Lukis and Lukis (Child support)

[2021] AATA 4794

Lukis and Lukis (Child support) [2021] AATA 4794 (28 October 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2021/BC021599 & 2021/BC021706

APPLICANTS:  Mr Lukis & Ms Lukis

OTHER PARTIES:  Child Support Registrar

Ms Lukis & Mr Lukis

TRIBUNAL:  Member P Jensen

DECISION DATE:  28 October 2021

DECISION:

The decision under review is set aside and, in substitution:

• Mr Lukis’ adjusted taxable income is varied to $178,695 per annum from 10 September 2020 to 12 February 2021;

• Mr Lukis’ adjusted taxable income is varied to $100,000 per annum from 13 February 2021 to 31 December 2022; and

• Ms Lukis’ adjusted taxable income is varied to $76,000 per annum from 10 September 2020 to 31 December 2022.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – income of the child – decision to depart – 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 omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

Introduction

1. Mr Lukis and Ms Lukis are the parents of [Child 1] who was born in 2003, [Child 2] who was born in 2005 and [Child 3] who was born in 2008. A child support case was registered on 10 September 2020 with what is commonly called the Child Support Agency or CSA. Ms Lukis has been recorded as providing 100% care for the children since the case was registered. [Child 1] ceased to be a child of the case when he turned 18 [in] June 2021.

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the children. From 10 September 2020 the administrative assessment was based on Mr Lukis’ 2019-20 adjusted taxable income of $138,971 and Ms Lukis’ 2019-20 adjusted taxable income of $61,193, and Mr Lukis was required to pay $31,788 per annum in child support.

3. The Act also provides for a departure from the administrative assessment in certain circumstances. Ms Lukis lodged a departure application on 13 December 2020. An original decision-maker made a departure decision. Mr Lukis objected to that decision. An objections officer allowed his objection and made the following departure decision:

   ·      Mr Lukis’ adjusted taxable income is varied to $174,560 per annum from 10 September 2020 to 12 February 2021;

   ·      Mr Lukis’ adjusted taxable income is varied to $100,500 per annum from 13 February 2021 to 9 September 2022;

   ·      Ms Lukis’ adjusted taxable income is varied to $75,000 per annum from 10 September 2020 to 9 September 2022; and

   ·      Mr Lukis’ rate of child support payable is increased by $3,828 per annum from 10 September 2020 to 31 December 2021.

4. Both parents applied to the Tribunal for further review. I conducted a directions hearing on 7 September 2021 and a full hearing on 28 October 2021. Mr Lukis and Ms Lukis gave sworn evidence by conference phone.

5. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

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

   (ii)... 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; …

Potential grounds for departure

Reason 2 - [Child 1’s] orthodontic braces

1. Subparagraph 117(2)(b)(ia) of the Act, commonly referred to as Reason 2, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …   

   (ia)because of special needs of the child …

2. Ms Lukis submitted that Reason 2 was established in respect of [Child 1’s] orthodontic treatment. There is no dispute that he required braces. Ms Lukis did not provide evidence of the total cost of the braces. Mr Lukis provided calculations concerning the total cost and the payments each parent had made towards those costs.[1] At the directions hearing, Ms Lukis stated she could not confirm the accuracy of Mr Lukis’ calculations. The matter was left on the basis that if she disputed Mr Lukis’ calculations she could provide documentary evidence in support of her account of events. She did not provide any such evidence. I accept the accuracy of Mr Lukis’ calculations. [Child 1’s] braces cost $6,430, and $914 was paid prior to the parents’ separation. Each parent subsequently paid half of the outstanding balance. However, Mr Lukis paid his half prior to the child support case being registered and Ms Lukis paid the majority of her half after the child support case had been registered. Ms Lukis invited me to focus on the payments that had been made after the child support case had been registered, and to increase Mr Lukis’ rate of child support payable accordingly. In my opinion, the better approach is to note that each parent paid half of the total cost of [Child 1’s] braces, and those circumstances do not constitute special circumstances. Reason 2 is not established in respect of [Child 1’s] orthodontic costs.

   [1]Page 393 of the hearing papers.

