Lyashenko and Siremevan (Child support)

Lyashenko and Siremevan (Child support) [2022] AATA 2377 (16 June 2022)

DIVISION: Social Services & Child Support Division

REVIEW NUMBER: 2021/DC022910

APPLICANT: Mr Lyashenko

OTHER PARTIES: Child Support Registrar

Ms Siremevan

TRIBUNAL: Senior Member M Kennedy

DECISION DATE: 16 June 2022

DIRECTION TO ALTER DECISION OR REASONS FOR DECISION:

Pursuant to section 43AA of the Administrative Appeals Tribunal Act 1975, the following alteration is made to the decision and the written statement of reasons for the decision:

The date on the coversheet of the decision identifying the date of the decision is altered to read: 16 June 2022.

Senior Member M Kennedy 4 July 2022

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/DC022910
APPLICANT:  Mr Lyashenko
OTHER PARTIES:  Child Support Registrar
Ms Siremevan

TRIBUNAL:Senior Member M Kennedy
DECISION DATE: 20 April 2022
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the objection is allowed so as to determine

(a)To discharge the departure determination in effect at 1 July 2020.
(b)From 1 July 2020 to 30 June 2021, to vary the annual rate of child support payable by Mr Lyashenko to $3,900 pa.
(c)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Mr Lyashenko to nil.
(d)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Ms Siremevan to nil.
(e)From 15 March 2022 to 24 April 2022, to vary the annual rate of child support payable by Mr Lyashenko to the minimum annual rate.
(f)From 25 April 2022 to 1 August 2023, to vary Mr Lyashenko’s adjusted taxable income to $74,000pa.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure - costs of special needs significantly affect the cost of maintaining the child – income, property and financial resources of the parents - 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

Mr Lyashenko and Ms Siremevan are the parents of [Child 1], [Child 2] and [Child 3], in respect of whom a child support assessment is in place. [Child 3] ceased to be an eligible child for the assessment on 19 April 2021. [Child 2] has ceased to be an eligible child for the assessment on 14 March 2022.
Mr Lyashenko had apparently lodged a document purporting to be an application for a departure determination on 7 January 2020, but according to Services Australia the form had not been signed. Following an enquiry from Mr Lyashenko, a further application form with the signature dated 7 January 2020 was sent to Services Australia on 6 November 2020.
By then, as a previous departure determination had expired, Mr Lyashenko was assessed to pay nil, based on his 2019/2020 adjusted taxable income of $22,434 and Ms Siremevan’s 2019/2020 adjusted taxable income of $49,468. Immediately prior to that point in time his annual rate of child support was $25,241. This assessment had been arrived at following an earlier departure determination that had varied his adjusted taxable income to $230,307 until 30 September 2020.
There have been a series of earlier departure determinations that had varied Mr Lyashenko’s adjusted taxable income component to much higher rates in previous years.
Notwithstanding that Mr Lyashenko’s liability was nil at the time the ground relied upon by Mr Lyashenko was Reason 8. He asserted that he was unemployed, had health issues, and was then reliant on Centrelink benefits.
Ms Siremevan cross applied on the same ground, essentially asserting that Mr Lyashenko had financial resources beyond his income support from Centrelink. Ms Siremevan also raised the ground known as reason 2 in relation to orthodontic fees for [Child 1].
On 24 March 2021 the primary decision maker found that Reason 8 was established on the basis that Mr Lyashenko had alienated financial resources through the structure of a corporation: [Business 1]. The primary decision make noted that Mr Lyashenko had failed to provide evidence and had not further communicated with Services Australia. The primary decision maker primarily relied on previous decisions about Mr Lyashenko’s financial circumstances to conclude that his adjusted taxable income should be varied to $222,258pa for the period 24 March 2021 to 24 March 2026, and his annual assessment increased by a further $2,600 for the period 24 March 2021 to 24 March 2023.
Mr Lyashenko objected to this decision on 1 April 2021. On 2 July 2021 an objection officer disallowed the objection but adjusted the amount by which Mr Lyashenko’s adjusted taxable income was to be varied to $196,745 for a reduced period of 24 March 2021 to 23 March 2023, with a further increase in the annual rate of $1950 for the same period.
The objection officer noted that Mr Lyashenko had previously acknowledged receipt of a $400,000 lump sum payment into [Business 1], of which $68,000 needed to be repaid. The objections officer considered that 1/5^th of this figure per annum could be treated as an ongoing personal benefit for Mr Lyashenko. Noting that the company’s 2019/2020 taxation return indicated $186,511 in income, the objections officer relied upon benchmarks to conclude that income available to Mr Lyashenko after expenses would be in the order of $106,311. When Mr Lyashenko’s taxable income, the income derived from the lump sum and the income of the company after benchmarked expenses were combined, the amount identified was $196,745pa.
Mr Lyashenko applied to the Tribunal for review on 18 October 2021.
The parties participated in a telephone directions hearing in this matter on 20 April 2022. At the directions hearing Mr Lyashenko’s position was that the only way the Tribunal could obtain financial records and be informed about the activities of [Business 1] would be to issue statutory notices to his mother compelling her to produce documents and attend the hearing to give evidence. The Tribunal took these steps and documents were produced by [Mother A]. The Tribunal also identified further relevant evidence that would be held by the Child Support Registrar and required that material also be produced.
Mr Lyashenko also lodged a large volume of additional documents, but many were irrelevant or at best of minor or peripheral relevance. Also, at the first hearing on 7 June 2022 it was identified that Mr Lyashenko’s financial circumstances had materially changed in light of new employment recently obtained and it was desirable for a full statement of financial circumstances in the Tribunal’s format to be completed.
Arrangements to take evidence from [Mother A] unfortunately failed and the hearing was adjourned. The hearing resumed on 16 June 2022 and [Mother A] gave evidence.
As a result of the procedures identified above, the documentary evidence before the Tribunal consisted of :
·T Documents numbered from 1 to 558 (the subsection 37(1) Statement and Documents);
·‘D’ Documents (being documents produced by [Mother A] pursuant to statutory notice) numbered from D1 to D110;
·A large bundle of ‘A’ documents produced by Mr Lyashenko numbered from A1 to A269, but with the following documents expressly excised from the bundle and not received on the grounds of relevance: A1 to A6, A8 to A20, A61 to A66, A75 to A228;
·‘B’ Documents provided by Ms Siremevan numbered B1 to B15;
·‘C’ Documents provided by the Child Support Registrar pursuant to Tribunal direction numbered C1 to C30.

