Marcotte and Anning (Child support)

Marcotte and Anning (Child support) [2018] AATA 1225 (3 April 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/SC012496
APPLICANT:  Mr Marcotte
OTHER PARTIES:  Child Support Registrar
Ms Anning

TRIBUNAL:Member W Kennedy
DECISION DATE: 3 April 2018
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to vary Mr Marcotte’s adjusted taxable income to $53,807.64 for the period from 1 February 2017 to 31 January 2019.

CATCHWORDS
Child support – Departure from assessment – Income and financial resources of parents – Business income – Proper needs of the child – 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 1988.

REASONS FOR DECISION

BACKGROUND

This decision concerns an application for a departure from the formula assessment of child support. Mr Marcotte and Ms Anning are the parents of [Child 1] who was born in 2003. There has been a child support assessment in place for [Child 1] made by the Child Support Agency of the Department of Human Services (the Department) since 3 June 2004. The assessment is based on Ms Anning having a care percentage of 100%.
The annual rate of child support results from a previous decision of this Tribunal (differently constituted). That decision resulted in Mr Marcotte’s adjusted taxable income (ATI) being set at $141,663 for the period from 1 August 2016 to 31 January 2017.
On 20 December 2016 Ms Anning applied to the Department for a departure from the assessment based on Reason 8A (the income, property and financial resources of one or both of the parents) and Reason 8B (the earning capacity of one or both of the parents).
On 16 May 2017 a delegate of the Child Support Registrar considered the departure application and decided that Reason 8A and Reason 8B had been established. The delegate decided to set Mr Marcotte’s ATI at $71,256.00 for the period from 1 February 2017 to the date of a terminating event and to increase the ATI annually by the Consumer Price Index beginning on 1 July 2018.
On 22 June 2017 Mr Marcotte lodged an objection to that decision, stating that there was no basis for setting his income at $71,256.00. On 8 August 2017 a Department objections officer considered Mr Marcotte’s objection, finding that Reason 8A had been established but that Reason 8B had not been established. The objections officer decided to set Mr Marcotte’s ATI at $38,045.00 for the period from 1 February 2017 to 31 January 2019.
On 13 September 2017 Mr Marcotte lodged an application for a review of the decision with this Tribunal. The Tribunal had access to the statement and documents provided by the Department. The documents are at folios 1 to 449 of the hearing papers and were provided to the parents in advance of the hearing.
Before the hearing the Tribunal directed Mr Marcotte and Ms Anning to provide further documentation. Mr Marcotte complied with the directions and the documents provided by him are at folios A1 to A131 of the hearing papers. Ms Anning also complied with the directions and the documents provided by her are at folios B1 to B95 of the hearing papers. Copies of the additional documents were provided to the parties prior to the hearing. The matter was heard and determined in Sydney on 3 April 2018. Mr Marcotte and Ms Anning both attended the hearing by telephone and gave their oral evidence under affirmations. Mr Marcotte was supported at the hearing by [a witness]. Ms Anning was supported at the hearing by [another witness]. At the commencement of the hearing Mr Marcotte acknowledged that the decision of the Tribunal could be adverse to him and elected to proceed. The Child Support Registrar was not represented at the hearing.

CONSIDERATION
The legislative framework and issues for the Tribunal to determine

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 Act). This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.
The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act. Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process for considering applications to do so. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:
·     that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exists; and
·     that it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
·     that it would be otherwise proper to make a particular determination
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established. The term ‘special circumstances’ is not defined in the Act. In Gyselman v Gyselman (1992) FLC 92-279 the Full Court of the 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.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal must make one of the determinations prescribed in section 98S of the Act. These include 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?

The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established. In her application to the Department Ms Anning asserted that there are two grounds (or reasons) for a departure from the administrative assessment. The Tribunal considered each of these in turn.

Does a ground exist to depart from the administrative assessment under Reason 8A?