Reason 2 - [Child 2’s] orthodontic braces

1. Similar evidence and submissions were provided in respect of [Child 2’s] orthodontic treatment. The post-separation debt in respect of the braces was $4,324.[2] Mr Lukis paid slightly more than half of that debt and he paid it prior to the child support case being registered. The majority of Ms Lukis’ payments were made after the child support case had been registered. Again, those circumstances do not constitute special circumstances. Reason 2 is not established in respect of [Child 2’s] orthodontic costs.

   [2]Page 394 of the hearing papers.

Reason 2 - [Child 2’s] [Sport 1]

1. Ms Lukis submitted that [Child 2] is [particularly] talented [at Sport 1]. As the Child Support Guide notes at 2.6.8, “Gifted sports people could be considered to have special needs.” In December 2020, Ms Lukis estimated that [Child 2’s] participation in [Sport 1] cost approximately $12,000 per annum.[3] She did not provide any primary evidence, such as receipts, in support of that statement. At the directions hearing, I explained the requirements of Reason 2 as they might apply to the costs associated with [Child 2’s] [Sport 1]. I informed Ms Lukis that I would not direct her to provide evidence in support of her claim, but if she maintained that claim, she should provide evidence of the costs she incurred during the sample period from 1 January 2021 to 30 June 2021. She said she would provide that evidence, but if it exists, she did not provide it. She did provide an unsigned statement from [Coach A] dated 20 September 2021. He stated that he coached [Child 2], but he did not state the frequency or duration of the coaching sessions. He stated, “[Ms Lukis] pays me weekly direct to my account”, but he did not state how much she pays him. Ms Lukis referred me to statements for her bank account with an account number ending #8966 for the period from 26 May 2020 to 23 November 2020.[4] She made a payment of $80 to [Coach A] on 9 June 2020. She made a payment of $400 on 17 August 2020. She made weekly payments of $40 from 24 August 2020 to 23 November 2020. Even if I were to conclude that Ms Lukis had paid $40 per week to [Child 2’s] [Sport 1] coach since the child support case commenced (notwithstanding the paucity of evidence on that issue), I would not conclude that the payment of such costs significantly affected the costs of maintaining [Child 2]. It is not unusual for a child to participate in a sport and for the associated costs to total approximately $2,000 per annum. At the hearing, Ms Lukis said she had incurred other costs, but she did not provide any primary evidence, such as receipts, in support of that statement. Reason 2 is not established in respect of [Child 2’s] [Sport 1].

   [3]Page 66 of the hearing papers.

   [4]Pages 77 to 93 of the hearing papers.

Reason 2 - [Child 3’s] [Sport 2]

1. Ms Lukis submitted that [Child 3] is a particularly talented [Sport 2] player. She submitted that the associated costs were approximately $4,000 per annum. The matter was left on the basis that she could provide evidence of the costs she incurred during the sample period from 1 January 2021 to 30 June 2021. No such evidence was provided. Reason 2 is not established in respect of [Child 3’s] [Sport 2].

Reason 3 - [Child 2’s] schooling

1. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …   

   (ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents …

2. [Child 2] attended [College 1] in 2020. There is no dispute that she was being educated in the manner that was expected by the parents. There is no dispute that the tuition fees were $11,540 per annum, of which $2,885 was referrable to Term 4 of 2020 (and the child support case started around the start of Term 4). Those costs significantly affected the costs of maintaining [Child 2]. Ms Lukis paid the fees. Reason 3 is established in respect of those costs. Mr Lukis agreed that it would be appropriate to require him to pay half of those fees, i.e. $1,443.  

3. Ms Lukis unilaterally decided to home-school [Child 2] in 2021 via enrolment in [a named] College. Mr Lukis said he had always expected [Child 2] to receive her formal education by physically attending a school; he had never expected her to be home‑schooled. Ms Lukis did not dispute that evidence and I accept it as correct. [Child 2] is not being educated in the manner that was expected by Mr Lukis. Reason 3 is not established in respect of [Child 2’s] home schooling.

Reason 3 - [Child 3’s] schooling

1. [Child 3] attended [School 2] in 2020. There is no dispute that he was being educated in the manner that was expected by the parents. There is no dispute that the tuition fees were $1,772 per annum, of which $443 was referrable to Term 4 of 2020. I am not persuaded that those costs significantly affected the costs of maintaining [Child 3]. Reason 3 is not established in respect of those costs. Nevertheless, Mr Lukis agreed that it would be appropriate to require him to pay half of those fees, i.e. $222.  

