McLennan and Calladine (Child support)

[2022] AATA 3063

McLennan and Calladine (Child support) [2022] AATA 3063 (5 July 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC023251

APPLICANT:  Mr McLennan

OTHER PARTIES:  Child Support Registrar

Ms Calladine

TRIBUNAL:Member C Breheny

DECISION DATE:  05 July 2022

DECISION:

The decision under review is set aside and a decision substituted that:

• For the period 1 July 2021 to 18 January 2022 Mr McLennan’s adjusted taxable income is set at $77,375 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – decision to depart – 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. Ms Calladine and Mr McLennan are the separated parents of [Child 1], born February 2007 and [Child 2], born December 2012. There are two older children not subject to this review. A child support case has been registered with Services Australia – Child Support (Child Support) since 19 February 2015, but only registered for collection from 27 March 2020. Child support was payable on the basis that Ms Calladine has 100% care of the children. Mr McLennan is, at all times, assessed as liable to pay child support to Ms Calladine.

2. For the period 1 September 2020 to 31 August 2021 Mr McLennan’s child support liability had been administratively assessed as being $443[1] per annum based on his 2019/20 adjusted taxable income of $26,773 and Ms Calladine’s 2019/20 adjusted taxable income of $25,347. From 1 September 2021 to 30 November 2022 the rate of child support payable was $542 per annum based on Mr McLennan’s 2020/21 adjusted taxable income of $28,361 and Ms Calladine’s 2020/21 adjusted taxable income of $27,843.

   [1] This was the minimum annual rate at the time.

3. On 7 June 2021, Ms Calladine applied to Child Support for a change of assessment on the basis that Mr McLennan’s income, property, financial resources and earning capacity were not accurately reflected in the assessment. Mr McLennan disagreed, noting that his taxable income was correct and should continue to be reflected in the assessment.

4. On 8 October 2021, decision maker (DM) Crisp decided to change the administrative assessment on the basis of Mr McLennan’s income and financial resources and determined that for the period 1 July 2021 to 30 June 2023 Mr McLennan’s adjusted taxable income was set at $58,000.

5. On 26 October 2021, Mr McLennan objected to the decision stating that Ms Calladine also had undisclosed earnings. On 3 February 2022, a Child Support objections officer decided to disallow the objection.

6. On 8 February 2022, Mr McLennan applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) for an independent review of Child Support’s decision. A hearing into Mr McLennan’s application for review was held on 5 July 2022. Both Ms Calladine and Mr McLennan attended the hearing by conference telephone and gave evidence on affirmation. 

7. I had before me the statement and documents provided by Child Support pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975, received on 8 March 2022 and 17 June 2022 respectively and numbered 1–505. I also considered additional documents provided by Mr McLennan (marked A1–A236) and Ms Calladine (marked B1–B230) as a result of written directions issued on 10 May 2022.

LEGISLATIVE FRAMEWORK AND ISSUES

1. The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the 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. Either the liable parent or the carer entitled to child support may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the 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 that a ground for departure exists and that it is just and equitable and otherwise proper to make a departure determination.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Act. 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 may make one of the determinations prescribed in section 98S of the Act.

4. In the legislation, each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether one (or more) grounds exists, the Tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279 stated that:

   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 administrative formula result in the ordinary run of cases.

5. Subsection 98C(3) of the Act provides that subsections 117(4) to (9) of the Act apply and the Tribunal must consider these when deciding whether it would be just and equitable or otherwise proper to make the departure decision.

CONSIDERATION

A ground for departure

1. Ms Calladine asked for a departure from the administrative assessment on the basis that the assessment does not correctly reflect the parties’ respective income, property, financial resources and earning capacity (also known as “Reason 8A and 8B”).

Income, property, financial resources and earning capacity of both parties

1. Subparagraph 117(2)(c)(ia) of the Act provides that, in the special circumstances of the case, a ground for departure may be established if application of the legislative provisions relating to an administrative assessment results in an “unjust and inequitable determination of the level of financial support to be provided by the liable parent” due to the income, property and financial resources of either parent.

