Madacsi and Giancarlo (Child support)
[2024] AATA 2761
•24 June 2024
Madacsi and Giancarlo (Child support) [2024] AATA 2761 (24 June 2024)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2024/MC027386
APPLICANT: Mr Madacsi
OTHER PARTIES: Child Support Registrar
MsGiancarlo
TRIBUNAL:Member P Noonan
DECISION DATE: 24 June 2024
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
·For the period 1 September 2023 to 31 December 2023 the annual liability of child support payable by Mr Madacsi is varied (increased) by $3,710 to account for the education costs of the children.
·For the period 1 January 2024 to 31 December 2024 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,386 to account for the education costs of the children.
·For the period 1 January 2025 to 31 December 2025 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,200 to account for the education costs of the children.
·For the period 1 January 2026 to 31 December 2026 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,500 to account for the education costs of the children, (which also accounts for standard fee increases).
·For the period 24 February 2024 to 31 December 2025 Mr Madacsi’s adjusted taxable income is varied to $97,500 per annum.
CATCHWORDS
CHILD SUPPORT – change of assessment – children are being educated privately – education costs of the children – a just and equitable outcome in regard to the respective situations of each parent – income and financial resources – 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 theChild Support (Registration and Collection) Act 1988
REASONS FOR DECISION
BACKGROUND
Mr Madacsi (the father) and Ms Giancarlo (the mother) are the parents of two children relevant to the child support assessment under review.
A child support case was first registered with Services Australia – Child Support (Child Support) on 11 July 2012 and child support has been registered for collection by Child Support from 8 September 2023. Child Support currently maintains a case completion date for this matter of 13 March 2030.
On 29 August 2023, the mother applied for a change to the assessment. On 22 September 2023, a Child Support officer, acting as a delegate of the Registrar, found that a ground for departure was established and decided that the annual rate of child support payable by the father should be increased by $3,015 for the period 1 September 2023 to 31 December 2023 due to the costs of educating the children.
On 16 October 2023 the father objected to this decision and on 11 January 2024 the objections officer decided to part allow the objection and depart from the assessment in the following terms:
·For the period 22 November 2023 to 21 November 2024, the annual liability for child support payable by the father is increased by $50,581.
·For the period 1 September 2023 to 31 December 2023, the annual liability for child support payable by the father is increased by $1,855.
·For the period 1 January 2024 to 31 December 2024, the annual liability for child support payable by the father is increased by $2,193.
The father subsequently applied to the Tribunal for an independent hearing of Child Support’s decision. A hearing for the matter was held on 24 June 2024 by conference telephone. The Registrar did not attend the hearing. Both Mr Madacsi and Ms Giancarlo attended the hearing and gave evidence under oath.
Pursuant to paragraph 98C(1)(b) of the Child Support (Assessment) Act 1989 (the Act), a decision to depart from the administrative assessment may be made if the following requirements are met:
(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; …
CONSIDERATION
A ground for departure
Are the costs of maintaining the children significantly affected because the children are being cared for, educated or trained in the manner that the parents expected?
The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman & Gyselman (1992) FLC 92-279 has held: “as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the formula in the ordinary run of cases.” Likewise, in Philippe & Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”. In considering whether the relevant grounds set out in subsection 117(2) were established in this case the Tribunal was guided by these cases.
Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
There was no dispute that the children are being educated in the manner intended by the parents at the time of the departure application. That is, the children are being educated privately in the Catholic education system. The full cost for 2023 tuition of the eldest child was $3,710. Fee relief was provided to the mother in respect to the youngest child in 2023.
Under the administrative assessment of child support the annual rate of child support payable at the time of the departure application was $14,696 per annum. The cost of educating the child is therefore 37.5% of the annual rate payable. As such, this cost constitutes a significant proportion of the total annual rate payable and accordingly the Tribunal is satisfied that in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being educated in the manner that was expected by his or her parents. As such, the Tribunal finds that the ground at subparagraph 117(2)(b)(ii) of the Act to depart from the administrative assessment is established.
Other grounds
11.The Tribunal notes that a ground for departure from the administrative assessment was also raised in regard to the overall income, property and access to financial resources of each parent. In Marsh & Eccles [2008] FMCAfam 1417, Riethmuller FM stated, in regard to determining multiple grounds for departure from the administrative assessment, as follows:
Once a ‘special circumstance’ is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment … once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process (at para 13).
The Tribunal will therefore consider this further reason for departure that was raised in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.