2. [Child 3] has been attending [School 3] in 2021. Reason 3 is not established in respect of that schooling. Ms Lukis said the school has decided to expel him, with effect from 1 November 2021, which is when his current suspension expires. No decision has been made concerning the school he will attend for the remainder of 2021, or for 2022.

Reason 4 - [Child 1’s] income

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

   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. Departmental policy concerning what might constitute a significant income for a child is contained in Chapter 2.6.10 of the Child Support Guide.

   If a parent applies for a change of assessment because their child receives more than a minimal income, the Registrar will consider whether that income is significant to warrant a change to an assessment. This will depend upon the income of the child, the financial circumstances of the parents, the amount of child support payable under the assessment and the circumstances of the case. However, 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 rate of youth allowance... payable to a child under 18 years of age living at home plus the income free threshold applicable to students / Australian Apprentices ... This means, for example, that as at 1 January 2021, a child would generally need to earn or receive a gross income of at least $345.10 per week for the earnings to be considered so significant as to be capable of affecting the assessment.

3. The Tribunal is not bound by Departmental policy but will apply it unless there is a reason to do otherwise.

4. [Child 1] completed his schooling in 2020. He attended a state school. He started working for Mr Lukis on or around 5 December 2020. Mr Lukis provided [Child 1’s] payroll records to 10 April 2021.[5] At the directions hearing, Mr Lukis said he could provide [Child 1’s] payroll records for 2020-21. I directed him to provide those records and [Child 1’s] 2020-21 payment summary. Mr Lukis provided neither, but he did provide a different document which states that [Child 1] was paid $14,267 during 2020-21. At the full hearing, Mr Lukis said he had asked his accountant to provide the documentation that I had directed him, i.e. Mr Lukis, to provide, and the accountant had provided documentation directly to the Tribunal Registry. I accept that the omission occurred for the reasons that Mr Lukis stated, but it is still an unsatisfactory state of affairs. Mr Lukis had a legal obligation to provide certain documentation. He should have ensured that he complied with that obligation. However, the evidence suggests that [Child 1] earned $14,267 during the 208 days from 5 December 2020 to 30 June 2021, which is an average of $480.14 per week. As noted earlier, [Child 1] ceased to be a child of the child support case [in] June 2021.

   [5]Page 426 of the hearing papers.

5. Ms Lukis disputed the evidence that Mr Lukis provided concerning [Child 1’s] earnings. She said she checked [Child 1’s] bank account statements and she calculated his net earnings to 30 June 2021 to be $13,429. It is not apparent that there is an inconsistency between the evidence of [Child 1] earning $14,267 gross and the evidence of him earning $13,429 net. I accept Mr Lukis’ evidence concerning [Child 1’s] gross earnings. I am satisfied that [Child 1] was earning a significant income, and Ms Lukis’ costs of supporting [Child 1] were consequently reduced, and those circumstances constitute special circumstances that made the administratively assessed rate of child support payable unjust and inequitable. Reason 4 is established.

Reason 8 - Mr Lukis’ income, financial resources and earning capacity

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

   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; or

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

2. The Tribunal can only find that a parent’s earning capacity is greater than their actual income if the requirements of subsection 117(7B) are satisfied. That subsection states:

   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.

3. It is convenient to deal with Mr Lukis’ earning capacity first. He is [an occupation 1]. For many years he worked as a contractor for the trustee for [Family Trust 1]. The trustee’s name does not appear in the hearing papers but it trades under the name [Business 1].

4. On 12 January 2021 the CSA made its first contact with Mr Lukis concerning Ms Lukis’ departure application. On 3 February 2021 the CSA asked Mr Lukis to provide financial statements in respect of a company and a trust that he controls. On 9 February 2021, Mr Lukis sent an email to [Business 1] in which he stated that he needed to take some “time off” to “sort a lot of issues”. On 12 February 2021, [Business 1] sent a letter to Mr Lukis stating:[6]

   The current [project] we are doing at [Town 1] is a very large and complex job that requires your full attention.

