133 for Ms Leith (a deemed 2021/22 income) and an adjusted taxable income of $99,785 for Mr Proctor (based on his 2021/22 income). Ms Leith is assessed to pay child support at a rate of $12,568 per annum.

8. The administrative assessment for the period 1 August 2023 to 31 August 2023 is based on an adjusted taxable income of $49,000 for Ms Leith (a 2021/22 income as advised by Ms Leith) and an adjusted taxable income of $99,785 for Mr Proctor (based on his 2021/22 income). Ms Leith is assessed to pay child support at a rate of $4,565 per annum.

9. The administrative assessment for the period 1 September 2023 to 3 November 2023 is based on an adjusted taxable income of $49,000 for Ms Leith (a 2022/23 income as advised by Ms Leith) and an adjusted taxable income of $157,030 for Mr Proctor (based on his 2022/23 income). Ms Leith is assessed to pay child support at a rate of $3,734 per annum.

10. On 1 March 2023 Ms Leith applied for a departure from the administrative assessment of child support, under Part 6A of the Child Support (Assessment) Act 1989 (the Act), on the basis of [Child 1]’ income, property and financial resources (Reason 4).  

11. On 17 May 2023, the Child Support Registrar (Child Support) refused Ms Leith’s application to change the child support assessments.

12. Ms Leith objected to that decision and, on 31 July 2023, a Child Support objections officer affirmed the decision.

13. Ms Leith then applied for review by the Tribunal. The Tribunal hearing was conducted on 30 January 2024. Ms Leith and Mr Proctor attended the hearing by conference telephone and gave sworn evidence. The tribunal deferred making a decision to allow time for Ms Leith to provide any further evidence she wished the Tribunal to consider.

14. In addition to Ms Leith’s and Mr Proctor’s oral evidence and submissions at hearing, the Tribunal took into account the relevant documents provided by Child Support to the Tribunal prior to hearing: pages 1 to 390 (the hearing papers), additional evidence provided by Ms Leith (marked A1–A15), additional evidence provided by Mr Proctor (marked B1–B11) and additional evidence obtained by the Tribunal after the hearing (marked C1–C12).

CONSIDERATION

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. A formula is used. It takes into account variables including each parent’s adjusted taxable income, the number of children, and the level of care provided by each parent.

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

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

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

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

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

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

Grounds for departure

Income, earning capacity, property and financial resources of the children

1. Subparagraph 117(2)(c)(i) – commonly referred to as Reason 4 – provides as a ground for departure:

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

   (i) because of the income, earning capacity, property and financial resources of the child …

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

3. The Child Support Guide (the Guide) provides government policy and guidelines to assist in decision making. The Guide at 2.6.10 provides that generally the Registrar will not be satisfied that a child’s income is sufficient to warrant a change to the assessment unless that income is regular and exceeds the equivalent of the maximum basic rate of youth allowance. That amount is currently $426.45 per week.

4. The Tribunal acknowledges that, while it may be guided by policy, it is not bound to follow it: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In the recent case of G v MIBP [2018] FCA 1229, the Federal Court observed that it is clear from earlier authorities that in the absence of any statutory indication to the contrary, any lawful executive policy enacted to guide the exercise of a statutory power is a relevant factor for the Tribunal to take into account in performing its review task. A lawful approach allows the adoption of appropriate policy as a guide but not so as to control the making of the decision, and the Tribunal adopts that approach.

5. Ms Leith told the Tribunal that she wants child support to be stopped from when [Child 1] turned 18 in April 2023.

6. Ms Leith said she knows [Child 1] was working at the [name] ([Company 1] Pty Ltd) at the beginning of last year. When she applied to change the assessment, Mr Proctor made [Child 1] give up the job. She said [Child 1] needs that income as [Child 1] has told her he buys his own food and clothes and Mr Proctor uses the child support payments to buy investment properties.

7. She said [Child 1] was being paid $35 per hour and worked more in the school holidays. She said [Child 1] started working about 18 months ago. She said [Child 1] has more than $20,000 in his bank account and therefore [Child 1] can support himself and child support was not needed after [Child 1] turned 18.

8. Mr Proctor said [Child 1] was attending school until November 2023. He was not working and was concentrating on his Year 12 studies. He has worked part-time in the past including as part of a traineeship which finished in Year 11. He said [Child 1] worked in the first school holiday period of 2023 and not after that.

9. Mr Proctor said that, whilst in Years 10 and 11, [Child 1] would work Friday nights and during school holidays. Mr Proctor said [Child 1] had also worked at a café and at [a workplace] previously and he has been saving that income since he was 14 years old. He does buy clothing if he likes something. He would buy something to eat if he wanted something in particular. Mr Proctor said [Child 1] did not pay him board or rent. He said [Child 1] pays for the fuel in the car that he uses, which was given to him by Mr Proctor.