Mr McLennan – income, property and financial resources

1. At the time Ms Calladine lodged her application on 7 June 2021 child support liability was $443 per annum, based on Mr McLennan’s 2019/20 adjusted taxable income of $26,773. Ms Calladine submitted that Mr McLennan has a business and he was also able to make mortgage payments of $25,400 in the 2019/20 financial year. In the previous (2018/19) financial year Mr McLennan declared a taxable income of $33,263 but was able to make mortgage payments of $53,500. Mr McLennan’s ability to pay these amounts are inconsistent with his low declared income.

2. Mr McLennan said that he operates a sole trader business [providing specified services]. He earned a reasonable income in the past, but the COVID-19 pandemic affected the business performance. He has worked as a contractor for a larger company and, at times he had two subcontractors working for him.

3. Mr McLennan submitted that his taxable income accurately reflected his financial circumstances and the income that he has derived from his business. He said that he was able to make additional mortgage payments because his girlfriend provided extra cash. She would either transfer money directly into his account or give him the money which he would then deposit into his account.[2]

   [2] These are marked as “cash deposits” on the bank statements.

4. Mr McLennan said that he last worked in his business in December 2021. He sustained [an injury] in January 2022. Since that time he has also been caring for his [brother] who suffers from a disability. Mr McLennan submitted that he is being paid a regular carer payment for his brother from March 2022 and the child support assessment ought to reflect his current situation.

Mortgages

1. Ms Calladine and Mr McLennan jointly own two properties. The first property is a townhouse, which was rented out after the second property (in which Ms Calladine now resides) was purchased in 2009. Mr McLennan moved into the townhouse when the couple separated in 2015 (folio 239).

2. There are three mortgages attached to the properties. A mortgage of approximately $290,000 ($293,235 as of 31 December 2020, folio 202) for the home in which Ms Calladine resides. She has been trying to make mortgage repayments of about $1,677 per month. She made the last payment on 20 July 2021 (folio B104) and mortgage payments are currently paused.

3. The other two mortgages of approximately $190,000 ($190,472 as of 31 December 2020, folio 208) and approximately $59,000 ($59,902 as of 31 December 2020, folio 205) are attached to the townhouse. Mr McLennan made repayments of approximately $600 per week in the past. Most recently his repayments have been about $400 per week (e.g. folios A175-177). Last payments appear to have been made in January 2022 (folio A188/189) and the property is currently on the market.

4. Ms Calladine submitted that Mr McLennan was able to make mortgage payments of $25,400 in 2019/20, even though he only declared a taxable income of $26,773. She noted that he must have additional financial resources, such as rental payments from a friend who has been residing with him for some time.

5. I have estimated that Mr McLennan made mortgage payments of $17,540, plus Council rates and Strata Title levies of about $10,400 (a total of $27,940) in 2020/21, based on evidence in Mr McLennan’s bank accounts. His taxable income in 2020/21 was $28,361. It thus appears that he has additional financial resources.

Taxable income

1. Child Support records show that Mr McLennan’s 2014/15 taxable income was $86,069 (folio 98) and his 2015/16 taxable income was $88,088 (folio 101). Ms Calladine suggests that Mr McLennan’s 2016/17 taxable income was $90,000 and his 2017/18 taxable income was $94,000, although there is no supporting evidence of this before me.

2. In 2018/19 Mr McLennan’s taxable income reduced to $33,263, in 2019/20 it was $26,773 and his taxable income was $28,361 in 2020/21 (folio 472).

3. The 2019/20 income tax return (folios 251-257) shows business income of $58,218, subcontractor expenses of $16,140, motor vehicle costs of $4,212 and other expenses of $12,957. I note his combined business expenses amounted to 57% of his business income. Mr McLennan also received $4,229 in Centrelink payments.

4. The 2020/21 income tax return (folios 258-262) shows business income of $91,129, subcontractor expenses of $36,212, motor vehicle costs of $8,911, depreciation of $2,230 and other expenses of $20,225. I note that combined business expenses increased to 74.5% of business income in this year. Mr McLennan also received $5,187 in Centrelink payments.