LEGISLATIVE FRAMEWORK

The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act) and in the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act). The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. This requires the application of a statutory formula which takes into account factors such as the number and age of children, the level of care provided and the taxable income of each parent.
Under section 98B of the Act, if special circumstances exist, a liable parent or a carer entitled to child support may apply to the Child Support Registrar (the Registrar) in writing, requesting a departure from the administrative assessment in relation to a child.
Under section 98C of the Act, before making a departure determination on an application made under section 98B of the Act, the Registrar must be satisfied that in the special circumstances of the case, one or more grounds under subsection 117(2) of the Act exist, and that it would be just, equitable and otherwise proper to make a particular determination.
The issues for me to determine in this case are therefore:
· Whether one or more of the grounds for departure referred to in subsection 117(2) of the Act exists; and, if so
· Whether it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support; and otherwise proper; to make a particular determination to depart from the administrative assessment of child support.

The timing of the application

There is a technical matter pertaining to the timing of Mr Lyashenko’s application for a departure determination that requires consideration and findings. It is relevant to the provision of the legislation under which I proceed and also to my consideration over which periods any departure determination could and should be applied.
The documentary evidence indicates that on 18 September 2020 Mr Lyashenko was in contact with the Department to inform it that he was then unemployed. At that time, the child support liability was $24,801 based on a variation to Mr Lyashenko’s adjusted taxable income to $230,307. At that time also there were three children the subject of the assessment, with [Child 3] and [Child 1] in Ms Siremevan’s 100% care, and [Child 2] in Mr Lyashenko’s 100% care.
I have noted that the contact of 18 September 2020 does not record any reference to an outstanding application for a departure to the child support assessment. The officer at the time has recorded there was a discussion to the effect that a change of assessment application should be lodged right away as Mr Lyashenko’s income had been the subject of an earlier departure determination (and could not therefore be varied any other way). There was a further contact on 19 October 2020 of a similar vein.
On 2 November 2020, the Department has recorded a communication with Mr Lyashenko where it was noted that an application for a departure determination had been sent in January 2020, but it was invalid as it was not signed. I note there are no other records in the Tribunal papers regarding this event.
On 6 November 2020, Mr Lyashenko wrote to the Department enclosing an application for a departure determination, and asserting the paperwork had been first sent in January 2020. The accompanying document has Mr Lyashenko’s signature next to the date of ‘7 January 2020’.
At the hearing, Mr Lyashenko could not recall if he had retrospectively dated the form to 7 January 2020 when he completed it in November 2020.
In all the circumstances as recounted above, I am not satisfied that an application for departure determination was validly made prior to 6 November 2020. This finding has two consequences.
First, the administrative assessment operative at the time of the application for a departure determination was not affected by any earlier departure determination. At the time of application, Mr Lyashenko was assessed to pay nil based on his 2019-2020 adjusted taxable income of $22,434 and Ms Siremevan’s 2019-2020 adjusted taxable income of $49,468.
Second, a statutory limitation at paragraph 98S(3B) of the Act prevents a departure determination applying on a day more than 18 months earlier than the day on which the application under section 98S is made without the leave of a court. This means that I may not make any departure determination apply earlier than 6 May 2019. I note that during the period that may potentially be affected by a departure determination the assessment was affected by earlier departure determinations varying Mr Lyashenko’s income to $225,791 (to 30 November 2019) and $230,307 (to 30 September 2020).