10. He said it was [Child 1]’ choice to give up work to concentrate on his studies.  

11. The hearing papers contain a copy of several payslips from late 2022 and early 2023. The payslips record that, as at 9 May 2023, [Child 1]’ year-to-date income was $8,583.22. That income was earned from mid-December 2022. That would equate to an income of about $21,606 per annum during that period. Both parents agreed that [Child 1] ceased working from about that time, which was after Ms Leith had lodged her change of assessment application.

12. Searches of the Australian Taxation Office systems confirm that [Child 1] has not lodged any income tax returns.

13. The evidence available to the Tribunal shows that [Child 1] earned income of $8,583.22 between mid-December 2022 and early May 2023. The Tribunal is not satisfied that income of itself makes the assessment unfair given it was only earned for a period of about six months.   

14. The Tribunal accepts that [Child 1] earned income prior to that from working for [Company 1] Pty Ltd, [a workplace] and at a café. However, there is no evidence as to the quantum of the income [Child 1] earned during that time. Given [Child 1] was attending school full-time during those periods, the Tribunal finds it is unlikely that he would have been earning an income which would have made the child support assessments unfair.

15. The fact that [Child 1] may have saved up his earnings for a number of years does not of itself make the child support assessments unfair.  

16. A ground for departure has therefore not been established.

Income, property and financial resources

1. Subparagraph 117(2)(c)(ia) – commonly referred to as Reason 8 – provides as a ground for departure:

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

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

   (ib) because of the earning capacity of either parent…

2. A parent can only be assessed on their capacity to earn if subsection 117(7B) of the Act is satisfied, which relevantly provides:

   (7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a) one or more of the following applies:

   (i) the parent does not work despite ample opportunity to do so;

   (ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii) the parent has changed his or her occupation, industry or working pattern; and

   (b) the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i) the parent’s caring responsibilities; or

   (ii) the parent’s state of health; and

   (c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

   All three paragraphs (a), (b) and (c) must be satisfied before a person can be assessed as having a greater capacity to earn.

Mr Proctor

1. The incomes being used in the assessment for Mr Proctor have been in accordance with the child support formula under Part 5 of the Act. That is, his last adjusted taxable income in relation to each child support period.

2. The assessments use incomes of $98,436 (his 2020/21 income) from 1 March 2022 to 30 April 2023, $99,785 (his 2021/22 income) from 1 May 2023 to 31 August 2023 and $157,030 (his 2022/23 income) from 1 September 2023 to 3 November 2023.

3. Ms Leith submitted that Mr Proctor’s 2022/23 income should be used in the assessment from 1 July 2022, that is, the period during which the income was earned.

4. Mr Proctor advised he changed employment in March or April 2023. He said he took a pay cut in doing so and received a lower hourly rate. He said he was paid out his entitlements when he left his employment.

5. He said he changed employment as he had a new opportunity and he had been doing the same job for six years. He moved to a leadership role which did not eventuate. He wanted to broaden his skill set.

6. Mr Proctor confirmed that he rents out his former family home and another property. He rents the home he lives in. He said the former family home is under contract so he cannot live there.

7. A copy of Mr Proctor’s 2022/23 income tax return is at page C3. It records that Mr Proctor received $113,825 salary and wage income from [Company 1] Pty Ltd; a $12,106 eligible termination payment from [Company 1] Pty Ltd; $27,018 salary and wage income from [Company 2] Pty Ltd; a $1,170 allowance from [Company 1] Pty Ltd; $91 interest income; $6,172 net rental income; and he claimed $3,352 of deductions.

8. Ms Leith submitted that Mr Proctor is paying a financial advisor to manipulate his rental income. There is no evidence before the Tribunal to support such a contention. Mr Proctor reports rental income and expenses in his income tax returns, which results in net rental income which is included in his adjusted taxable income.

9. If an income of $157,030 was used for Mr Proctor from 1 July 2022, Ms Leith’s child support liability would be reduced by about $1,359.32 for the period 1 July 2022 to 30 June 2023.

10. In his Statement of Financial Circumstances form, Mr Proctor listed his current income from [Company 2] Pty Ltd as being $1,710 per week, which equates to about $89,000 per annum. The income recorded from [Company 2] Pty Ltd in his 2022/23 income tax return related to the period from April 2023 when he started employment with that employer. That equates to an income of about $108,000 per annum.

11. The Tribunal is satisfied that Mr Proctor’s income from 1 July 2023 to 3 November 2023 was equivalent to about $111,000 per annum once net rental income, interest income and deductions are considered.

12. Using an income of $111,000 for Mr Proctor in the assessment for that period would increase Ms Leith’s child support liability by about $57.32 for that period.