   I note that at this time you have other issues affecting your work and health. I have spoken to [two named colleagues] and we all agree that you should take time off to get your life back on track.

   Your health is very important and we hope you take the time off to recuperate.

   [Another person] will be taking over [a specified role] at [Town 1]. We wish you nothing but the best and hope one day you will work again with our Company.

   [6]Page 414 of the hearing papers.

5. On 25 February 2021, Mr Lukis contacted the CSA and it noted:[7]

   Estimate is $0 income. Discussion as to how the customer is supporting themselves: [Mr Lukis] advises he is living off his savings. [Mr Lukis] advises he quit his job 9/2/2021 to start his own business and has had 2 weeks off and not earnt any money.

   [7]Page 294 of the hearing papers.

6. At the hearing, Mr Lukis acknowledged that paragraph 117(7B)(a)(iii) was satisfied. He stated that his decision to stop working for [Business 1] was based on the state of his health, but he acknowledged that he had not consulted a doctor at the time and there was no supporting medical evidence. He stated that his decision was not for a major purpose of affecting the rate of child support payable.

7. According to Ms Lukis, the parents separated in November 2019.[8] In July 2020, [Business 2] (“the Company”) was registered. Mr Lukis is the sole director and shareholder of the Company. It started a business, [Business 3], as [new business line]. The Company is the trustee of [Family Trust 2]. Mr Lukis is the sole beneficiary of the trust. Mr Lukis agreed that, for practical purposes, he is the sole owner of the business.

   [8]Page 75 of the hearing papers.

8. Mr Lukis said that from July 2020 to February 2021, he continued to work full-time for [Business 1]. He said he also worked in the [Business 3] business in the early mornings and in the evenings, before and after his work with [Business 1], and he arranged for contractors to work in the [Business 3] business during the day. He stated, in effect, that it was an unsustainable workload, and he was also attending to various personal issues. It was in that context that he reached the point where he was unable to properly perform his work for [Business 1], and he had concerns that his mistakes might injure others or cause significant financial loss, hence his request to take some leave which resulted in [Business 1’s] decision to cease using his services indefinitely.

1. It is worth noting that the Company was generating significant sales prior to Mr Lukis asking for leave from [Business 1]. The Company’s sales for the first two quarters of 2020-21 were $83,315 and $127,400, and it transpired that its sales for the last two quarters were $92,237 and $84,027.[9] Notwithstanding the fact that Mr Lukis provided an estimate of income of $0 on 25 February 2021, there was reason to believe that the Company would be profitable. On 14 April 2021, Mr Lukis informed that CSA that he would be taking drawings of $1,500 to $1,800 per week.[10] On 29 April 2021 the objections officer spoke to [the Business 1 owner] and noted:[11]

   I asked [the owner] to explain the context behind the letter sent to Mr Lukis on 12 February 2021 stated that he, [and the two named colleagues] agree that Mr Lukis should take time off work.

   [The owner] explained:

   - It was evident Mr Lukis was under immense stress relating to family and other matters.

   - The stress Mr Lukis was under manifested itself in mistakes he made on a large job being undertaken in [Town 1].

   -The mistakes also created an OH and S risk for those working with him.

   -After receiving a letter from Mr Lukis asking for some time off, the Directors of the [Business 1 Group] decided that it would be best if  Mr Lukis stopped working for the until [sic] he got his life back on track.

   -This meant that the Directors did not want Mr Lukis to work for the [Business 1 Group] until family matters had been dealt with and he was able to do his job without distractions.

   -Mr Lukis is welcome to apply to work for the [Business 1 Group] once family matters and other distractions are out of the way.

   [9]Pages A216, A218, A220 and A222 of the hearing papers. The figures include GST.

   [10]Page 423 of the hearing papers.

   [11]Page 521 of the hearing papers.

2. The objections officer concluded:[12]

   Having spoken with [the Business 1 owner] and examined the letter from the [Business 1 Group], I am satisfied it was the employer’s decision, not Mr Lukis’, for him to stop working for that organisation. As it was [Business 1 Group’s] decision to essentially stand Mr Lukis down, I am satisfied Mr Lukis has demonstrated that affecting the child support assessment was not a major purpose behind the change in his occupation, industry and working pattern.

   [12]Page 24 of the hearing papers.

