Malghum and Greaves (Child support)

[2021] AATA 468

Malghum and Greaves (Child support) [2021] AATA 468 (18 January 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC019661

APPLICANT:  Miss Malghum

OTHER PARTIES:  Child Support Registrar

Mr Greaves

TRIBUNAL:Member P Noonan

DECISION DATE:  18 January 2021

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to refuse to make a determination pursuant to section 98F of the Child Support (Assessment) Act 1989.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – special needs of the child – costs of special needs do not significantly affect the cost of maintaining the child – no ground for departure established – refuse to make determination – s98F Child Support (Assessment) Act 1989 – 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

BACKGROUND

1. Miss Malghum and Mr Greaves are the parents of one child who is currently relevant to the child support assessment.

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of the child support payable. It uses a formula, which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

3. A child support case was first registered with the Department of Human Services (the Department) on 22 November 2016 and child support was registered for collection by the Department from the same date. The Department maintains a case completion date for this matter of 4 October 2034.

4. On 14 November 2019 Miss Malghum applied for a departure from the assessment of child support payable at that time. Care of the child was registered as being 365 nights per year  to Miss Malghum. At the time of Miss Malghum’s departure application the applicable assessment of child support payable was that for the period 25 September 2019 to 19 December 2019, Mr Greaves was assessed to pay child support of $1,863, per annum based on based on his 2018/19 adjusted taxable income of $40,560 and Miss Malghum’s 2018/19 adjusted taxable income of $40,793.

5. On 26 February 2020, a Department officer acting as a delegate of the Child Support Registrar, found that a ground for departure was established and decided to depart from the assessment such that for the period 14 November 2019 to 30 November 2021, Mr Greaves’ adjusted taxable income is set at $68,780.

6. Mr Greaves objected to this decision and on 10 July 2020 a Department objections officer allowed his objection. The officer decided to depart in the following terms:

   ·For the period 14 November 2019 to 29 March 2020, Mr Greaves’ adjusted taxable income is set at $63,293.

   ·For the period 30 March 2020 to 14 May 2020, Mr Greaves’ adjusted taxable income is set at $39,000.

   ·For the period 15 May 2020 to 30 September 2020, Mr Greaves’ adjusted taxable income is set at $49,000.

   ·From 1 October 2020, the formula assessment will apply.

7. On 13 August 2020 Miss Malghum applied to the Administrative Appeals Tribunal (the Tribunal) for an independent review.

8. A hearing for the matter was held on 18 January 2021. Both Miss Malghum and Mr Greaves attended the hearing by conference telephone and gave evidence on affirmation.

9. Pursuant to paragraph 98C(1)(b) of 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 – the income and access to financial resources of either parent

Mr Greaves

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to as Reason 8, 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 …

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

2. The term “special circumstances” is not defined in the Act. In Gyselman and Gyselman (1992) FLC 92–279, the Full Family Court indicated that for special circumstances to exist, the facts of the case must establish something which is special or out of the ordinary.

3. Mr Greaves informed me that he is self-employed in a [business] partnership with his personal partner [Ms A]. The latest financials with respect to this partnership were before me at the hearing and I discussed certain expense claims with Mr Greaves. In particular I asked him to explain items such as rent, which he stated was the underfloor area of his residence in which he stored business items, vehicle expenses, phone expenses and other items that may provide him with a personal benefit. As noted at hearing it is a well-established principle in the Family Court that the taxable income of a person who is self-employed may not be an accurate reflection of their earning capacity and financial resources for child support purposes (DJM and JLM [1988] FamCA 97; Scott and Scott [1994] FamCA 12; Carey and Carey [1994] FamCA 74). Mr Greaves agreed that some items could be seen as providing him with a personal benefit not available to the ordinary PAYG taxpayer.

4. In Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39, the Court said about the interpretation of the term “financial resources”:

   ‘Financial resource’ refers to ‘something which is not property but from which financial benefit is or may be gained. In light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.

5. With respect to the 2019/20 financial statements for Mr Greaves’ partnership, total income was $77,221.38. I consider that rental deductions are appropriately added back as claiming this item for under house storage clearly constitutes a personal financial benefit. With respect to business vehicles I note that $8,315.37 was claimed which includes fuel, full registration and insurance costs and repair costs (even though it is clear from the evidence that the two vehicles are used for a mix of personal and business purposes). In addition a  further item of fuel and oil of $4,699.13 was claimed. Utility expenses clearly associated with Mr Greaves’ personal residence have also been claimed, constituting electricity of $2,631.89. Finally, phone and internet expenses of $2,918.13 were claimed which made no provision for personal expenses.

6. Considering the above items, I consider add backs to net profit (of $45,984 after adjustments) constituting rent of $16,605, electricity of $2,631.89, 50% of total vehicle related expenses of $6,507 and 50% of phone expenses of which $1,459 are appropriate. Total add backs are therefore $27,203. Accordingly, the partnership 2019/20 net profit is $73,187 or $36,594 distributed on a 50% basis to Mr Greaves for child support purposes.