There is a ground to depart from the administrative assessment of child support.

The primary focus of the proceedings has been on Mr Lyashenko’s income, property, financial resources and earning capacity (collectively referred to as ‘Reason 8’), but Ms Siremevan has also raised the ground known as ‘Reason 2’ in respect of [Child 1].
For the following reasons, I consider that the ground known as Reason 2 is established on the evidence. My analysis of the issues and evidence pertaining to the ground known as Reason 8 shall form part of my consideration of the factors going to a just, equitable and otherwise proper departure determination later in these reasons.
As to Reason 2, the ground is established if, in the special circumstances of the case, the costs of maintaining a child are significantly affected because of the special needs of the child. Ms Siremevan points to costs for orthodontic work required by [Child 1] as the basis for this ground being established.
The evidence before the Tribunal includes confirmation of an orthodontic payment agreement to the effect that Ms Siremevan had incurred a liability to pay a total of $7800 in respect of [Child 1’s] orthodontic treatment (T164). As at 4 December 2021, the amount remaining to be paid was $3,670.26 (T480), with Ms Siremevan falling slightly behind the payment schedule. I am satisfied that between 8 October 2020 and 8 August 2022 Ms Siremevan will incur expenses of $7800 for [Child 1’s] orthodontic treatment, which I am satisfied amounts to a special need of the child.
At the time of the application for a departure determination, the annual rate of child support assessed to be paid by Mr Lyashenko was nil. Ms Siremevan’s adjusted taxable income (as a measure of her capacity to meet these special needs) was modest at $49,468. I consider the orthodontic expenses are a substantial imposition on Ms Siremevan’s resources and therefore amount to a special circumstance of the case. I find the ground established.
Mr Lyashenko raises the availability of private health rebates for the treatment which have not been accessed by Ms Siremevan. Ms Siremevan has indicated she is unwilling to make a claim for partial reimbursement of orthodontic expenses because that reimbursement will be paid to Mr Lyashenko where she has incurred the expense. I have insufficient evidence before me to calculate the total out of pocket expenses to be incurred in respect of the orthodontic costs if a claim was to be made for reimbursement through private health insurance.

A just, equitable and otherwise proper departure

As I am satisfied that there is at least one ground to depart from the administrative assessment of child support, the next step is to consider whether it is just, equitable and otherwise proper to depart from the assessment. In deciding whether it is just and equitable, the Tribunal must have regard to the following matters set out in subsection 117(4) of the Act:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)         the proper needs of the child; and
(c)         the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da)       the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;

by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;

by the making of, or the refusal to make, the order; and
(iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

I am to approach this task on the basis that a duty that a parent has to maintain their children has a priority over all other commitments of the parent other than commitments necessary to support other children and themselves: section 3 of the Act.
Neither parent raised any further matters for consideration regarding the income, property and earning capacity of the children.
No further matters were raised by the parties in relation to the proper needs of the children other than the issue mentioned above in the context of establishing Reason 2. Similarly, as to the direct and indirect costs incurred by Ms Siremevan in providing care for the child (or potentially for Mr Lyashenko in providing care to [Child 2] while [Child 2] was a child of the assessment), no matters were raised with me to suggest that the direct or indirect costs of providing care to the children required any further specific analysis. I have examined the statements of financial circumstances in this regard and identified nothing to justify further analysis of this factor.

Mr Lyashenko’s income, property, financial resources and earning capacity

Mr Lyashenko holds a number of tertiary qualifications, but over time has primarily [worked] as [an occupation 1].
A significant development in Mr Lyashenko’s circumstances that does not appear to have been fully appreciated by Services Australia in relation to [Business 1’s] capacity to provide a financial resource to Mr Lyashenko is that [in] August 2021 the [Professional Registration Authority 1] suspended Mr Lyashenko’s registration as [an occupation 1] on disciplinary grounds. T281 is a document prepared by [Mother A] in her capacity as Director of [Business 1] indicating the Mr Lyashenko’s employment with that company was terminated [in] October 2019.
At the time of the hearing, Mr Lyashenko told me that review proceedings had been completed, with his suspension being upheld and made permanent. In his evidence, Mr Lyashenko told me that he has not worked as [an occupation 1] since October 2019. Mr Lyashenko had lodged a copy of his written submissions to the [a review agency] that I had originally excluded from the evidence on the grounds of relevance, but in order to obtain greater precision on the date of suspension, I have received that document for that purpose only (A7).
Income
Mr Lyashenko has been in receipt of social security benefits since 18 November 2019: per the objection officer’s decision at T20.
Mr Lyashenko told me at the hearing that he had very recently commenced employment as [an occupation 2], and this has been corroborated by provision of his employment contract indicating that he is employed on a temporary full-time basis as [an occupation 2] from 25 April 2022 with an annual salary of $74,313pa.
In his evidence, Mr Lyashenko described only brief and intermittent employment since he ceased work as [an occupation 1], for example as [an occupation 3] for a week or two.
Mr Lyashenko’s 2019/2020 taxable income was $22,434pa (T203 and T498) with income sourced from salary at [Business 1] of $12,000 and from income support payments of $10,828 – with nominal deductions.

