Macqueen and Macqueen (Child support)

[2018] AATA 2417

Macqueen and Macqueen (Child support) [2018] AATA 2417 (10 May 2018)

DIVISION:       Social Services & Child Support Division

REVIEW NUMBER:  2017/SC012802

APPLICANT:  Mr Macqueen

OTHER PARTIES:    Child Support Registrar

Ms Macqueen

TRIBUNAL:    Member J Cuthbert

DECISION DATE:     10 May 2018

DECISION:

The tribunal sets aside the decision under review and substitutes a decision to depart from the child support assessment from 27 June 2017 until the assessment for [Child 1] ends by varying Mr Macqueen’s adjusted taxable income to $80,000.

CATCHWORDS
Child support - Departure determination - Undeclared business income - Earning capacity - A ground for departure established - Decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act

REASONS FOR DECISION

HISTORY

1. This review concerns an application for a change to a child support assessment made by Ms Macqueen on 27 June 2017.

2. Ms Macqueen and Mr Macqueen are the parents of [Child 1] (born 2000). At all relevant times there has been a child support assessment in place, made by the Department of Human Services – Child Support (the Department) for [Child 1]. The child support assessment is based on Ms Macqueen having a care percentage of 100% and Mr Macqueen having a care percentage of 0%.

3. From 1 September 2016 to 30 November 2017 Mr Macqueen was assessed to pay child support of $2,304 a year based on his 2015/16 adjusted taxable income of $33,768 and a provisional income of $14,722 for Ms Macqueen.

4. On 27 June 2017 Ms Macqueen applied to the Department for a departure from the assessment on the grounds that Mr Macqueen’s income, property, financial resources and earning capacity were not properly reflected in the assessment.

5. On 24 August 2017 a decision was made to depart from the child support assessment by varying Mr Macqueen’s adjusted taxable income to $75,000 from 1 September 2016 until the assessment for [Child 1] ends.

6. Mr Macqueen’s objection to that decision was disallowed on 19 October 2017. On 30 October 2017 Mr Macqueen lodged an application for a review of the objection decision with the tribunal.

7. The matter was heard on 10 May 2018. Mr Macqueen and Ms Macqueen both attended the hearing in person. The tribunal was assisted by a Serbian interpreter. The tribunal had access to the statement and documents provided by the Department (folios 1 to 273), documents provided by Mr Macqueen (folios A1 to 177) and documents provided by Ms Macqueen (B1 to B42).

8. At the hearing Mr Macqueen submitted a further document (folios A178) and Ms Macqueen submitted further documents (folios B43 to B46). Numbered copies of those documents were provided to Mr Macqueen and Ms Macqueen at the hearing.

CONSIDERATION

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Assessment Act). This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.

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

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

   (ii)that it would be:

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

   (B)otherwise proper;

   to make a particular determination under this Part; …

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

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

1. Ms Macqueen sought a departure from the administrative assessment on the grounds that Mr Macqueen’s income, financial resources, property and earning capacity were greater than reflected in the provisional income used for him in the assessment.

2. The grounds for departure are set out in subsection 117(2) of the Assessment Act. Subparagraphs 117(2)(c)(ia) and (ib) provide as grounds 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; or

   (ib)because of the earning capacity of either parent

3. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

4. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 209 Federal Magistrate Slack dealt with the issue of the disclosure of financial information in matters before the Social Security Appeals Tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to child support proceedings before that tribunal. He stated at paragraph 31:

   In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117).

5. Also, in Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144 Federal Magistrate Halligan stated:

   If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent’s financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that parties financial circumstances.

Mr Macqueen’s income, property and financial resources

1. Mr Macqueen has experience working in the building industry providing [certain] services, although the tribunal accepts that he is not a licenced builder or [Occupation 1]. He told the tribunal that he has not worked since 2016 although he did provide invoices which he said were for two week’s work in February 2018. Although Mr Macqueen redacted information on those documents, contrary to directions provided to him, the tribunal notes that he invoiced amounts of $2,640 and $660 for labour. Mr Macqueen provided copies of his bank statements showing that he was only paid $2,420 and $605. He did not provide a clear explanation as to why the builder did not pay him the agreed rate, which he stated was $55 an hour, plus GST. The tribunal found his later evidence that he had previously only earned between $25 and $40 an hour to be disingenuous.