Ms Leith

1. The most recent income tax return lodged by Ms Leith recorded an income of $95,367 for the 2020/21 year. Ms Leith has advised Child Support that her incomes for the 2021/22 and 2022/23 were each $49,000. Ms Leith has also lodged estimates of income of $79,935 per annum from 29 September 2022, $51,100 per annum from 3 March 2023 and $44,112 per annum from 31 May 2023.

2. Ms Leith told the Tribunal that she ceased employment as she could not keep working and care for her father who has cancer and dementia. She said she received sporadic amounts of workers’ compensation payments through her employer.

3. She said her income has decreased significantly and she is no longer working. She said she is unable to return to work pursuant to doctor’s orders. She said she ceased working about 18 months ago.

4. She said she is dealing with an insurance company and has had a lot of issues. The income from the employer is sporadic. She said she is still seeking treatment for her medical condition.

5. A copy of a payslip for Ms Leith, at page A10, records her as receiving a gross payment of $1,656 on 28 September 2023 as a workers’ compensation payment.

6. After the hearing, Ms Leith provided the Tribunal with a copy of a medical certificate stating she was unfit to work from 9 November 2022 to 9 December 2022. A further medical certificate dated 5 December 2023 states she is unfit to work.

7. At page 275 of Exhibit 1 is a copy of a report from [Dr A] dated 26 April 2023. In that report, [Dr A] states, “[medical conditions deleted]

8. Whilst the Tribunal accepts that there have been relatively short periods of time during which Ms Leith has been unable to work, the only such periods verified with medical evidence are 9 November 2022 to 9 December 2022 and from 5 December 2023, which is after the child support assessment ended. The report from [Dr A] does not suggest that Ms Leith is unable to work.

9. The Tribunal notes that Ms Leith has received some workers’ compensation payments which would suggest that the insurer has accepted that Ms Leith has been unable to work for some periods.

10. Ms Leith said her own health was the reason she has been unable to work. That was based on the recommendation of several specialists she has seen. She said her father has stage 3 cancer and dementia and requires constant care. He cannot drive. Her mother is elderly and in chronic pain. She is caring for her parents and very much focussed on that. She said Mr Proctor has no contact with her parents.

11. She said she is meeting expenses for her parents as they will not accept assistance from anyone other than their immediate family.

12. Mr Proctor said he sees Ms Leith’s parents in the street and he does speak with them. He does not accept that Ms Leith’s need to care for her parents justifies her not working.

13. He said Ms Leith travels to Canberra regularly and spends on average three weeks in every month in Canberra.

14. The Tribunal accepts Ms Leith’s evidence that her father is unwell and she has been caring for him. However, there is no evidence before the Tribunal to support a finding that Ms Leith has been unable to work because of the care she has provided for her father.

1. Even if the Tribunal was satisfied that Ms Leith was unable to work because she has cared for her father, the Tribunal has to consider whether Ms Leith’s decision to care for her father rather than continue to work is justified for child support purposes. That is, in the context of the reduction to Ms Leith’s income resulting in a significantly reduced level of child support she has been assessed to pay, particularly from 3 March 2023.

2. From 3 March 2023 to 3 November 2023 Ms Leith has been assessed to pay child support totalling about $3,600 (just over $500 per month). Prior to that, Ms Leith had been assessed to pay about $830 per month and about $1,000 per month earlier.

3. The Tribunal finds that Mr Proctor’s actual income from 1 July 2022 was higher than the income being used in the assessment. That of itself may not make the assessments unfair as the incomes which have been used for Mr Proctor are those required to be used by the initial child support formula. That is the formula which applies initially for both parents.

4. The Tribunal finds that the incomes being used in the assessment for Ms Leith reduced from 29 September 2022 and then reduced more significantly from March 2023. There is no evidence before the Tribunal to establish that the reduction to Ms Leith’s income was justified either by her state of health or by her need to care for her father.

5. Any amounts Ms Leith has spent in caring for her parents cannot result in a reduction to the child support she is otherwise assessed to pay for [Child 1]. That is because Ms Leith has a legal duty to support [Child 1] whereas she does not have a legal duty to support her parents.

6. Whilst using a higher income in the assessments for Mr Proctor from 1 July 2022 would reduce Ms Leith’s child support liability, the Tribunal finds that does not make the current administrative assessments unjust and inequitable as the rate of child support payable by Ms Leith for [Child 1] has already reduced significantly, especially from March 2023.

7. Similarly, the Tribunal finds that the administrative assessments are not unjust and inequitable because of Ms Leith’s earning capacity as Ms Leith would have difficulty paying any further arrears of child support which such a decision would create.

8. The Tribunal notes the child support assessment ended on 3 November 2023. Ms Leith owes a small amount of arrears.   

9. A ground for departure has therefore not been established.

DECISION

The decision under review is affirmed.