Given the evidence regarding the substantial change to Mr Lyashenko’s circumstances recounted above concerning the cessation of his ability to [work] as [an occupation 1], I am satisfied that in terms of his direct income from the date of that event, his taxation return for 2019/2020 is essentially an accurate measure of his personal direct income.
Property and financial resources
Turning to consider [Business 1] further as a financial resource for Mr Lyashenko, by way of background, and generally speaking, since 2012 the Department has made a series of departure determinations recognising that Mr Lyashenko had alienated personal services income through a private company, [Business 1]. The company has entered into commercial contracts with [professional businesses] where Mr Lyashenko would work as [an occupation 1] in [their premises] in exchange for a proportion of [service fees] and other remuneration to be paid to [Business 1]. This was confirmed at the hearing by [Mother A], the Director of [Business 1], in the course of her evidence. A contract with [Business 2] in 2017 is the relevant example in this review.
For reasons that follow, I have also formed the view that Mr Lyashenko has historically alienated income, property and financial resources through the structure of the private company [Business 1] and associated trusts. I accept, as Mr Lyashenko observed during the proceedings, such structures are by no means unusual in the context of [professional businesses].
While I have noted that [Mother A] is (and always has been) the sole Director and [official] of the company, and was also the sole shareholder until [March] 2018 when shares were transferred to Mr Lyashenko’s [Relative A, Ms A] , the legal ownership structure for [Business 1] is less relevant for child support purposes than what was ultimately an undisputed fact that all income and wealth ever held within [Business 1] had, as its source, Mr Lyashenko’s personal services as [an occupation 1]. I have also had regard to the fact that [Mother A] is Mr Lyashenko’s mother, and [Ms A] is Mr Lyashenko’s [Relative A], and so the shareholders and office holders of the company are close associates to Mr Lyashenko.
I have noted that the most recent contract with [Business 3] for example was a tripartite contract with Mr Lyashenko and the company, and made express provision for Mr Lyashenko to provide the services required.
I also note a document of unknown provenance (T494) that purports to be a Profit and Loss statement for [Business 1] for the period July 2018 to June 2019. Ms Siremevan said she had provided it to the Department, but could not now recall how she had come to be in possession of it. It is an unusual document to the extent that it lists a series of expenses of [Business 1] between July 2018 to June 2019 that are manifestly not expenses a private company would legitimately meet, but are instead of the nature of personal expenses of Mr Lyashenko. These expenses include such items as the child support liability, household utilities and cash. The period purportedly covered by the document does not align with the financial statements prepared by an accountant and produced by [Mother A] and so I am unable to cross check that document against the more formal financial statements.
Mr Lyashenko was unable to assist me in explaining that document. He denied being aware of the essential approach of the Child Support Agency over the last decade in treating the income, property and financial resources of [Business 1] as if they were his directly held. Indeed, In the course of the hearing, Mr Lyashenko asserted that he had no knowledge whatsoever of the financial arrangements in place in respect of his work over the years, or the basis of the Department’s earlier departure determinations. Mr Lyashenko’s evidence in relation to his financial affairs was uninformative and unhelpful. Mr Lyashenko’s standard response to any question posed to him about his financial affairs was to defer to his mother. As I explained to Mr Lyashenko in the hearing, I found his inability to respond meaningfully to any questions I posed to him about his financial circumstances to be difficult to reconcile with his status as the applicant in these proceedings and the other evidence he had provided indicating he holds a [specified qualification] (A41) and was studying towards [another qualification] (A53). Mr Lyashenko arranged for his mother to complete his Statement of Financial Circumstances on his behalf. A low point in Mr Lyashenko’s evidence was his inability to articulate, even approximately, the annual salary he would expect to receive from the employment he had only just obtained.
[Mother A] asserts that Mr Lyashenko has [a medical condition] (A263) but was nonetheless a very good [occupation 1]. [Mother A] asserted that Mr Lyashenko gets very upset about finances and has elaborated on an apparent inability for Mr Lyashenko to manage his affairs in this way as the motivation behind creating [Business 1] and for her to control the entity in the way she has. I understand that previously Mr Lyashenko has been declared bankrupt.