Ms Anning sought a departure from the administrative assessment on the grounds that Mr Marcotte’s income, property and financial resources are greater than is reflected in the ATI used for him in the child support assessment. This ground for departure, which is known as Reason 8A for administrative purposes, is set out at subparagraph 117(2)(c)(ia) of the Act:
(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
…
Ms Anning has previously said that she believes that Mr Marcotte’s income is greater than he has declared. She has provided the Tribunal with a considerable amount of speculative material. For instance she has provided the names of numerous companies with names similar to Mr Marcotte’s. There is no evidence linking those companies with Mr Marcotte and the Tribunal is not prepared to be party to a speculative inquiry. In this regard the Tribunal notes that the Department investigated a company that Ms Anning had asserted belonged to Mr Marcotte and found that there was no association between Mr Marcotte and that company.
Ms Anning also claims that aside from his home Mr Marcotte owns a rural property [in Town 1] and shares in a construction company known as [Company 1]. Ms Anning states that Mr Marcotte previously owned a property [in Town 2] and that the sale proceeds are paid to him by instalments which he is continuing to receive.
At the hearing Mr Marcotte said that he had previously operated a [business], registered as [Company name] (ACT) Pty Ltd. Its main activity was providing [certain] services for schools in the ACT. The business failed to win [contracts] in 2017 and as a result, and also because of his age and state of health, Mr Marcotte decided to close the business. The business ceased operating at the end of the 2016/17 financial year.
Mr Marcotte has provided the Tribunal with a Statement of Financial Circumstances (SOFC) (folios A1 to A10) as well as bank account and credit card statements for a six month period (folios A43 to A101). The period covered by the statements is immediately following the cessation of the business. In his SOFC Mr Marcotte states that his income totals $377.69 per week, consisting of interest on a loan he has made and rent on a property he owns. This represents an annual income of $19,640.00. He states that he has no other source of income. He states that his expenses amount to some $658.00 per week, meaning that his expenses exceed his income by some $280.00 per week. At the hearing he said that he could not explain how he met the shortfall.
Mr Marcotte’s credit card and bank account statements show that he receives $270.00 per week in rent, as indicated in his SOFC, but the statements do not disclose any interest income. During the six month period for which statements are available, deposits to his personal bank account totalled $6,200.00 (folios A43 to A56, but also assuming two deposits of $500.00 during the period from 1 to 28 September, which is missing from the documentation provided by Mr Marcotte). Extrapolating the income for a full year means that Mr Marcotte’s income would be $12,400.00, however as the rent increased from $250.00 per week to $270.00 per week in October 2017 the income from that source is now somewhat higher.
Mr Marcotte’s 2016/17 income tax return shows income of $18,400.00 in wages and $21.00 in interest. No income from rent is disclosed in his tax return and the interest return is clearly less than he would have received (folio 358). While the quantum of income disclosed in his SOFC and in his tax return is similar the nature is completely different, in one case coming almost entirely from wages and in the other case coming entirely from investment income. At the hearing Mr Marcotte said that he is not an accountant and cannot explain why the rental income and interest income is not shown on this tax return.
Mr Marcotte’s expenditure on his credit card and from his personal bank account totalled $13,527.42 (folios A43 to A71). Although the records are not quite complete, as they cover slightly varying periods, it is clear that the difference between Mr Marcotte’s income and his expenditure is made up when his credit card account is paid with funds transferred from his business bank account (folios A86/A65, A94/A68 and A98/A72).