3. Having considered that documentation and the other documentation in the hearing papers, including Mr Lukis’ details submissions on pages 393 to 405 of the hearing papers, and having heard from Mr Lukis, I am also satisfied that he did not change his occupation, industry or working pattern for a major purpose of affecting the rate of child support payable. Subsection 117(7B) is not satisfied and I cannot have regard to Mr Lukis’ earning capacity.

4. Mr Lukis provided the CSA with the Company’s profit and loss statement for the period from 10 September 2020 (when the child support case was registered) to 12 February 2021 (when he received the letter from [Business 1]).[13] During those 156 days, the Company’s revenue primarily came from [Business 1] and [Business 3], and it made a profit of $76,374, which equates to $76,374 / 156 x 365 = $178,695 per annum.

   [13]Page 643 of the hearing papers.

5. During the directions hearing I suggested, and Mr Lukis confirmed, that on his account of events, there were two distinct periods to be considered: the period from 10 September 2020 to 9 February 2021, when Mr Lukis ceased working for [Business 1 Group], and the period from 10 February 2021 onwards when his income was generated via [Business 3]. I explained that it would be useful to have profit and loss statements for both periods. I was reluctant to direct Mr Lukis to provide a profit and loss statement for the period from 10 September 2020 to 9 February 2021 — he had already provided a profit and loss statement for the period from 10 September 2020 to 12 February 2021, and nothing would turn on the difference of three days unless he received a significant termination payment during those three days — but Mr Lukis indicated that he was agreeable to providing that documentation and I subsequently issued written directions for him to do so. He did not provide those profit and loss statements. At the hearing he said he asked his accountant to provide the documentation and he apologised if that did not occur.

6. As noted earlier, Mr Lukis informed the CSA in April 2021 that he would be taking drawings of $1,500 to $1,800 per week, which would equate to approximately $78,000 net to $93,600 net per annum. In June 2021 he completed a Statement of Financial Circumstances in which he stated that he received an income of between $1,000 and $1,500 per week. He provided a profit and loss statement for 2020-21. According to that document, the Company made a profit of $77,747 during 2020-21.[14] It will be recalled that the company made a profit of $76,374 during a 156-day period during that financial year. I am not persuaded that it made a profit of only $1,373 during the other 209 days.

   [14]Page A227 of the hearing papers.

7. Mr Lukis provided statements from the bank accounts to which he was a signatory. Two of the accounts were the Company’s accounts. Three of the accounts were his personal accounts. There were also other accounts. It quickly became apparent, and Mr Lukis acknowledged, that business transactions and personal transactions were mingled. Mr Lukis explained that he identified the business transactions in QuickBooks, which is an accounting software package. He did not provide documentation from QuickBooks to the Tribunal.

8. I turned to Mr Lukis’ Statement of Financial Circumstances with a view to comparing his stated personal income with his stated personal expenditure. Some of the estimates of his personal expenditure appeared to be particularly low. For example, he estimated that he spent $100 per week on food. I suggested that he might spend more. Mr Lukis maintained that $100 per week was a fair estimate. Later during the hearing, when considering withdrawals from the Company’s bank accounts, I noted a withdrawal of $53.90 on 26 July 2021 for “[a food outlet]” and a withdrawal of $77.63 on 28 July 2020 for “[another food outlet]”. Mr Lukis said on both occasions he had bought dinner. During that three-day period there were also withdrawals from the same Company account of $7.60 for “[a food outlet]” and $8.95 for “[another food outlet]”. Such transactions would not normally be noteworthy, but they were noteworthy in the context of Mr Lukis’ sworn evidence that his food expenses were approximately $100 per week. When faced with evidence that cast doubt on that estimate, he revised his estimate to $200 per week. I am not persuaded that that is a reliable estimate either. I am persuaded that Mr Lukis’ original estimate was an obvious under-estimate, but when questioned about that estimate, he initially maintained that it was a fair estimate; he did not take the opportunity to make an appropriate concession.

9. Ms Lukis noted a withdrawal of $34.99 on 1 June 2021 from a Company bank account.[15] Mr Lukis said the transaction probably related to the purchase of cigarettes. He said he spends approximately $100 per week on cigarettes. He omitted to include cigarette expenses in his list of weekly expenses in his Statement of Financial Circumstances.