I have no medical evidence that directly bears upon what I observed to be Mr Lyashenko’s inability to assist me in any way regarding his financial affairs, notwithstanding he had initiated the review proceedings in the Tribunal. I do not know for sure if Mr Lyashenko’s failure to fully and frankly disclose and discuss his financial circumstances was because he was unwilling to do so, or because he was incapable of doing so. The hearing process presented a very complex picture in that regard.
I did however find [Mother A] to be as helpful and engaged with the process as circumstances permitted. [Mother A] responded to the statutory notices issued by the tribunal and produced the financial statements for [Business 1]. At my invitation, [Mother A] had also prepared a written statement outlining the history and purpose of the company from her perspective. I am satisfied that [Mother A] responded to the best of her ability to the questions I posed to her during her evidence. There were limitations in [Mother A’s] capacity to respond to some details about the financial statements, but on reflection not in any way that affects the outcome of this review. Given my overall assessment of the financial statements, I concluded taking further steps to follow up on some details in the statements was unnecessary.
[Mother A] asserts that she has provided her own funds to the company recently in order to service loans over the residential properties, but was unable to point to how this was accounted for in the financial statements.
Finally, and to complicate matters further in terms of identifying what financial resources within [Business 1] ought to be considered to be Mr Lyashenko’s financial resources, [Mother A] explained that she has recently divorced and her former partner has made a claim over the assets of [Business 1] as part of property settlement negotiations.
It is clear from my analysis of the financial statements and from the evidence of [Mother A] that the company’s financial operations were irregular, in the sense that they were by no means arm’s length from Mr Lyashenko and members of his family. It is clear that the company met expenses that had no bearing on its business operations. This appears to have continued throughout the 2019/2020 financial year. Salary payments made to Mr Lyashenko when the company had income to make such payments were disproportionately low when compared to the income he generated for the company through his personal services. Director’s fees, which were paid to [Mother A] (at least in the financial statements) were disproportionately high. On [Mother A’s] evidence funds have flowed in and out of the company without clear and coherent records appearing in the financial statements. The assets of the company have and continue to be impacted by family law proceedings unrelated to Ms Siremevan. On [Mother A’s] evidence the company carries significant liabilities.
I am satisfied to conclude however that all wealth and financial resources to be found within the company came from Mr Lyashenko’s personal services as [an occupation 1]. The key to understanding [Business 1] as a financial resource for Mr Lyashenko for child support purposes is therefore identifying what, if any, ‘wealth’ was in the company at any material time, and what, if any, remains.
The objection officer focussed on a $400,000 lump sum payment made by [Business 2] in 2017 as a sign on incentive for [Business 1] and Mr Lyashenko. [Mother A] agreed with my analysis that at the present time, that financial resource now appears to exist in the form of equity in the residential property owned by [Business 1].
As to income within [Business 1], it is apparent from the financial reports that income into [Business 1] vanished for the 2020/2021 financial year consistent with the circumstances of Mr Lyashenko ceasing to [work] as [an occupation 1] in August 2019. For 2019/2020 [service fees] as income were $137,829. The company incurred [premises] administration charges of $62,431.95 in 2019/2020 and $58,660.80 in 2020/2021 (the latter in the absence of any [service] billing income). In 2020/2021, income from [service fees] was nil. The absence of income from Mr Lyashenko’s personal services as [an occupation 1] fundamentally re-characterises [Business 1] as a financial resource and diminishes its value. From July 2020, it is clear that [Business 1’s] value as a financial resource pertains only to its assets.
To the extent that previous departure determinations made by the Registrar relied on [Business 1] receiving income from Mr Lyashenko’s personal services, Mr Lyashenko ceasing [work] as [an occupation 1] from August 2019 constitutes a material change of circumstances that may render aspects of the previous departure determination that had operated during the period of 18 months before the date of the current departure determination unjust and inequitable.
There is no other form of income for [Business 1] other than rental payments for the residential properties. This however is also a resource that is difficult to pin down. [Premises 1] was once occupied by Mr Lyashenko and his now ex-wife and children (not Ms Siremevan) and then solely by the ex-wife and children under an arrangement where the ex-wife was to pay rent pending family law settlement. [Mother A] told me that no rent was ever paid, but certain household running costs were nonetheless still met by the company out of a concern for the welfare of the children.