Would departure from the administrative assessment be just and equitable?
The father’s income and access to financial resources
The father informed the Tribunal that he was made redundant in February 2024. His previous salary was $110,000. He was in that job for 19 months. A redundancy notice was submitted to the Tribunal and the Tribunal accepts the father was made involuntarily redundant as stated. He soon started a new paid position on a salary of $87,500 per annum. This is an ongoing full-time position. He has no other income sources.
With respect to the objections officer’s departure determination the father submitted that applying the untaxed portion of his declared capital gain was unjust and inequitable. This is because the gain was made from the sale of an investment property that was entirely invested in a new house build that had caused him significant financial distress. This was because his builder [had] gone into administration during the build. This had caused an unforeseen escalation in costs, which was worsened by a blow out in costs due to increasing building costs and unforeseen interest rate rises. The end result was that the house was put under a forced sale, which was settled in February 2024. He had realised a $27,000 loss overall and was left with a $20,000 tax debt in respect to the taxed portion of the capital gain. He was now renting for $475 a week. The father submitted extensive documentation with respect to the build, the builder insolvency, the cost over runs and the forced sale of the house. The Tribunal accepts the above to be true.
The father has some credit card debt and his taxation debt. He has no other debt. He enjoys the benefit of the use of a work supplied [vehicle]. He contributes petrol on the weekends from his personal monies but otherwise makes no contribution. The Tribunal discussed the worth of this benefit to the father. The Tribunal resolved that a figure of $10,000 per annum was a reasonable reflection of the benefit to the father for the use of this asset.
It is clear that the father was in a difficult financial position at the time of the capital gain received in October 2023. He has used the capital gain entirely for the purpose of meeting costs overruns associated with his house build, which he has subsequently sold at a loss. In such circumstances, the Tribunal will not include the declared capital gain as to do so would not be a just and equitable outcome and would risk hardship to the father. Instead, the Tribunal will base its assessment upon the adjusted taxable income of the father in its assessment of the costs of educating the children.
The mother’s income and access to financial resources
The mother informed the Tribunal that she had started new employment on 17 July 2023. Her 2022/23 taxable income was $85,795. Her current salary is $92,924 per annum. She supplied employment records ,and the Tribunal accepts this income figure is accurate. She submitted that she has a significant mortgage of $618,959. This is costing her $941.54 per week. She also has significant food and transportation costs and estimated her outgoings at around $2,376 per week or $123,552 per annum. There was nothing before the Tribunal that may indicate that the mother’s income was not an accurate reflection of her overall access to financial resources.
The children
In determining the proper needs of the child, it is necessary to have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275, at paragraph 22, Slack FM stated as follows:
In considering the proper needs of the child [s 117(4)(b)], the SSAT:
a. would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;
b. may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323);
c. may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).
No special needs costs with respect to the children were raised in this matter. With respect to the costs of educating the children, the mother submitted that the eldest child has two years left at high school after 2024. The tuition fees will be around $4,500 per year for that child. The youngest child commences year 7 in 2025 and her annual fee will be around $3,700. There was no dispute that the objections officer has not accurately assessed the education costs of the children in 2023 and 2024 after taking into account various rebates provided by the schools. That is in 2023 the costs were $3,710 and in 2024 they were $4,386.
Overall, and as discussed at hearing, the Tribunal considered this an appropriate case to largely distribute the costs of raising the children using the relevant child support formula, which is based on social science research giving the average costs of children in various family income brackets and then assessing each parent’s capacity to pay further towards the education costs after this process.
It is open to the Tribunal to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula. The principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, the Tribunal is guided by the statements contained in sections 3 and 4 of the Act to the following effect:
·Parents of a child have a primary duty to maintain the child;
·The duty has a priority over all other commitments of the parent other than commitments necessary for self-support;
·The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and
·The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.
The Tribunal will vary the father’s income from 24 February 2024 when he commenced a new position to $97,500 per annum. There is no basis upon which to vary the mother’s income. This means that from 24 February 2024 the amount of child support payable by the father will be approximately $9,098 per annum or $174 per week. When this was discussed with the parents the father submitted that he felt he had the financial capacity to contribute more, with respect to the education costs of the children. He submitted that he had been paying child support of $260 per week equating to around $13,520 per annum. The Tribunal noted that this is around $4,422 per annum higher than the income assessment. He submitted this was sustainable for him. The Tribunal notes that the mother made significant representations that she is struggling to service her mortgage and pay all of the costs associated with the children. She is very unhappy that the current accumulated arrears, based on the objections officer’s decision (currently around $4,800) may not be ultimately fully payable to her.