5. Mr McLennan said that he provides all relevant information to his accountant who then calculates the appropriate expenses.

Bank accounts

1. Mr McLennan provided bank account statements for his business (acc.no. xxxx5904). He only uses the one account for his business transactions.

2. The statements for the period 1 July 2020 to 30 June 2021 indicate deposits from “[Business 1]” of about $92,729. I note that this accords (approximately) with the business income declared by Mr McLennan in his 2020/21 tax return. There are a further $8,027.50 cash deposits or transfers from his partner and $5,215.03 jobseeker payments from Centrelink (accounted for in the tax return).

3. In addition Mr McLennan deposited $10,000 from his superannuation. He received a $17,429.36 tax refund on 4 November 2020 (folio A 137) and, it appears, he also claimed jobkeeper payment for July to September 2020 ($1,500 per month: a total of $4,500).

4. The bank statements do not clearly show business expenses. There are no transfers to third parties (e.g. subcontractors) and very few expenses for “materials” (apart from occasional purchases at “Bunnings”). It appears that Mr McLennan operates his business largely on a cash basis. Bank statements show that he regularly withdraws fairly large amounts of cash (between $1,000 and $7,000). In total he withdrew $86,710 from the bank account in 2020/21.

5. Mr McLennan declared business expenses of $67,578 on his 2020/21 tax return. It is impossible for me to discern from the available information whether all or some of these business expenses were paid for in cash.

6. Bank statements confirm that Mr McLennan’s circumstances changed in the 2021/22 financial year. Deposits from [Business 1] amounted to $66,141.92 in the period 1 July 2021 to 31 December 2021. I note this would annualise to a gross business income of about $132,284 in 2021/22. The last payment from [Business 1]. However, was made on 10 December 2021 (folio A176). Mr McLennan received a further $1,700 cash/transfers from his partner in that period.

7. Since January 2022 Mr McLennan is receiving carer payment and carer allowance from Centrelink. Carer allowance payment is $136.50 per fortnight and carer payment is about $986.80 per fortnight (folio A203).

8. In the period 1 January 2022 to 30 June 2022 Mr McLennan also received $3,400 cash/transfers from his partner and a tax refund of $11,048.98.

Summary

1. I have considered the evidence before me. As noted, Mr McLennan stopped working in his business in December 2021. Thus, the last full financial year of business operation was 2020/21.

2. Mr McLennan declared a taxable income of $28,361 in that year, based on his business income and jobseeker payments from Centrelink. I have expressed some concern about how the business expenses were calculated, as there are very few discernible business expenses shown in the bank statement and it appears that Mr McLennan pays his expenses in cash.

3. I note the objections officer added back 50% of the claimed motor vehicle costs ($4,455), as well as $2,230 depreciation costs for a total income of $35,046. I will do the same. Mr McLennan noted that he has two vehicles but I cannot discern why his vehicle costs should double between 2019/20 ($4,212) and 2020/21 ($8,911). Presumably he had those vehicles for some years and presumably his subcontractors would have their own transportation.

4. Mr McLennan did not dispute that he received rent payments from a friend of $200 per week in that financial year, but he did not think that these should be added to his income. I disagree. These payments are a financial resource available to him to meet his financial obligations.  I will also include the superannuation payment ($10,000), the tax refund (17,429.36) and the jobkeeper payments ($4,500) to Mr McLennan’s income amount.

5. I will not include the transfers and cash payments from his partner. Mr McLennan’s partner has no legal obligation to support his children. Thus, any money that she may provide cannot be considered a financial resource for Mr McLennan for the purposes of a child support assessment.

6. Based on these deliberations I thus find that Mr McLennan’s income and financial resources in 2020/21 amounted to $77,375.

Mr McLennan – Earning capacity

1. Ms Calladine submitted in the hearing that Mr McLennan had greater earning capacity. She stated that he should not have stopped working in his business. His brother did not require constant care or supervision and, in any case, someone else in the family could have agreed to take on the role of carer.