   [15]Page A186 of the hearing papers.

10. I noted that the Company paid $199 to “[a sports venue]” on 31 May 2021.[16] Mr Lukis said it was a gift to his mother. He said the gift had been claimed as a tax‑deductible donation to the Company’s financier. That statement raised a number of concerns, but I focused on the fact that the Company’s 2020-21 balance sheet did not identify a debt to Mr Lukis’ mother.[17] There is a sizable debt to [Family Trust 2]. Mr Lukis confirmed that his mother was not involved in that trust. He stated, in effect, that even if she was not technically or legally a financier of the Company, she had lent him money to start [Business 3], hence his claim that the Company’s gift of $199 to his mother was tax‑deductible.

    [16]Page A186 of the hearing papers.

    [17]Pages A228 and A229 of the hearing papers.

11. I tried a different approach. I referred to one of Mr Lukis’ personal bank accounts with an account number ending #0897. During the period from 3 May 2021 to 2 July 2021 the withdrawals totalled $10,825.[18] I asked Mr Lukis to add up the total of the withdrawals that were for personal expenses. He took some time doing so, and I did not check which transactions he included, but he said the total was $9,138. That sample of withdrawals from one account over that two-month period suggests that, at least since he stopped his full-time work with [Business 1], his personal expenditure has been not less than $54,828 net. Further, he is a signatory to a number of bank accounts, including Company accounts that have been used to pay his personal expenses. Further, he claimed in his Statement of Financial Circumstances that he does incur any motor vehicle expenses or telephone expenses; the Company pays those expenses, at least initially. The child support administrative assessment formula is based on the parents’ adjusted taxable incomes, which reflect gross incomes and not net incomes, and so if it were possible to calculate Mr Lukis’ net personal expenditure, which would constitute at least a portion of his income and financial resources for child support purposes, it would be necessary to gross-up that figure when calculating his adjusted taxable income.

    [18]Page A86 to A91 of the hearing papers.

12. Mr Lukis was directed to provide documentation which might have allowed me to calculate his adjusted taxable income for child support purposes with some precision. He failed to fully comply with those directions. When questioned about his expenses, he did not always provide reliable evidence. Nevertheless, I am still required to make a finding of fact. I accept that he is earning less than the $178,695 per annum that he was earning while working for [Business 1] and running [Business 3] via the Company. I find that the income and financial resources that he has been receiving since 13 February 2021 via his full‑time involvement in the Company are considerably more than the $54,828 per annum net that was calculated from a two-month sample from just one of the bank accounts to which he is a signatory. He acknowledged that other personal expenditure was paid from other bank accounts. Doing the best I can in the circumstances, I find that his income and financial resources from 13 February 2021 can be fairly reflected for child support purposes in an adjusted taxable income of $100,000 per annum.

13. When the child support case was registered, the administrative assessment was based on Mr Lukis’ 2019-20 adjusted taxable income of $138,971. From 25 February 2021, it was based on his estimate of income of $0. In the absence of a departure decision, that estimate would be reconciled against his 2020-21 adjusted taxable income as assessed by the Australian Taxation Office in due course. That adjusted taxable income will probably understate his income and financial resources for child support purposes. His actual income and financial resources have been more than the figures used in the administrative assessment. The circumstances as a whole constitute special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. Reason 8 is established in respect of Mr Lukis’ income and financial resources.

Reason 8 - Ms Lukis’ income and financial resources

1. When the child support case was registered, the administrative assessment was based on Ms Lukis’ 2019-20 adjusted taxable income of $61,193. However, there is no dispute that by September 2020, Ms Lukis she was earning $76,273 gross per annum as a consultant for [Agency 1]. Both parents agreed that Ms Lukis would incur modest tax‑deductible expenses. They both agreed, and I agree, that it would be appropriate to vary her adjusted taxable income to $76,000 per annum. Reason 8 is established in respect of Ms Lukis’ income and financial resources.

An unusual number of potential grounds for departure

1. Subparagraph 98C(1)(b)(i) of the Act is satisfied once one ground for departure is established, but in this case an unusually large number of potential grounds for departure were raised, and I considered it preferable to consider each in turn since they needed to be addressed at some point in the proceedings.

