McIntyre and McCaffry (Child support)

[2024] AATA 2538

McIntyre and McCaffry (Child support) [2024] AATA 2538 (6 June 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/PC027353

APPLICANT:  Miss McIntyre

OTHER PARTIES:  Child Support Registrar

Mr McCaffry

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  06 June 2024

DECISION:

The decision under review is varied so that the fixed annual rate of child support should not apply to Miss McIntyre’s child support assessment from 3 August 2022.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – fixed annual rate of child support – low-income earner – relevant date of change – decision under review varied

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. This review is about an application for the fixed annual rate of child support to not apply to the child support assessment.

2. Miss McIntyre and Mr McCaffry are the parents of [Child 1] (born February 2012).  There has been a child support assessment in place since 10 October 2017 and Miss McIntyre is currently the liable parent under the assessment.

3. On 25 May 2023 Miss McIntyre made an application to Services Australia – Child Support (Child Support) for the fixed annual rate to no longer apply to the assessment.  On 25 May 2023 Child Support made the decision to accept the application for the fixed annual rate to no longer apply to the assessment from 25 May 2023.

4. On 19 June 2023 Miss McIntyre objected to this decision and on 8 January 2024 Child Support disallowed the objection (the objection decision).

5. On 12 January 2024 Miss McIntyre applied to the Administrative Appeals Tribunal (the Tribunal) for review of the objection decision.

6. The Tribunal conducted a hearing into the application on 21 May 2024.  Miss McIntyre and Mr McCaffry gave evidence on affirmation by Microsoft Teams audio.  Child Support provided the Tribunal and the parties with papers relevant to the matter (104 pages).

7. The Tribunal received additional information from Mr McCaffry prior to the hearing (B1‍–‍B12).  As a copy was not distributed to Miss McIntyre until 22 May 2024 the Tribunal gave Miss McIntyre additional time to review this evidence.  At hearing the Tribunal also requested that Miss McIntyre provide financial information relating to her business.  This was received on 27 May 2024 and a copy distributed to Mr McCaffry (A131–A136).  No written comments were received from Mr McCaffry by the stipulated date.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The issue which arises in this case is whether or not the fixed annual rate of child support should not apply in respect of Miss McIntyre’s child support liability.

CONSIDERATION

1. For low-income parents not on income support, a fixed annual rate of child support is payable (section 65A of the Act).

2. A parent who has been assessed at the fixed annual rate under section 65A may make an application to Child Support for it not to apply (section 65B of the Act).  The parent making the application must provide evidence to demonstrate their current income is less than the parenting payment (single) maximum basic amount and that it would be unjust and inequitable to expect them to pay the amount assessed under section 65A.

3. At the time relevant to this review the fixed annual rate was $1,521 per child. The Tribunal is satisfied that Child Support made a determination under section 65A which required Miss McIntyre to pay the fixed annual rate in respect of [Child 1] from 3 August 2022.  The Tribunal also finds that Miss McIntyre made an application under section 65B on 25 May 2023.

4. Miss McIntyre told the Tribunal she had ceased working in December 2017 when pregnant with her middle daughter and had been financially supported by her partner since then.  Miss McIntyre said she received no form of allowance from her partner and he paid all the bills.

5. Miss McIntyre said that in March 2023 she worked [at a local business] for a few days to help a friend but had not done so again since.  Miss McIntyre explained that she started her own business, [Business 1], in August 2023, which she operated from home as a sole trader.  Miss McIntyre said at one point her family was helping her care for her young children while she was running the business but this was no longer the case and so she was unable to take on as many appointments.  Miss McIntyre said she was likely to close [Business 1] at the end of the current financial year.

6. The Tribunal notes in evidence from Child Support an Australian Taxation Office (ATO) notice of assessment for Miss McIntyre for the year ended 30 June 2023.  It shows Miss McIntyre had a taxable income of $1,369 in 2022–23.

7. Miss McIntyre told the Tribunal that she considered her business was more of a hobby and, at best, might make a net profit of approximately $8,000 in 2023–24.  Miss McIntyre added that she had no other source of income and was not in receipt of any government benefits.

8. Following the hearing Miss McIntyre provided the Tribunal with a detailed spreadsheet showing the income and expenses for [Business 1] from the date the business commenced in August 2023 through to May 2024.  The spreadsheet shows total sales generated of approximately $12,042 and total expenses of approximately $9,969.

9. Miss McIntyre told the Tribunal that as a stay-at-home mother her biggest outing during the week was a trip to the supermarket; otherwise, she led a very quiet life.  Miss McIntyre said given her limited financial circumstances she was seeking to have the fixed annual rate not apply to the assessment from 3 August 2022 which was the date she became the paying parent.  Miss McIntyre added she did not believe her partner should be responsible for supporting [Child 1] as this was the only way she could meet her child support obligations.