The Tribunal finds that, based on the father’s own representations, he has the financial capacity to pay the full costs of educating the children from the date of the departure application until 31 December 2024. From that date, with due regard to the respective incomes of the parents and the significant increase in education costs, it is appropriate that he pay 50% of the education costs of the children. Such a figure will be $4,100 per annum which is still in line with what he submitted he could afford. Given the father’s own representations the Tribunal considers that this is a just and equitable departure from the administrative assessment of child support payable in this matter and he will not be placed in undue hardship by being requiring to make such contributions to this cost.
With respect to appropriate departure dates, the Tribunal discussed this with the parents. Both parents submitted a shorter period is appropriate with respect to the father’s income. The mother asked for a longer period with respect to education costs.
With respect to an appropriate date range for this departure determination the Tribunal finds that the date of departure of 1 September 2023 set by the objections officer with respect to education costs is appropriate, which is around when child support was registered for collection. This will be maintained until the end of the eldest child’s schooling being 31 December 2026. At that point there will be a significant change in fees payable per annum and as such the matter may need to be revisited. With respect to the father’s income, the departure will commence as set out above from 24 February 2024 to take account of the vehicle benefit. The Tribunal will extend this until 31 December 2025.
The Tribunal is satisfied that an appropriate departure determination in this matter is as follows:
·For the period 1 September 2023 to 31 December 2023 the annual liability of child support payable by the father is varied (increased) by $3,710 to account for the education costs of the children.
·For the period 1 January 2024 to 31 December 2024 the annual liability of child support payable by the father is varied (increased) by $4,386 to account for the education costs of the children.
·For the period 1 January 2025 to 31 December 2025 the annual liability of child support payable by the father is varied (increased) by $4,200 to account for the education costs of the children.
·For the period 1 January 2026 to 31 December 2026 the annual liability of child support payable by the father is varied (increased) by $4,500 to account for the education costs of the children, (which also accounts for standard annual fee increases).
·For the period 24 February 2024 to 31 December 2025 the father’s adjusted taxable income is varied to $97,500 per annum.
The annual rate of child support payable by the father under the above departure determination is around $13,500 per annum or $260 per week. The Tribunal is satisfied that the father has sufficient income and access to financial resources to meet this assessed child support payment and accordingly will not be placed in undue financial hardship by this decision. With respect to the mother, the Tribunal acknowledges that she has a significant mortgage and that this may cause it to be difficult to service 50% of the school fees from 1 January 2025. However, she is a homeowner with significant equity and the father is a private renter. Neither parent has the financial support of a partner. This may well make the ongoing servicing of private school fees difficult for the mother. However, their respective incomes are similar and, given the above considerations about their respective situations, it would be inappropriate to require the father to continue servicing 100% of the education fees from 1 January 2025 when this cost increases significantly.
There is some variation in the amount of child support as previously assessed; however, the Tribunal is satisfied that no undue hardship will be created to either parent. There will be a reduction in the liability owed by the father. In any event, and in response to the mother’s expressed concerns about this, overpayments and arrears are merely an unavoidable consequence of the review process.[1]
[1] Child Support Registrar & Pearce [2018] FamCAFC 10
Both parents have reasonable and secure income to enable them to budget financially. Overall, the Tribunal considers both parents will be provided with certainty in planning their respective finances to adequately support the children by the implementation of this departure determination, and that it is a just and equitable outcome in regard to the respective situations of each parent.
Otherwise proper
The Tribunal is satisfied that changing the amount of child support payable will not have any adverse effect upon the community as this decision results in the parents being required to pay child support according to their actual capacity to do so. Such a result would be otherwise proper.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
·For the period 1 September 2023 to 31 December 2023 the annual liability of child support payable by Mr Madacsi is varied (increased) by $3,710 to account for the education costs of the children.
·For the period 1 January 2024 to 31 December 2024 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,386 to account for the education costs of the children.
·For the period 1 January 2025 to 31 December 2025 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,200 to account for the education costs of the children.
·For the period 1 January 2026 to 31 December 2026 the annual liability of child support payable by Mr Madacsi is varied (increased) by $4,500 to account for the education costs of the children, (which also accounts for standard fee increases).
·For the period 24 February 2024 to 31 December 2025 Mr Madacsi’s adjusted taxable income is varied to $97,500 per annum.
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