Mr Marcotte’s business bank account shows income of $41,463.11 and expenses of $18,192.82. With a few exceptions the business account is used to meet the same sort of expenses as are met by Mr Marcotte’s credit card. For instance Mr Marcotte makes regular purchases at [a] Store (which is between his home in Canberra and his second property at [Town 1]) using his credit card and also using his business bank account. He also makes purchases on both accounts at [different locations] and so on, all of which appear to be related to his hobby farm rather than to his business. As there appears to be no distinction between personal and business expenditure, the Tribunal considers that all of MrMarcotte’s accounts should be considered together.
Mr Marcotte’s business bank account shows only three deposits during the six month period. These consist of a payment of $30,000.00 described on the bank account statement as “Repay Loan” (folio A78), a payment of $11,416.00 described on the bank account statement as “Deposit [for a] College” (folio A73) and a deposit of $47.11 (folio A73). At the hearing Mr Marcotte said that the payment of $30,000.00 was the repayment of part of a loan he had made to [Company 1] and that the payment of $11,416.00 was the final payment from the contract to [provide services to a] College. In this regard the Tribunal notes an immediate payment of $5,561.68 described as “Universal Office Pay” which Mr Marcotte said was the wages for the persons employed by the company on that contract.
The business’ financial statements for 2016/17 (folios A103 to A111) show a gross income of $229,045.21 and total expenses of $255,574.58, producing a loss of $26,529.37. The largest expenses are salaries ($132,289.00) contract expenses ($20,400.00) and associated salaries ($18,400.00), the latter apparently being paid to Mr Marcotte, consistent with his personal tax return.
As far as expenditure is concerned, an examination of Mr Marcotte’s bank account and credit card statements shows the expenses that would be expected. During the six month period covered by the accounts the Tribunal is not able to identify every expenditure item but the majority are readily identifiable. Mr Marcotte’s main expenditure items are groceries ($2,691.83), hardware and miscellaneous ($1,753.00) and petrol ($1,045.30). He also makes significant purchases from chemists ($789.26) and has the expected expenditure on utilities ($1,262.70) and rates ($813.32). The Tribunal notes that there are no expenses for meals or entertainment. A few anomalies are apparent when the expenses are compared with his SOFC. Mr Marcotte also shows on his SOFC no expenditure on entertainment or holidays, gardening, cleaning, household repairs, books, gifts or hairdressing. Despite these anomalies the Tribunal finds that in general the expenses disclosed by his bank and credit card statements are consistent with the items shown on his SOFC.
The expenditure disclosed by the personal bank account and credit card accounts suggest an annual expenditure of some $27,000.00 per annum, which is consistent with Mr Marcotte’s SOFC. When considering all of the accounts disclosed by Mr Marcotte, and eliminating the transfer of funds between accounts, the Tribunal finds that in the six month period disclosed by the accounts Mr Marcotte’s income totalled $47,663.11 and his expenditure totalled $31,868.56. Annualised, this would produce an income of more than $95,000.00 and expenditure of more than $60,000.00. However, there are income items which require further consideration. The payment of $30,000.00 is the repayment of part of the principal of a loan (see below). The payment of $11,426.00 is a payment that relates to the period when the business was operating.
In considering the financial resources that are disclosed by the documentation provided by Mr Marcotte the Tribunal considers that there are two periods that must be considered.