[Premises 1] has subsequently been the subject of family law settlement and has been sold by the company to Mr Lyashenko’s ex-wife. According to [Mother A] the proceeds of the sale after repaying the finance on the property was $107,151.11, but then solicitor’s costs and other expenses resulted in only $14,000 now being retained by the company as cash. There is no doubt a degree of blurring between company expenses and personal expenses in relation to the legal costs. The balance sheet for 2021 shows [Premises 1] was valued at $437,504.98. The corresponding liability to [Bank 1] was $133,262.12. I have noted that the family law consent orders provided for the property to be sold for $240,000, or a little over half its balance sheet value (T468).
The company continues to own [Premises 2], but as mentioned above, it is now occupied by [Mother A]. The balance sheet for 2021 shows the property with a value of $414,676 with a corresponding liability of $296,426.79. [Mother A] states that she pays rent for the property in the form of servicing the mortgage. On the balance sheet value therefore the company has equity in the property of $118,250. While on the one hand I recognise this as a financial resource of Mr Lyashenko given that equity has come in part from the sign-on payment received from [Business 2] and the servicing of the mortgage from income derived from his personal services over time, the fact that the equity in the property is relatively modest and the property is occupied by [Mother A] leads me to conclude that practically the property at [Premises 2] is not reasonably available as a financial resource for child support purposes in these circumstances.
[Mother A] states that the company currently has $29,014.90 in cash, but faces liabilities in relation to a claim from [Business 2] for $58,660.80 in relation to Mr Lyashenko’s incapacity to fulfill the contract. Other liabilities to Mr Lyashenko are also identified by [Mother A], but it appears to me to be reasonably clear that the contingent liability to [Business 2] is readily apparent based on the contract between [Business 1] and [Business 2] and the change to Mr Lyashenko’s circumstances that has prevented him from fulfilling his obligations in relation to the $400,000 lump sum payment in 2017. Notwithstanding my view that the contingent liability to [Business 2] appears to be legitimate at face value, the cash holdings of [Business 1] are a financial resource that I will have regard to in my ultimate determination in this matter.
From this complex and untidy picture, it is almost impossible to rationally quantify a value of the income, property and financial resources of [Business 1] for child support purposes.
On reflection, I have considered that my analysis of [Business 1] as a financial resource should be different for the 2019/2020 and 2020/2021 financial years. The financial information before me is separated by financial years.
From 1 July 2020, I am satisfied that [Business 1] does not represent a meaningful or significant additional financial resource for child support purposes for Mr Lyashenko. By 1 July 2020, [Business 1] no longer received income, yet continued to meet liabilities established when the company did receive substantial income from Mr Lyashenko’s work as [an occupation 1]. The physical assets of the company in 2020/2021, while being used in some respects for private purposes, cannot be reasonably viewed as property or financial resources that can be taken into account for child support purposes. A significant proportion of the wealth that remains within [Business 1] (primarily in the form of equity in a residential property now occupied by [Mother A] and some cash) is offset by apparent liabilities associated with Mr Lyashenko’s change to his circumstances.
The picture is much less clear for the financial year 2019/2020, although I recognise that the income into [Business 1] ceased early in that financial year. However, at that time parts of the property of the company had not yet been the subject of family law settlement, the company has documented that it paid an $18,000 director’s fee and wages (combined $30,000) and was meeting a variety of living expenses for Mr Lyashenko and his family. It is not possible to quantify the value of this financial resource to 30 June 2020, but in recognising that there was a financial resource in [Business 1] to that date, I have concluded that the just and equitable way to take those resources into account is by not disturbing the pre-existing departure determination that was in place at that time. At that time, a departure determination was in place that had the effect that Mr Lyashenko was assessed to pay an annual rate of child support of $24,801.
From 1 July 2021, I consider that the financial circumstances impacting Mr Lyashenko and [Business 1] is such that the company no longer represents a financial resource to Mr Lyashenko, and the property it owns cannot reasonably be considered available to Mr Lyashenko.
The dividing line at the end of the financial year is somewhat nominal. I have taken into account the existence of [Business 1’s] cash holdings at the time of the hearing to address any child support arrears that may accrue between the date Mr Lyashenko ceased working as [an occupation 1] and the end of the financial year I have identified as the point when [Business 1] ceased to be a relevant financial resource.