2. Mr Macqueen states that his company [has] never traded and provided copies of business activity statements (BAS) showing nil sales.

3. He told the tribunal that despite being unemployed since 2016, he has not claimed Centrelink income support payments. He said that his solicitor had advised him that he would not be eligible. Mr Macqueen claims to rely solely on funds loaned to him by his step-mother, Ms [A]. He provided copies of bank cheques deposited to his account totalling $335,000 as follows:

   $45,000          16 December 2014

   $70,000          5 August 2015

   $40,000          15 October 2015

   $100,000        8 September 2015

   $40,000          8 October 2015

   $40,000          8 June 2016

4. While Mr Macqueen states that the funds were a loan from Ms [A], apart from a statutory declaration sworn by Ms [A] on 7 September 2016, there is no documentation to support the existence of a loan. Ms [A] stated that the funds of $340,000 (not $335,000) were loaned from December 2014 to July 2016, the last payment being several months before she swore the statutory declaration. The terms of the loan are not stated.

5. Although Mr Macqueen told the tribunal that he is to repay the loan on the sale of a house he owns jointly with former partner, Ms [B], and which is the subject of property proceedings, he did not list it as a liability in the Statement of Financial Circumstances form he completed on 16 November 2017. In that form he listed only a joint liability to the Commonwealth Bank of $351,037. The tribunal notes that Mr Macqueen and Ms [B] have some equity in the property. 

6. In the Statement of Financial Circumstances form Mr Macqueen stated that he has weekly household expenses of $1,080. However, those expenses do not include amounts he said that he provides to Ms [B] for the support of his son or other expenses he told the tribunal he has in relation to [Child 1] and his son. The listed expenses do not include any amounts for clothing, entertainment, or pharmaceutical or other expenses that might usually be expected. The tribunal concludes that Mr Macqueen’s expenses may be greater than he stated. The tribunal notes that his bank statements show that in the period 1 December 2017 to 28 February 2018 he debited $18,864 from Commonwealth Bank account #5133, including mortgage payments of $2,003 a month. The vast majority of the debits were cardless cash withdrawals, often a number of withdrawals on the same day. At 28 February 2018 Mr Macqueen had savings of $43,503 in account #5133 and at 10 March 2018 he had an outstanding mortgage to the bank of $347,033.

7. The tribunal notes that bank statements obtained by the Department for Mr Macqueen’s account with ING to late 2016 indicate significant cash withdrawals, generally made from licensed premises, including multiple withdrawals on the same day. Apart from a gambling win of $47,098 in 2013 which he said was used to purchase his home, Mr Macqueen did not provide evidence of any significant windfalls.

8. Ms Macqueen suggests that Mr Macqueen is working and earning cash. She referred to seeing him on a building site in 2013. She also provided statements from third parties that indicate that Mr Macqueen was working in 2014 and 2015, but did not provide any more recent evidence.

9. The tribunal found Mr Macqueen’s evidence about his financial affairs to lack credibility. The tribunal notes that if he is unemployed and if he has borrowed funds from his step-mother as he states, he could no doubt rearrange his affairs in order to qualify for Centrelink payments. The tribunal infers that Mr Macqueen does not do so as he is working and is not declaring his income. However, if that is not the case, the tribunal is satisfied that he has financial resources from which he is able to meet annual expenses of at least $80,000 a year. In either case, the tribunal is satisfied that Mr Macqueen has income and financial resources greater than his adjusted taxable income for 2015/16 of $33,768.

Mr Macqueen’s earning capacity

1. The tribunal also considered Mr Macqueen’s earning capacity and the three criteria in subsection 117(7B) of the Assessment Act. If indeed Mr Macqueen is not working, the tribunal finds that the first criterion of subsection 117(7B) of the Assessment Act is satisfied as he did not give any evidence of the steps he has taken to find work.