2. The relevant legislative provisions for consideration of a parent’s earning capacity are provided for in subparagraph 117(2)(c)(ib) and also in subsection 117(7B) of the Act. Essentially the provision restricts the circumstances in which a person’s earning capacity can be used as a basis to depart from a formula assessment.

3. There are three essential matters to be considered in determining whether the administrative assessment should be departed from on the grounds of earning capacity. In simple terms they can be explained as follows:

   ·did the parent not work despite ample opportunity to do so, reduce their hours of work or change their occupation, industry or working pattern; and

   ·was the parent’s decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern not justified because of caring responsibilities or their state of health; and

   ·the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support.

   All three of the above criteria must be met before a change of assessment can be made to take into account whether the parent has a greater earning capacity.

4. In this case there is no dispute that Mr McLennan reduced his working hours from December 2021. He is no longer working at all in his business. Based on the evidence, I therefore find that paragraph 117(7B)(a) of the Act is satisfied.

5. Mr McLennan stated that he is suffering from medical conditions that make it difficult for him to work. He had an accident in January 2022 which required [specified surgery]. [The specified injury means] he is no longer able to [undertake his] work ([providing specified services]). Mr McLennan provided a medical certificate from [Doctor A], dated 28 April 2022 (folio A72). The certificate indicates that Mr McLennan has a mental health condition with onset in 2017 and recurrent [physical injury] (onset 14 January 2022). [Doctor A] indicated that the mental health condition was permanent and the [physical condition] was temporary. [Doctor A] noted further medical conditions ([specified]) but did not provide additional information about these conditions.

6. [Doctor A] also did not indicate whether Mr McLennan’s medical conditions affected his ability to work. On the basis of the evidence provided, I am not satisfied that Mr McLennan’s decision to reduce his working hours (i.e. to stop working) is justified by the state of his health.

7. Mr McLennan also submitted that he has caring responsibilities for his brother. He said that his brother always needed a carer and up to late 2021 this role was performed by their mother. Mrs McLennan passed away [in] January 2022 (folio A100) and thus someone else needed to take on the caring role. Mr McLennan was granted carer payment and carer allowance with effect from 19 January 2022. Medical evidence before me indicates that [Brother A] suffers from intellectual disability, epilepsy and autism (folio A117) and he is receiving disability support pension.

8. I note here that to be eligible for carer payment a person must provide “constant care” for the disabled adult, and the care must be provided in the home of the care receiver.[3] To be eligible for carer allowance a person must provide care of the disabled adult in a private home of either the adult or the carer and, in addition, the disability from which the care receiver is suffering, is such that she/he “receives care and attention on a daily basis” from the caregiver.[4]

   [3] According to section 198 of the Social Security Act 1991

   [4] According to section 954 of the Social Security Act 1991

9. Ms Calladine submitted that [Brother A] does not require a high level of care. I am not persuaded by this argument. Centrelink requires detailed medical evidence to prior to granting carer payment and carer allowance to a person (in this case Mr McLennan) and I accept Centrelink’s decision in this regard.

1. Ms Calladine also submitted that one of Mr McLennan’s other two brothers could have taken over the caring role. Mr McLennan said that his other brothers work and live with their families in their own homes. They would not have the time to care for [Brother A] in his own home and he would thus be required to move.

2. Mr McLennan stated that his brother is deeply affected by the death of their mother. To require him to move from his place of residence in which he has lived for the past 21 years would further adversely affect his brother. The best solution for his brother was therefore for Mr McLennan to become his carer and for Mr McLennan to move into his brother’s home.

3. I have considered the evidence before me and I am persuaded that Mr McLennan’s decision to reduce his working hours (i.e. to stop working) is justified by his caring responsibilities and this means paragraph 117(7B)(b) of the Act is not satisfied in this case.

4. As all three criteria provided for in subsection 117(7B) of the Act are therefore not met, I cannot consider Mr McLennan’s earning capacity further.

Ms Calladine – Income, property and financial resources

1. Ms Calladine has been a “stay at home mother” since the birth of her first child in 2000. She has had occasional short-term work contracts but is generally relying on Centrelink payments. She currently receives jobseeker and family assistance payments.