Earning capacity

As to earning capacity, much of Mr Lyashenko’s evidence and arguments to the Tribunal were directed at demonstrating both medical barriers to work and attempts at obtaining additional qualifications or finding employment.
However, as was observed by the objections officer and reiterated in telephone directions hearings in preparation for the hearing, a determination based on earning capacity may only be made if the relevant requirements of the legislation are satisfied. In that regard, section 117(7B) of the Act provides that I may determine that Mr Lyashenko’s earning capacity is greater than is reflected in his income only if 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.

In Mr Lyashenko’s circumstances, the change to his occupation, industry and working pattern, the reduction in the number of hours he has worked and the factors impacting on his opportunity to work are all comprehensively explained by the regulatory action taking by the [Professional Registration Authority 1] in suspending and cancelling his registration and capacity to [work in this profession]. In these circumstances, I am satisfied that it was not a major purpose in any decision made by Mr Lyashenko to change his working arrangements to affect the administrative assessment of child support. As such, no determination I make may be based on the proposition that Mr Lyashenko’s earning capacity is greater than is reflected in his income.

Ms Siremevan’s income, property, financial resources and earning capacity

Ms Siremevan earns income from employment as [an occupation 4]. She is up to date with her taxation returns and has provided the Tribunal with updated payslip information confirming her income and recording that she accesses salary sacrificing arrangements.
Ms Siremevan also relies on family assistance payments. She has disclosed no interest in a property, business or trust.
I am satisfied that reliance on adjusted taxable income is an accurate and appropriate measure of Ms Siremevan’s financial capacity to support the children. No issue arises on the evidence in relation to Ms Siremevan’s earning capacity.

Commitments of the parents

As to the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support themselves, I have relied upon the statement of financial circumstances lodged by and on behalf of each parent (B1 and A255).
Ms Siremevan’s estimated household expenditure for herself is largely unremarkable, other than to note her expenses are consistent with her modest income and also that her overall household expenses exceed her income. No personal expenses that are out of the ordinary are identified. Ms Siremevan carries some personal debt and told me at the hearing that she receives some additional funds from family in [Country 1] from time to time .
Mr Lyashenko’s expenses for his own self-support are of note. In A255, which was prepared by [Mother A], only very limited personal expenditure is disclosed. Mr Lyashenko has confirmed that in his new employment he lives on site and pays board to [his employer] and eats in [their facilities]. In this way, Mr Lyashenko’s expenses for his own self-support are remarkable in that they are unusually low. From average weekly income before tax of $1,429.10, Mr Lyashenko has indicated he spends $517.60 each week on household expenses. I will take into account the evidence of Mr Lyashenko’s low expenses for self-support in identifying a just, equitable and otherwise proper determination.

As to children or other people that each parent has a duty to maintain, I note that Mr Lyashenko is afforded a multi-case allowance in respect of a child the subject of a child support assessment not involving Ms Siremevan. I also note that in assessment notices issued on 12 July 2021 Mr Lyashenko is recorded as having had [Child 2] 100% in his care until 14 March 2022 when [Child 2] turned 18. There is nothing in the evidence before me to indicate that the provision already made in the formula to take into account Mr Lyashenko’s duty to maintain other children is insufficient.
I am required to consider any hardship that would be caused to the child or the carer entitled to child support by the making of or the refusal to make a particular departure determination. I consider that maintaining the previous departure determination in place for periods within the scope of my decision when Mr Lyashenko no longer was earning income for [Business 1] and no longer had access to income through [Business 1], and where [Business 1] ceased to provide a financial resource to him would result in substantial hardship. This hardship in my view may be addressed by applying a departure determination based on my findings retrospectively, and therefore affecting the extent of child support arrears. For the reasons elaborated upon above, I consider that 1 July 2020 would therefore be an appropriate point to give effect to a different departure determination to the one put in place previously by the Registrar. In this regard, I may do so in accordance with section 98J of the Act on the basis of Mr Lyashenko’s substantial change of circumstances.
The current financial circumstances of the parents indicate to me that the balance of hardship however remains with Ms Siremevan. She earns a modest income with support through family assistance payments. Her household expenses are substantially higher that Mr Lyashenko’s having regard to his current living arrangements. I am satisfied that Ms Siremevan has provided an accurate account of her financial circumstances and accept that she has difficulty making ends meet. The orthodontic expenses in particular are a substantial financial burden for her which she should not have to meet alone.
As to the particular departure determination I consider would be just and equitable, having regard to all the factors provides for in section 117 of the Act, I consider the following determinations will give effect to my findings and reasons:

(a)To discharge the departure determination in effect at 1 July 2020.
(b)From 1 July 2020 to 30 June 2021, to vary the annual rate of child support payable by Mr Lyashenko to $3,900 pa.
(c)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Mr Lyashenko to nil.
(d)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Ms Siremevan to nil.
(e)From 15 March 2022 to 24 April 2022, to vary the annual rate of child support payable by Mr Lyashenko to the minimum annual rate.
(f)From 25 April 2022 to 1 August 2023, to vary Mr Lyashenko’s adjusted taxable income to $74,000pa.