10. Mr McCaffry told the Tribunal he believed [Business 1] was more successful than Miss McIntyre was revealing.  Mr McCaffry referred to a social media post where Miss McIntyre thanked clients for their support.

11. The Tribunal notes in evidence from Mr McCaffry a post on social media dated 27 December 2023 in which Miss McIntyre thanks clients and family and states that without their support she could not have had “the successful first year of business”.

12. Mr McCaffry told the Tribunal it was his view Miss McIntyre was running a cash business with little income declared on the books.

13. The parenting payment (single) maximum basic amount at the time relevant to this review was $22,415 per annum.  For the purposes of determining a parent’s current income it is generally accepted this is the income for the 12 months from the date of application to not have the fixed annual rate apply.  Miss McIntyre made her application on 25 May 2023.

14. The Tribunal is satisfied, based on the evidence provided, that Miss McIntyre has a current income – being her income for the 12 months from the date of her application to not have the fixed annual rate apply – which is less than the threshold amount of $22,415 per annum.  There is no evidence before the Tribunal to substantiate the contention Miss McIntyre is not declaring the full income generated by [Business 1].  Even if Miss McIntyre were receiving cash income from her business and the Tribunal were to double her estimated net profit this would amount to a total of approximately $16,000 in 2023–24.

15. In determining whether or not it would be unjust and inequitable for Miss McIntyre to pay the fixed annual rate, the Tribunal considered the Child Support Guide at section 2.4.11:

    The Registrar will make a fixed annual rate assessment where a liable parent has a low ATI but did not receive income support payments during the last relevant year of income. The fixed annual rate amount may not be the final amount payable by a parent - it is the amount calculated at (for example) Step 8 of the basic formula (2.4.7), as payable by that parent in relation to the child.

    The fixed annual rate addresses situations where a parent minimises their taxable income in a way that does not fairly represent their real capacity to pay child support, and thereby reduce or avoid the contribution they should make towards meeting the costs of their children. If a parent is genuinely on a low income, they will usually access social security or other income support payments.

    Some parents may genuinely be on a low income and either choose not to access income support payments, or may not be eligible to receive such payments (for example, due to their current partner's income). A parent is able to apply to the Registrar to have the fixed annual rate not be used.

16. Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation.

17. The Tribunal is satisfied that Miss McIntyre is a low-income earner and being supported financially primarily by her partner.  The Tribunal finds it would be unjust and inequitable for Miss McIntyre to pay the fixed annual rate of child support and her application should be accepted.

18. In determining the date on which section 65A ceases to apply in relation to Miss McIntyre, subsection 65B(5) of the Act establishes that the day may be any day from the first day of the child support period on which the fixed annual rate became payable by the parent.

19. The policy in the Child Support Guide at section 2.4.11 also states in relation to this matter:

    If an application is granted, the Registrar will specify the day on which the fixed annual rate ceases to apply to the parent (CSA Act section 65B(5)). In most cases, the Registrar will specify that the determination will apply from the first day in the child support period on which the fixed annual rate was payable. However, if making a determination that the fixed annual rate will not apply from the beginning of the child support period would create an overpayment for the payee, generally the Registrar will specify that the determination will apply from a date after the start of the child support period, for example, the date the application was made. In making this decision, the Registrar will consider the reasons for any delay in making the application.

20. Miss McIntyre explained to the Tribunal that when she first contacted Child Support to have the fixed annual rate not apply to the assessment, she wanted it from the date care changed and she had become the paying parent.  Miss McIntyre said this was because she had not been working for many years.

21. The Tribunal notes in evidence from Child Support that Miss McIntyre had a taxable income in 2021–22 of $5.  The Tribunal also notes that Mr McCaffry had a taxable income of $129,260 in 2021–22 and $148,742 in 2022–23.

22. The Tribunal notes there is a private arrangement between the parents in relation to the collection of child support.  It is unclear if Miss McIntyre is up to date with her child support obligations, however, the Tribunal is satisfied that any overpayment to Mr McCaffry, should this arise, would not cause him financial hardship.

23. The first day in the child support period on which the fixed annual rate was payable was 3 August 2022.  The Tribunal is satisfied that, in the circumstances of this case, the fixed annual rate should cease to apply from 3 August 2022.

24. In making this decision the Tribunal notes that if Child Support determines under section 65B of the Act that section 65A does not apply and is later satisfied that the parent does not meet the relevant conditions, the fixed annual rate of child support may be reinstated (section 66B).

DECISION

The decision under review is varied so that the fixed annual rate of child support should not apply to Miss McIntyre’s child support assessment from 3 August 2022.