2. Mr Macqueen stated that he has some day-time care of his four year old son on about two days a week. However, he did not suggest that his caring responsibilities for his son affect his ability to work.

3. He told the tribunal that his ability to work is affected by his medical conditions and provided various letters from medical practitioners indicating that he is having counselling for depression and has had investigations in relation to [certain body parts] functions. However, the tribunal finds that the medical evidence provided by Mr Macqueen does not support his contention that he is unable to work due to his medical conditions. While he has been seeing a psychologist since 2017 in relation to symptoms of depression and anxiety, he is receiving no other treatment. In letters dated 12 February and 30 April 2018 his psychologist reports the symptoms described to her by Mr Macqueen and diagnoses generalised depression anxiety disorder [symptoms]  r, but makes no comment about the effect of the conditions on Mr Macqueen’s ability to work.

4. The tribunal finds that the second criterion of subsection 117(7B) of the Assessment Act is not satisfied as any decision Mr Macqueen has made not to seek work is not justified on the basis of his caring responsibilities or his health.

5. On the evidence Mr Macqueen provided the tribunal is not satisfied that a major reason for his decision not to seek work is not to affect the child support assessment. During the hearing he referred a number of times to funds taken from his bank account by the Department in January 2016 to meet child support arrears.

6. The tribunal finds that the three criteria of subsection 117(7B) of the Assessment Act are satisfied. On Mr Macqueen’s evidence that he was billing his labour at $55 an hour in February 2018, the tribunal finds that, even allowing for the vagaries of self-employment, he could earn at least $80,000 a year ($50 an hour x 40 hours x 40 weeks).

Do the existing assessments provide a result which is unjust and inequitable?

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

1. In order to determine whether Mr Macqueen’s income, financial resources and earning capacity results in child support assessments which are an unjust and inequitable determination of the financial support he should provide for [Child 1], the tribunal considered whether Ms Macqueen’s adjusted taxable income is indicative of her income, property, financial resources and earning capacity.

2. Ms Macqueen is in receipt of newstart allowance. She told the tribunal that she has not worked since 2000 and received a workers’ compensation payment of about $20,000 two or three years ago.

3. Mr Macqueen contends that Ms Macqueen also receives cash from working as [an Occupation 2] in a [workplace] at [Suburb 1]. However, he had no evidence to support his assertion. He also stated that Ms Macqueen was earning money making and decorating cakes and operating a nail salon. He suggested that she could make a profit of $150 per cake and has the ability to make three to four cakes a day. However, again, apart from pointing to two purchases in Ms Macqueen’s bank statements, one for $27.30 for cake decorating supplies and $30 to a nail salon, Mr Macqueen provided no evidence in support. The tribunal accepts Ms Macqueen’s explanation that she paid for [Child 1] to have a nail treatment and that she makes cakes for special occasions for friends and family. She told the tribunal that she gives the cakes as gifts and is not paid.

4. The tribunal notes that in an affidavit sworn on 6 October 2017 Ms Macqueen described herself as [an Occupation 2], but that in a document signed on 13 November 2017 she stated to the tribunal that she was unemployed. She said that she described herself as [an Occupation 2], when she is making job applications.

5. In a Statement of Financial Circumstances form signed on 13 November 2017 Ms Macqueen stated that her total income from newstart allowance and family tax benefit (including rent assistance) is $554 a week. She listed her weekly household expenses as $890 a week, including rent of $505 a fortnight. The tribunal finds that the expenses listed are consistent with Ms Macqueen’s bank statements and her evidence at the hearing, including her ability to afford regular holidays. She told the tribunal that she meets the shortfall of $336 a week by utilising cash she keeps at home. She said that she also used that cash to make payments to her Visa account. The tribunal notes that in the period 1 December 2017 to 28 February 2018 Ms Macqueen made cash payments totalling $1,790 to her Visa account.

6. Ms Macqueen noted that she had received a lump sum payment of child support in 2016. She said that she withdrew $6,000 from her bank account in February 2017 and then a further $10,000 in March or April 2017. She said at that time she still had about $3,000 in cash and that she now has about $8,000 left.