The first period covers the period when Mr Marcotte’s business was operating. At that time he was paid by the business an annual income of $18,400.00 as shown in the business accounts and on his personal tax return. The business had a loss of $25,089.00 in 2016/17 (as disclosed in the business income tax return rather than in the financial statements). The Tribunal will deduct this amount from Mr Marcotte’s income. In 2016/17 the business declared depreciation of $10,263.00, which is a provision rather than an expense. As the business was about to cease operation there was no need for such a provision and the Tribunal will add it on to Mr Marcotte’s income. The business also claimed fines ($1,440.00) which the Tribunal will count as a personal benefit. With regard to motor vehicle expenses of $5,504.00 and telephone expenses of $2,003.79, the Tribunal will regard 50% of the totals as delivering personal benefits to Mr Marcotte. The business accounts shows items for ordinary salaries ($132,289.00) and superannuation ($14,972.91). At the hearing Mr Marcotte said that these relate to persons employed under the cleaning contracts. He also said that the contract payments ($20,400.00) relate to a specialist cleaner employed by the business. Mr Marcotte said that none of the persons paid under these items were related to him and that he was not in a relationship with anyone paid under these items.
Mr Marcotte rents out a house on a rural property he owns in [Town 1]. He currently receives $270.00 per week, but prior to October 2017 the rent was $250.00 per week. Mr Marcotte has provided documentation which supports these figures.
At the hearing Mr Marcotte said that he sold a property referred to as “the [Town 2] farm” about four years ago. He said that the sale price was $250,000.00 and that it was to be paid at the rate of $25,000.00 every 5 months. He said that in April 2017 he received a repayment of $35,000.00 which finalised the purchase. At the hearing Mr Marcotte was unable to say why the final payment was $35,000.00. A letter dated 26 April 2017 (folio 265) confirms that the payment received on that date finalised the sale of that property.
In about 2015 Mr Marcotte extended a loan of $100,000.00 to [Company 1]. At the hearing Mr Marcotte acknowledged that the interest was received “cash in hand” and did not show up in his bank account statements. A repayment of principal of $30,000.00 was received on 31 July 2017 and Mr Marcotte stated in his SOFC that after that repayment of principal he was receiving $107.69 per week in interest. On a pro rata basis this means that prior to the repayment Mr Marcotte was receiving $153.84 per week, or $7,999.83 per annum.
The Tribunal concludes that during the period up to 30 June 2017, when the business ceased operation, the information provided by Mr Marcotte shows that his income could be calculated by adding together the following elements:
·Wages  $18,400.00
·Rent  $13,000.00
·Interest  $7,999.83
·Depreciation               $10,263.00
·Fines  $1,440.00
·Motor Vehicles           $2,752.00
·Telephones                $1,001.90
·Business Loss  -$25,089.00
TOTAL  $29,767.73
The second period commences on 1 July 2017, the day after the business ceased operation. In his SOFC Mr Marcotte declares a superannuation balance of $49,000.00. This is the same figure declared by him to the Tribunal in 2016. At the hearing Mr Marcotte said that he had not yet started an account based pension as he is saving the money for when he is old. As Mr Marcotte is 72 years old and retired he may start a pension at any time. The Tribunal considers it appropriate to proceed on the basis that Mr Marcotte has access to the statutory minimum income (which is 5% of the balance for a person aged between 65 and 74) from a superannuation balance of $49,000.00. The Tribunal notes that this income is not subject to income tax.
At the hearing Mr Marcotte said that he had applied for the age pension but that he had not yet been advised of the outcome. Mr Marcotte is 72 years of age and claims to be fully retired. The assets that he has declared to the Tribunal would not result in a reduction of the rate of payment, however the income disclosed by his oral evidence would reduce the rate of payment somewhat. The Tribunal will therefore consider that he has access to an age pension somewhat below the maximum rate.
With regard to the loan to [Company 1] Mr Marcotte has received two repayments of principal, being $30,000.00 received on 31 July 2017 and $10,000.00 received on 16 January 2018. During the first period Mr Marcotte was receiving $153.84 per week. After the first principal repayment he was receiving $107.69 and he now receives $92.31 per week.