The purpose of the determination at (a) is to bring to an end the previous departure determination varying Mr Lyashenko’s adjusted taxable income to $230,307pa from that date. As mentioned above, I do so on the basis of section 98J of the Act and Mr Lyashenko’s changed circumstances. My findings set out above as to the financial resources in [Business 1] explain why I have not given further retrospective effect beyond 1 July 2020.
The purpose of the determination at (b) is to preserve within any child support arrears a contribution by Mr Lyashenko of 50% of the costs of [Child 1’s] orthodontic work. I would have otherwise varied Mr Lyashenko’s annual rate of child support to nil during this period, on the basis that this would be the product of the administrative assessment of child support based on his adjusted taxable income of $22,434 for 2019/2020 (and Ms Siremevan’s adjusted taxable income of $49,468) and the care arrangements for [Child 1] and [Child 2] then in place.
I have incorporated the full cost of the orthodontic work as it is in respect of the full cost only that I have evidence. It is unfortunate that the parents are unable to negotiate a means by which they might access the private health benefits available. It is open to the parents to do so privately but I am unable to fashion any contingent departure determination in this regard.
The purpose of the determination at (c) is to reflect in arrears the product of the administrative assessment of child support based on his adjusted taxable income of $22,434 for 2019/2020 (and Ms Siremevan’s adjusted taxable income of $49,468) and the care arrangements for [Child 1] and [Child 2] then in place, giving effect to my finding that [Business 1] no longer represents a financial resource for Mr Lyashenko after 1 July 2020.
The purpose of the determination at (d) is, for the avoidance of doubt, to ensure that Ms Siremevan does not retrospectively incur a child support liability in respect of that period as a result of my discharge of the previous departure determination. In this regard, having considered Ms Siremevan’s statement of financial circumstances, I am satisfied she has no financial capacity to meet an arrears of child support for this period. To make a determination that had that effect would place hardship on Ms Siremevan and the child in her care.
The purpose of the determination at (e) is to give effect to the statutory prohibition on reducing the annual rate of child support below the minimum annual rate unless the liable parent has at least regular care of at least one the children in the child support case. From 15 March 2022, [Child 2] is no longer an eligible child of the assessment.
Having regard to the objection officer’s reference to Mr Lyashenko being in arrears of child support of $27,175.14 as at 2 July 2021, and noting that the annual rate of child support produced by the previous departure from the child support assessment between 1 December 2019 and 30 September 2020 was $29,506 I note that the effect of the determinations at (a) to (d) will be to substantially reduce Mr Lyashenko’s arrears of child support. I consider this result just and equitable having regard to the conclusions I have reached about his income and financial resources at relevant points in time. The maintenance of some arrears is also just and equitable in my view having regard to the financial resources in the form of cash currently held within [Business 1] as discussed above, and the need to support the proper needs of [Child 1] in respect of her orthodontic work as I have identified.
The purpose of the determination at (f) is for Mr Lyashenko to be assessed on an income consistent with his annual rate of salary from the date he commenced employment until the end of his current contract. I am prepared to make an assumption that Mr Lyashenko’s employment will continue at a similar rate of pay through 2023. Absent this determination, Mr Lyashenko’s child support liability would be calculated on the basis of his adjusted taxable income for periods when he was unemployed and in receipt of income support payments, and would not reflect his current financial capacity to support [Child 1].
In the event that Mr Lyashenko’s employment does not continue for any reason, it is open for him to apply for a change of assessment based on a change to his circumstances.
The annual rate of child support that will be produced by the formula with that departure in place from 25 April 2022, based on the income of $74,000 per year for Mr Lyashenko and $52,246 for Ms Siremevan, and one other child support case with one child aged under 12 is an annual rate of $6,837pa. Having regard to Mr Lyashenko’s current income and living arrangements, I am satisfied that amount is affordable for him.
Having regard to the remaining financial resources at Mr Lyashenko’s disposal within [Business 1] and his ongoing income from employment, I am satisfied that addressing the arrears and meeting that assessment is within his financial capacity, and will not cause him undue hardship.
Having regard to all the factors in subsection 117(4) of the Act, I am satisfied that the determinations outlined above are just and equitable.
I must also be satisfied that the determinations are otherwise proper, having regard to Ms Siremevan’s entitlement to family assistance. My determinations are likely to increase Ms Siremevan’s entitlement to family assistance, but as I have reached these determinations on careful analysis of the evidence before me, I am satisfied the determinations are nonetheless proper determinations to make.

DECISION
(a)The Tribunal sets aside the decision under review and, in substitution, decides that the To discharge the departure determination in effect at 1 July 2020.
(b)From 1 July 2020 to 30 June 2021, to vary the annual rate of child support payable by Mr Lyashenko to $3,900 pa.
(c)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Mr Lyashenko to nil.
(d)From 1 July 2021 to 14 March 2022, to vary the annual rate of child support payable by Ms Siremevan to nil.
(e)From 15 March 2022 to 24 April 2022, to vary the annual rate of child support payable by Mr Lyashenko to the minimum annual rate.
(f)From 25 April 2022 to 1 August 2023, to vary Mr Lyashenko’s adjusted taxable income to $74,000pa.

[2022] AATA 2377

16 June 2022

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