Just and equitable

1. 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 needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. The parents are in negotiations concerning the division of their ex-matrimonial assets and liabilities. Mr Lukis lives in rented accommodation. For the reasons stated above, it is appropriate to vary his adjusted taxable income to $178,695 per annum from 10 September 2020 to 12 February 2021, and to $100,000 per annum from 13 February 2021

3. Ms Lukis lives in the ex-matrimonial home and she pays the associated costs including the home loan repayments. It is appropriate to vary her adjusted taxable income to $76,000 per annum.

4. Mr Lukis agreed that it would be appropriate to require him to pay $1,443 + $222 = $1,665 towards the costs of [Child 2’s] and [Child 3’s] private school fees during Term 4 of 2020. However, he also submitted, and I agree, and [Child 1] was earning a significant income from 5 December 2020 until 15 June 2021, when he ceased to be a child of the child support case. There is no prescribed methodology for adjusting the rate of child support payable on account of a child’s income, but one approach is to reduce the costs of that child for the purposes of the administrative assessment: see 2.6.10 of the Child Support Guide. The calculations can become quite complicated, but the following example is sufficient for present purposes. There is an assessment notice for the period from 1 January 201 to 24 February 2021 on pages 373 to 375 of the hearing papers. It was based on Mr Lukis’ adjusted taxable income of $173,496 per annum and Ms Lukis’ adjusted taxable income of $76,274 per annum. I will be varying their adjusted taxable incomes to similar amounts. [Child 1’s] costs were calculated to be $16,752: see page 374 of the hearing papers. Mr Lukis was required to contribute 74.47% of that cost, i.e. $12,475. More generally, he was required to make that contribution in respect of each child, hence the requirement at the time that he pay 3 x $12,475 = $37,425 per annum in child support.

5. [Child 1’s] income varied but he earned approximately $480 per week during the period from 5 December 2020 to 15 June 2021, which was approximately $135 per week, or $7,020 per annum, more than the maximum rate of youth allowance: see paragraph 17 above. Reducing [Child 1’s] costs by $7,020 would reduce Mr Lukis’ administrative assessed rate of child support payable by approximately $7,020 x 0.7447 = $5,227 per annum. Over the 193 days from 5 December 2020 to 15 June 2021, that would equate to a reduction of approximately $2,763.

6. If the calculation of child support were a purely mathematical exercise, it might be appropriate to require Mr Lukis to pay Ms Lukis $1,665 in respect of the Term 4, 2000 school fees, and to reduce Mr Lukis’ rate of child support on account of [Child 1’s] earnings so that he paid Ms Lukis $2,763 less than would otherwise be the case. The net result would be an adjustment of $2,763 - $1,655 = $1,098 in Mr Lukis’ favour. However, the calculation of child support is not a purely mathematical exercise, and given the uncertainty surrounding Mr Lukis’ income and financial circumstances and the fact that the uncertainty stems, in part, from his failure to fully comply with written directions, I consider it preferable to not make any adjustment to the rate of child support payable on account of those matters.

7. My proposed decision is similar to the objections officer’s decision but it does not include an increase in Mr Lukis’ rate of child support payable of $3,828 per annum from 10 September 2020. The most recent information provided by the CSA is that, as at 21 June 2021, Mr Lukis owed child support arrears of $3,222. If the proposed decision places him in credit, it is likely to be a relatively small credit. 

8. I consider it appropriate to make a departure decision with effect until 31 December 2022, by which time financial statements and tax returns for 2021-22 are likely to be available. The proposed decision will be just and equitable. 

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 a child.

2. Ms Lukis receives family tax benefit in respect of the children of the assessment. Changing the child support payable by Mr Lukis will result in a more appropriate apportionment of financial responsibility between the parents and the community. The proposed decision will be otherwise proper.

DECISION

The decision under review is set aside and, in substitution:

• Mr Lukis’ adjusted taxable income is varied to $178,695 per annum from 10 September 2020 to 12 February 2021;

• Mr Lukis’ adjusted taxable income is varied to $100,000 per annum from 13 February 2021 to 31 December 2022; and

• Ms Lukis’ adjusted taxable income is varied to $76,000 per annum from 10 September 2020 to 31 December 2022.