The Tribunal concludes that for the period from 1 July 2017, when Mr Marcotte retired, the information provided by him shows that his income could be calculated by adding together the following elements:
·Age Pension               $18,500.00
·Rent  $14,040.00
·Interest  $5,415.36
·Superannuation          $2,340.00
TOTAL  $40,295.36
The actual ATI used in the assessment at the time that Ms Anning applied for the departure from the assessment was $141,663.00. However, on 31 January 2017 the assessment would revert to the formula and under the formula Mr Marcotte’s ATI would be based on his 2015/16 taxable income, which was $26,556.00. Dependent on when Mr Marcotte’s 2016/17 tax return was lodged, the child support assessment would eventually be based on his 2016/17 taxable income of $18,271.00. As these figures are significantly lower than the figures produced by an examination of the documentation provided by Mr Marcotte the Tribunal finds that there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ia) of the Act.

Does a ground exist to depart from the administrative assessment under Reason 8B?

Ms Anning sought a departure from the administrative assessment on the ground that Mr Marcotte’s earning capacity is not reflected in the formula assessment. This ground, known as Reason 8B for administrative purposes, is set out in subparagraph 117(2)(c)(ib) of the Act:
(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:
…
(ib) because of the earning capacity of either parent; or

…

Subsection 117(7B) of the Act provides:
(7B)In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i)the parent does not work despite ample opportunity to do so;
(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)the parent has changed his or her occupation, industry or working pattern; and
(b) the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)the parent's caring responsibilities; or
(ii)the parent's state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
At the hearing Mr Marcotte said that he had closed the business when the contracts expired on 30 June 2017. He said that he is now fully retired and does not intend to work again. By closing his business and not taking up other work Mr Marcotte has changed his working pattern thus satisfying paragraph 117(7B)(a) of the Act. He has provided a substantial body of medical documentation showing that he has various medical conditions. A letter from a General Practitioner dated 13 June 2017 states that Mr Marcotte is “currently unfit for continuing with employment” (folio 267). Moreover Mr Marcotte is more than 70 years of age and may choose to retire. The Tribunal finds that paragraph 117(7B)(b) of the Act is not satisfied and it is not open to the Tribunal to make a finding as to Mr Marcotte’s earning capacity.
The Tribunal finds that there are no special circumstances that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ib) of the Act.

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

Relevant law and evidence

As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support under Reason 8A, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable the Tribunal had regard to the following matters set out in subsection 117(4) of the Act:
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(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.
The Tribunal considered the evidence provided by both parents, including the documents and SOFC form that each party provided to the Tribunal, as well as the documents provided by the Department.

Assessment of evidence, findings of fact and application of the law

Section 3 of the Assessment Act states and the Tribunal accepts that it is the duty of both parents to financially support their children and that [Child 1] should receive a proper amount of financial support from her parents in accordance with their capacity to contribute.

The children’s needs

Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children. The Tribunal has done this in accordance with the legislation under which this determination is made. At the hearing Ms Anning said that [Child 1’s] wisdom teeth must be removed. She provided a copy of a letter from [a medical centre] dated 17 November 2017 stating that [Child 1’s] wisdom teeth must be removed as soon as possible (folio B60). She also provided a copy of a quote dated 15 December 2017 (folio B62) which estimates that removing the wisdom teeth would cost $1,780.00.
Normal medical and dental costs are incorporated into the child support formula and in some circumstances it would be considered that as many children must have their wisdom teeth removed it is a routine cost. The Tribunal notes that in this case the cost is substantial when compared to the quantum of child support which would be payable under the formula and in comparison with the resources which Ms Anning claims are available to her.
At the hearing Ms Anning said that [Child 1] is attending a private school and provided documentation showing the fees charged by the school. Ms Anning has previously said that she is hopeful of obtaining an exemption or at least a reduction in the fees on compassionate grounds. Ms Anning acknowledged that she had not consulted with Mr Marcotte about {Child 1’s] education. Ms Anning lives in the ACT and [Child 1] has access to a high quality public education system, which is provided for in the formula assessment. The Tribunal finds that it is not necessary that [Child 1] attend a private school and that the fees, if Ms Anning pays them, represent a discretionary expenditure.
At the hearing Ms Anning said that [Child 1] is generally healthy and has no other extraordinary needs.

The children’s incomes and earning capacities

[Child 1] is a full-time student and has no independent income or earning capacity. She is dependent on Mr Marcotte and Ms Anning for support.

The income, property and financial resources and earning capacity of Mr Marcotte and his necessary commitments