2. Ms Calladine’s 2018/19 taxable income was $20,599 and her 2019/20 taxable income was $25,347 (folio 476). Her 2020/21 taxable income was $27,843, comprising of $24,388 in Centrelink payments (parenting payment and jobseeker) and $3,387 in wages from two short-term jobs (folio B229/230).

3. Mr McLennan submitted that Ms Calladine also receives rent payments from the two older children. Ms Calladine’s bank statements (acc.no. xxxx1764) indicate that she received payments totalling about $9,475 in the 2020/21 financial year from [Child 3] and [Child 4]. Ms Calladine noted that [Child 3] is no longer living with her but [Child 4] pays $100 per week for his board.

4. Based on the evidence before me I am generally satisfied that Ms Calladine’s income, property and financial resources are adequately represented by her annual income tax returns but she does appear to receive some additional payments from the older children.

Ms Calladine – Earning capacity

1. Ms Calladine has not been working for a number of years (apart from very limited short-term employment opportunities). She therefore did not reduce her working hours or change her occupation or working pattern. She also continues to meet qualification requirements for jobseeker payment from Centrelink which means that she is meeting her job search obligations and there is no evidence that she “does not work despite ample opportunity to do so”.

2. I therefore find that paragraph 117(7B)(a) of the Act is not satisfied in this case and I cannot consider Ms Calladine’s working capacity further.

Conclusion – Income, property, financial resources and earning capacity of both parties

1. At the time Ms Calladine lodged her departure application on 6 June 2021, the rate of child support was based on Mr McLennan’s 2019/20 adjusted taxable income of $26,773 resulting in a child support liability of $443 per annum (the minimum annual rate).

2. I have found that Mr McLennan’s actual income and financial resources in 2020/21 amounted to $77,375. I have estimated that Mr McLennan’s child support liability for the children, if calculated on the basis of his actual financial resources and Ms Calladine’s 2019/20 adjusted taxable income of $25,347 would amount to $13,578 per year.

3. If Ms Calladine’s 2020/21 income and financial resources of $37,318[5] was substituted, Mr McLennan’s child support liability would reduce to $13,522, less than about $1 per week. I do not consider this difference significant.

   [5] Being her 2020/21 adjusted taxable income of $27,843, plus the rent payments of $9,475 she received  in that year. 

4. I find that the difference between an annual child support liability of $13,578 and the annual rate of child support ($443) based on Mr McLennan’s 2019/20 adjustable taxable income at the time, is so great that it gives rise to special circumstances in this particular case.

5. I am therefore satisfied that the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act has been made out in respect of Mr McLennan’s income, property and financial resources only.

6. Subparagraph 98C(1)(b)(i) of the Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found one ground for departure established, I will now consider whether it is just and equitable to make a departure determination.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs that my attention is turned to what is fair to the parents and their children. To do so I must have regard to a number of factors set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.

Mr McLennan

1. Mr McLennan’s income, property and financial resources have been discussed in some detail above. I have found that Mr McLennan’s income, property and financial resources amounted to $77,375 in the 2020/21 financial year. I also accept that Mr McLennan’s circumstances changed substantially in January 2022, when his mother passed away and he took on the caregiver role for his [brother], who lives with significant disabilities.

2. Mr McLennan provided a Statement of Financial Circumstances (folios A1–A9) on which he indicated income of $400 per week (about $20,800 per year) from Centrelink. The Centrelink Income Statement and Mr McLennan’s recent bank statements confirm that he receives both carer payment and carer allowance: a total of about $1,072 per fortnight or $536 per week. Child support payments of $52.77 are already deduced from this amount (folio A203).

3. Mr McLennan listed expenses of $670 per week, including $150 per week for rent payments. Mr McLennan lives with his brother. His brother has been residing in a [public housing] property for many years. He pays $224.10 per fortnight rent from his disability support pension (folio A201). The remaining pension is paid into Mr McLennan’s bank account.