7. Miss Malghum raised concerns with respect to the genuineness of Mr Greaves’ disassociation with his parents’ business to which he was formally a director and shareholder. In the decision under review it was found he was still a 30% shareholder. However, records of company transactions indicate Mr Greaves’ shareholding was transferred to his mother, possibly around 2018. Mr Greaves confirmed this transfer had occurred for nil consideration. Miss Malghum also raised concerns with respect to previous property transactions undertaken by Mr Greaves. The difficulty in this matter is that Mr Greaves and Miss Malghum have undertaken a property settlement in which Mr Greaves’ pecuniary interest in the erstwhile family business and his property holdings were fully discoverable before the Court and also appealable in previous change of assessment applications made out in this matter. Miss Malghum submitted she was simply unaware of the shareholding at that time. In these circumstances, as explained at the hearing, I am reluctant to revisit this matter some years later unless there is evidence that Mr Greaves derives an ongoing undisclosed financial benefit from his parents’ business or from property proceeds. There is no such evidence before me. While Miss Malghum submitted photos of a quad and dirt bike she stated were subsequently purchased by Mr Greaves, and raised concerns with respect to some individual purchases by Mr Greaves and the destination of property sale proceeds, I do not consider there is sufficient evidence before me to demonstrate that he has access to financial resources higher than the amount derived from his business as I have worked out earlier in these reasons.

8. In addition to the above considerations it is undisputed that Mr Greaves accessed $10,000 as a lump sum payment from his superannuation in the 2019/20 financial year. This is appropriately considered a financial resource for child support purposes. Accordingly, I consider that it is reasonable to assess Mr Greaves’ income and overall access to financial resources as being $46,594 per annum at the time of Miss Malghum’s application for a departure from the administrative assessment.

9. With respect to Mr Greaves’ earning capacity the evidence before me indicates that he was working full time in the [business] until it was affected by COVID-19 and he began receiving jobkeeper payments. Under this ground he must have reduced his working hours with the intention of affecting child support. Given the well-recognised impact of the COVID-19 pandemic at that point in time I also do not find this ground to be made out.

   Miss Malghum

10. Miss Malghum is a PAYG taxpayer and I am satisfied that her recent payslips and taxation returns adequately reflect her overall access to income and financial resources. Her 2019/20 taxable income of $41,827 is therefore an appropriate reference when considering her overall capacity to support the child.

Conclusion – the parents’ income and financial resources

1. Under the applicable assessment, the annual rate of child support payable by Mr Greaves is $1,863 per annum. I have determined that his income and financial resources is reflective of an income of $46,594 per annum at the time of the departure application and that Miss Malghum’s income and financial resources is reflective of an income of $41,827 per annum at that time. The annual amount of child support payable by Mr Greaves using these figures is approximately $2,094 per annum after allowing for Mr Greaves’ other dependent children. Such an amount is not materially different and does not establish special circumstances in this matter. Accordingly, a ground for departure under subparagraph 117(2)(c)(ia) of the Act does not exist.

A ground for departure – the special needs of the child

1. The legislative grounds applicable to this ground are set out in subsection 117(2) of the Act. The legislative test is detailed in subparagraph 117(2)(b)(ia) and is commonly referred to as Reason 2 by the Department. The test is whether:

   … in the special circumstances of the case, the costs of maintaining the child are significantly affected because of special needs of the child

2. It was not contested by either parent that the child has special needs related to [her/his] diagnosis of [Medical conditions] and that his conditions are being managed under a National Disability Insurance Scheme (NDIS) plan. Miss Malghum supplied one accommodation receipt with respect to treatment for the child dated 14 December 2020 indicating an out-of-pocket expense of $95. When not affected by COVID-19 she submitted this expense would be incurred three to four times a year. She also incurs [Medical accessory] out-of-pocket expenses of around $100 per annum in respect to the child. No other costs were specified.

3. I am satisfied that the costs related to a “special need” in that they relate to the medically necessary procedures for the child’s health and wellbeing. The case of Lightfoot established the principle that if these costs are necessary or desirable for the child’s welfare, and they impact significantly on the cost of raising the child, a change to the child support assessment may be required. I am not satisfied that the claimed per annum annual costs of $195 incurred by Miss Malghum constitute an out-of-pocket expense that significantly affects the cost of maintaining the children, within the context of the amount of child support payable. I therefore consider that special circumstances relating to the child’s needs have not been made out in this matter and that Reason 2 has not been established.

   Other grounds

4. Miss Malghum also submitted that the child will incur private education costs in the future and asked me to take this into consideration. However, as noted during the hearing, as this cost is yet to be incurred, I am unable to consider this as a ground for departure at this stage.

5. No other grounds for departure were put forward in this matter.

CONCLUSION

1. I have found that no reason for departure has been established in this matter.

2. Under section 98F of the Act, the Registrar, after considering an application to depart from the administrative assessment, can refuse to make a determination “without taking any further action” under that Part of the legislation. To be able to make such a decision the Registrar must be satisfied of one of two things:

   Either

   That there are no grounds for departing from the provisions of the Act in relation to the child concerned;

   OR

   That it would not be just or equitable, as regards the child or either party to the application, or otherwise proper to do so.

3. The criteria for making such a decision are similar to the criteria contained in section 98C of the Act to allow the Registrar to make a departure determination. However, section 98F allows the Registrar to do so without further action and essentially is a summary way of dealing with a matter. While I also undertook an examination of the parent’s financial circumstances during the hearing, in the event that a ground for departure was established, there is now no need to discuss this further.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides to refuse to make a determination pursuant to section 98F of the Child Support (Assessment) Act 1989.