Mr Marcotte’s financial circumstances were closely examined by the Tribunal. The Tribunal’s findings in relation to the income information provided by Mr Marcotte is described above. However in considering the capacity of Mr Marcotte to provide child support for [Child 1], there are other matters in relation to Mr Marcotte’s financial resources that require consideration by the Tribunal. In addition to his home Mr Marcotte owns a rural property at [Town 1] which he values at $262,000.00. In his SOFC he has declared the loan to [Company 1] as an asset valued at $70,000.00, however he said at the hearing that $10,000.00 of this had been repaid in January 2018. He also advised that he has a superannuation balance of $49,000.00.
As at 30 June 2017 the business had assets of $532,884.36 (folios A106 to A107). Realisable assets consisted of the [Town 2] farm which is shown in the books as having a value of $200,000.00 and plant and equipment and motor vehicles which had a depreciated value of $32,742.00. There was also a “bond deposit” of $5,500.00 and directors loans (made to Mr Marcotte) of $294,000.00. Against these assets the business had liabilities of $50,727.25. At the hearing Mr Marcotte was unable to explain why the [Town 2] farm was still shown in the business accounts, when he said that it has been sold and that the final payment was received prior to the end of the period covered by the accounts.
Mr Marcotte’s financial affairs are somewhat opaque and at the hearing when pressed he claimed ignorance, saying that he was not an accountant. The fact that he receives some of his income as cash in hand and that he does not declare it on his income tax return suggests to the Tribunal that Mr Marcotte is prepared to mislead the authorities as to his true financial position. As well as acknowledging that he receives income that does not appear in his financial records, at the hearing Mr Marcotte acknowledged that his expenses are greater than he has disclosed in his SOFC. The information provided to the Tribunal shows that Mr Marcotte has sufficient resources to meet his needs and to support a rural property.
The Tribunal has decided that under these circumstances the best way to establish an understanding of the financial resources available to Mr Marcotte is to examine expenditure rather than income.
Mr Marcotte’s SOFC shows expenditure of $34,216.00 per annum but at the hearing Mr Marcotte stated that it is actually higher than that, noting that he had not put anything down in the SOFC for numerous normal expenditure items, including gifts and that he “has a lot of grandkids”.
The bank and credit card accounts provided by Mr Marcotte cover the period after the business ceased operation, however there are some payments disclosed in the accounts that are clearly related to the business and in considering Mr Marrapodi’s personal expenditure the Tribunal removes these from its calculation. The payments thus removed are Universal Office Pay ($5,561.68 at folio A73) and Quicksuper ($1,803.12 at folio A76). The accounts provided by Mr Marcotte show non-business expenditure of $24,503.76, which is $49,007.52 per annum, but Mr Marcotte acknowledged at the hearing that the cash in hand he receives would not appear in the bank or credit card account statements. The cash in hand income disclosed by Mr Marcotte is currently $92.31 per week. This will end when the loan is repaid, but Mr Marcotte will then have access to the capital. The Tribunal considers it appropriate to add the $92.31 per week to the expenditure figure disclosed by the documentation provided by Mr Marcotte. This produces an annual expenditure figure of $53,807.64. The Tribunal finds that this figure forms a better basis for determining the appropriate ATI than does the income documentation provided by Mr Marcotte.
The Tribunal finds that Mr Marcotte has sufficient income, property and financial resources to meet his necessary commitments.

The income, property and financial resources and earning capacity of Ms Anning and her necessary commitments

Ms Anning’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the SOFC (folios B1 to B9) and the other documentation provided by Ms Anning. According to her SOFC Ms Anning is entirely reliant on social welfare benefits and child support. Making some corrections for arithmetic errors, Ms Anning claims in her SOFC that her weekly income is $625.61 and that her weekly expenditure is $590.00, meaning that she has weekly surplus of income over expenditure of some $36.00.
The bank and credit card account statements provided by Ms Anning show that during the six month period her income averaged $557.27 per week and her expenditure averaged $560.80 per week, meaning that she had a weekly deficit of some $4.00. While there are some differences between the SOFC and the bank statements, the Tribunal finds that they disclose similar income and expenditure.
Over the six month period under review by the Tribunal the majority of Ms Anning’s income came from newstart allowance ($4,613.35) and family tax benefit ($5,091.68). She also received $926.00 in child support during the six month period. The statements provided by Ms Anning show that in addition to the disclosed income, funds are transferred from an unidentified account. During the six month period a total of $3,439.31 was transferred from this account. When questioned about the relevant transfers Ms Anning had difficulty identifying where the funds had come from. She eventually decided that the funds came from an account belonging to her daughter. She promptly said that the account now has a balance of $4.00. The Tribunal finds this explanation unsatisfactory but also finds that even taking into account this undisclosed source of funds Ms Anning’s relevant income remains below the self-support amount.
Ms Anning does not work and there is no evidence that she has worked since [Child 1] was born. Ms Anning is currently in receipt of NSA and is subject to the normal activity requirements in order to remain qualified for benefits. The Tribunal has before it no evidence that Ms Anning has any employment opportunities that she is not taking up.
Despite Ms Anning failing to disclose a source of funds to the Tribunal the Tribunal finds that Ms Anning has difficulty meeting the necessary needs of [Child 1]. She makes use of multiple charities and is housed in highly subsidised accommodation. At the same time the Tribunal notes that Ms Anning pays $43.00 per fortnight for funeral insurance and $60.00 per fortnight for lawn mowing (folio B14). These two expenditures amount to $2,678.00 per annum, which is more than 17% of Ms Anning’s current ATI. At the same time Ms Anning has provided evidence of the difficulty she has in meeting the cost of providing [Child 1] with appropriate football boots and the cost of taking her to sporting competitions.
The Tribunal finds that taking into account the undisclosed source of funds and Ms Anning’s discretionary expenditure she has sufficient financial resources to meet her necessary commitments and the necessary commitments to support [Child 1]. However, it also finds that an increase in child support paid by Mr Marcotte will help ensure that [Child 1] is able to participate more fully in normal teenage activities.