7. In her Statement of Financial Circumstances form Ms Macqueen stated that at 13 November 2018 she had total savings of $11,000. The tribunal notes that on 1 December 2017 she had $1,497 in her savings account after a credit of a Centrelink payment of $598. The amount of $11,000 that she had stated included her cash reserves.

8. In order to meet expenses of $890 a week (after disregarding the family tax benefit she receives of $255 a week which is not taken into account for child support purposes) Ms Macqueen would need income or financial resources of about $635 a week, or about $33,000 a year. However, Ms Macqueen has provided credible evidence that she is meeting the shortfall from her savings following the lump sum child support payment she received in 2016.

9. The tribunal is satisfied that Ms Macqueen’s current income and financial resources consist of the newstart allowance payments she receives from Centrelink. Those payments are less than the self-support amount used in the child support formula and should not affect the amount of child support payable by Mr Macqueen.

10. The tribunal also considered Ms Macqueen’s earning capacity. The tribunal finds that Ms Macqueen is not working. She provided medical evidence from her general practitioner that states that she is unfit for work or study from March 2017 to June 2017 and October 2017 to March 2018. She also provided a letter from clinical psychologist, [dated] 10 December 2017, which states that Mr Macqueen “is not deemed suitable in pursuing work related activities including job search at present”. Ms Macqueen told the tribunal that she also sees a psychiatrist on a regular basis. The tribunal accepts the medical evidence provided that Ms Macqueen has longstanding health conditions and that her ability to work is affected by those conditions. 

11. The tribunal notes Mr Macqueen’s evidence that she has not worked since prior to her separation from Mr Macqueen. The tribunal is satisfied that Ms Macqueen has not made the decision not to work in order to affect the child support assessment. The tribunal finds that the second and third criteria of subsection 117(7B) of the Assessment Act are not satisfied and therefore the tribunal is unable to determine that Ms Macqueen’s earning capacity is greater than her actual income.

Are there special circumstances for which to depart from the assessment?

1. Taking into account the objects of the Assessment Act (section 4), including that children should share in the standard of living of both their parents, the tribunal finds that the income and financial resources and earning capacity of Mr Macqueen provide special circumstances for which to depart from the assessment. Mr Macqueen would be liable to pay far more child support if the assessment was based on his actual income and financial resources or his earning capacity rather than his adjusted taxable income for 2015/16. The tribunal finds that the assessment is unfair to Ms Macqueen and to [Child 1] for that reason and that grounds are established to depart from the assessment under subparagraphs 117(2)(c)(ia) and (ib) of the Assessment Act.

Issue Two – Would a departure from the administrative assessment be just and equitable?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment having regard to the matters set out in subsection 117(4) of the Assessment Act.

2. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. In accordance with the objects set out in section 4 of the Assessment Act, [Child 1] should receive a proper amount of financial support from her parents in accordance with their capacity to contribute.

[Child 1]’s needs

1. [Child 1] is 17 years old and is in Year 12 at school. Although Ms Macqueen described costs for driving lessons, [Child 1]’s upcoming birthday and out of pocket costs of $300 for dental treatment; the tribunal finds that the costs related to the care of [Child 1] are not out of the ordinary range of expenses for a child her age.

[Child 1]’s income, property, financial resources and earning capacity

1. [Child 1] works at [a workplace] on a casual basis. The tribunal accepts Ms Macqueen’s evidence that she earns perhaps $15 to $16 an hour for casual shifts. Mr Macqueen suggested that [Child 1] works for perhaps 20 hours a week. However, Ms Macqueen said that she might only work a few shifts a month. She said that [Child 1] is saving for a car and also buys some gifts from the money she earns.

2. The tribunal has no evidence that [Child 1] receives anything other than a small amount from casual work. The tribunal finds that the income she receives is not sufficient to allow her to support herself and should not affect the child support assessment.