The parents’ duty to support others

Neither party has the legal duty to support any person other than [Child 1].

Hardship

The Tribunal has found that both parents have incomes that are sufficient to meet their necessary commitments.
Had the child support assessment reverted to Mr Marcotte’s 2015/16 taxable income it would have resulted in a child support assessment of $645.00 per annum. When Mr Marcotte’s 2016/17 taxable income was applied it would have resulted in a child support assessment of $427.00. As a result of the original decision the child support assessment was $10,807.00 per annum. As a result of the objection decision the child support assessment was $3,287.00 per annum.
The Tribunal considers that for Mr Marcotte an ATI of $53,807.64 is appropriate and that for Ms Anning an ATI determined consistent with the formula assessment is appropriate. The Tribunal calculates that this would produce a child support assessment of $6,753.00 per annum. The Tribunal is satisfied that Mr Marcotte has access to sufficient financial resources to meet the child support liability contemplated by the Tribunal and, having regard to Mr Marcotte’s primary obligation to support [Child 1], the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Marcotte.
The Tribunal considered whether to adjust the child support payable to take into account the need for [Child 1] to have her wisdom teeth removed. However the Tribunal notes that Ms Anning has access to a bank account which she failed to disclose to the Tribunal, despite specific directions that she do so. At the hearing, when pressed, Ms Anning said that the account has a balance of $4.00. The Tribunal notes that she transferred a total of $3,439.31 from the account during the six month period covered by the documentation provided by her. The Tribunal is unable to determine the balance in the account but concludes that it is likely to have sufficient funds to allow Ms Anning to meet the cost of removing [Child 1’s] wisdom teeth.
The decision contemplated by the Tribunal will result in Ms Anning being better able to provide for [Child 1’s] necessary needs and to ensure that [Child 1] is able to participate fully in normal activities for a person of her age. The decision contemplated by the Tribunal will not cause hardship to Ms Anning.

Terms and period of departure

The child support assessment in place at the time of Ms Anning’s application results from a previous departure from the assessment that continued in effect until 31 January 2017. In the absence of a further departure decision the case would then revert to the formula assessment. The application for departure that is currently before the Tribunal was lodged by Ms Anning on 20 December 2016. Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the departure to commence from the day after the previous departure ended.
The Tribunal has decided to make the departure of reasonable length so that the parties do not need to go through the change of assessment process in the immediate future. However, the Tribunal is also concerned to ensure that the assessment does not become disconnected from changing circumstances. It considers that a two year period is appropriate. Accordingly it has decided to set the departure to commence on 1 February 2017 and to end on 31 January 2019.

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

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 to 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.

The child support law recognises that each parent has a primary duty to maintain their children. In this case Ms Anning receives family tax benefit (FTB) and newstart allowance. On the basis of the information available to the Tribunal Mr Marcotte is qualified to receive age pension. As a result of the Tribunal’s decision Ms Anning’s FTB may change marginally. The Tribunal finds that this is appropriate and is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides to vary Mr Marcotte’s adjusted taxable income to $53,807.64 for the period from 1 February 2017 to 31 January 2019.

[2018] AATA 1225

3 April 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Jurisdiction

Statutory Construction

Remedies