The parents’ duty to support others  

1. The tribunal finds that Ms Macqueen does not have a duty to support any other person apart from [Child 1].

2. Mr Macqueen has a duty to support his son, [Child 2] (born 2014), who has lived with Ms [B] since her separation from Mr Macqueen in mid-2014. There is no child support assessment for [Child 2]. Mr Macqueen told the tribunal that he places $50 or $100 in [Child 2]’s pocket when he visits and sometimes gives money to Ms [B]. The tribunal does not accept his evidence. It notes that it is not consistent with his Statement of Financial Circumstances form which only records $10 a week for children’s activities and also with his evidence to this tribunal in another matter (2017/SC012338) in November 2017. The tribunal accepts that Mr Macqueen has contact with [Child 2] and may have some expenses for entertainment and toys, etc. but finds that he does not have care of him overnight and does not meet his regular expenses. In those circumstances, the tribunal finds that Mr Macqueen’s duty to support [Child 2] should not affect his child support liability for [Child 1].

The income, property, financial resources and earning capacity of Ms Macqueen

1. The income, property, financial resources and earning capacity of Ms Macqueen have been discussed above.

Ms Macqueen’s necessary commitments

1. Ms Macqueen lives with [Child 1] in rented accommodation. After reviewing the bank statements Ms Macqueen provided, the tribunal is satisfied that she is utilising her savings from an earlier lump sum of child support she received to meet the shortfall between her income and the reasonable and necessary expenses she has for herself and [Child 1].

The income, property, financial resources and earning capacity of Mr Macqueen

1. The income, property, financial resources and earning capacity of Mr Macqueen have been discussed above.

Mr Macqueen’s necessary commitments

1. Mr Macqueen lives in the house he owns jointly with Ms [B] which is the subject of property proceedings. On the basis of the findings made above, the tribunal is satisfied that he is able to meet his reasonable and necessary expenses.

Terms and period of departure

1. Ms Macqueen made her departure application on 27 June 2017. She seeks a departure from the assessment from 1 September 2016, the start of the child support period until the assessment for [Child 1] ends. Mr Macqueen contends that there should have been no departure from the assessment.

2. Ms Macqueen said that a change to the assessment should be backdated as although she had raised issues about Mr Macqueen’s situation with the Department several times, she did not have any evidence to provide to make an application until June 2017. The tribunal has no evidence to support Mr Macqueen’s evidence that she made earlier calls to the Department. It notes that Ms Macqueen’s application made on 27 June 2017 refers to a number of bank accounts held by Mr Macqueen. However, the tribunal finds that Ms Macqueen was not prevented from making an earlier application and that it is just and equitable to depart from the assessment from 27 June 2017 and not from an earlier date.

3. The tribunal finds that it is just and equitable to depart from the assessment by varying Mr Macqueen’s adjusted taxable income to $80,000 to reflect his likely earnings, his existing financial resources or his earning capacity. In light of [Child 1]’s age and to provide certainty, the tribunal proposes to continue that variation until the assessment for [Child 1] ends.

4. The tribunal finds that the proposed variations result in a child support liability (currently about $240 a week) which reflects a reasonable level of support for [Child 1] given the differences between her parents’ incomes, property, financial resources and earning capacities.

Hardship

1. The child support payable on the basis of the decision proposed should assist Ms Macqueen to meet [Child 1]’s proper needs.

2. In November 2017 Mr Macqueen owed child support arrears of almost $15,000. The proposed decision will result in a reduction to the arrears but will increase the ongoing rate of child support payable by Mr Macqueen. In light of the findings about Mr Macqueen’s income and financial resources and in particular his ability to make an arrears payment from his savings, the tribunal considers that the proposed decision will not result in hardship to him or either of his children.

Issue Three – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the tribunal to undertake is to determine whether it is “otherwise proper” to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the tribunal take into consideration the following matters:

   (a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)    the effect that the making of the order would have on:

   (i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The child support law recognises that each parent has a primary duty to maintain their children. Ms Macqueen receives family tax benefit for [Child 1]. The tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter and to properly reflect Mr Macqueen’s income and financial resources or his earning capacity.

DECISION

The tribunal sets aside the decision under review and substitutes a decision to depart from the child support assessment from 27 June 2017 until the assessment for [Child 1] ends by varying Mr Macqueen’s adjusted taxable income to $80,000.