4. I am not satisfied that I have an entirely accurate picture of Mr McLennan’s current financial circumstances, as it appears that he does not pay an additional amount for rent (as indicated on the Statement of Financial Circumstances). As such I am persuaded that Mr McLennan is generally able to meet his day-to-day expenses.

Ms Calladine

1. Ms Calladine indicated on her Statement of Financial Circumstances (folios B1–B9) that she is reliant on Centrelink payments. Her Centrelink income statement shows that she receives a total of $1,270.20 per fortnight or about $635 per week (folio B13). She also noted that the older [Child 4] pays about $100 per week board.

2. Ms Calladine listed total expenses of about $1,204 per week, including credit card payments and mortgage payments for her home ($386 per week). Ms Calladine included expenses of $74 per week for entertainment, books and gifts which are considered non-essential expenses.[6] She also noted that she currently does not make any mortgage payments. The bank had agreed to a “pause” on repayments. On this basis Ms Calladine’s total expenses amount to $744 per week.

   [6] The Family Court (in Mee and Ferguson (1986) FLC 91-716) has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses which can be considered to take priority over the parents’ primary duty to support their children. This includes expenses such as a reasonable amount for rent or mortgage payments, food, utilities, and some loans.

3. Ms Calladine did not list any “out of the ordinary” expenses for [Child 1] and [Child 2]. The children are now 15 and nine years old and have no income, property or financial resources relevant to my determination.

4. Overall, it appears that Ms Calladine is just able to meet her current financial obligations, if the older [Child 4] contributes his share to household expenses.

5. Ms Calladine noted that she recently purchased a pedigree cat and she hopes to breed from the animal to earn some additional income. She said that she is trying to keep the family home but that will become more difficult once she has to pay the mortgage again.

Otherwise proper  

1. The requirement to consider whether it is “otherwise proper” to depart from the administrative assessment directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances or benefits (subsection 117(5) of the Act).

2. It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.

3. Ms Calladine is in receipt of family assistance payments, which are affected by maintenance payments such as child support. Any increase to child support payable would result in an appropriate decrease in these payments. Such a result would be otherwise proper.

Conclusion

1. Section 98S of the Act describes the determinations that the Registrar, and the Tribunal standing in the shoes of the Registrar, may make if it decides to depart from the administrative assessment. It is open to the Tribunal to set a rate of child support payable or set some of the variables used in the administrative assessment formula (for example, vary one or both parents’ adjusted taxable income).

2. When Ms Calladine lodged her departure application on 7 June 2021 (the 2019/20 financial year), the rate of child support was based on Mr McLennan’s 2019/20 adjusted taxable income of $26,773 and Ms Calladine’s 2019/20 adjusted taxable income of $25,347 resulting in a child support liability of $443 per annum payable by Mr McLennan to Ms Calladine.

3. Mr McLennan submitted that his 2020/21 adjusted taxable income was $28,361 and that his child support liability ought to be based on his taxable income. His accountant had all relevant information in relation to business expenses and the tax returns were “100% accurate”. Mr McLennan also submitted that he ceased working in his business in December 2021 and is now solely reliant on Centrelink payments. The ongoing assessment thus needs to reflect this change in his circumstances.

4. Ms Calladine contended that Mr McLennan’s financial resources were much higher than indicated in his annual tax returns, as evidenced by his ability to make mortgage payments of (at least) $400 per week. Mr McLennan’s taxable income dropped significantly, particularly after she asked Child Support to collect the money from Mr McLennan.

5. I have found that Mr McLennan’s 2020/21 income and financial resources amounted to $77,375 (about $1,488 per week) on the basis of the tax return and bank statements before me. Bank statements showed that Mr McLennan received additional payments in that year which had not been reflected in his tax return.

6. It is possible that Mr McLennan also received additional payments in 2019/20 but I do not have the bank statements to verify such payments. Mr McLennan has not yet completed the 2021/22 income tax return, but banks statements show that his income situation changed substantially from January 2022. He was granted carer payment/carer allowance from 19 January 2022.

7. Mr McLennan stated that this change in his circumstances ought to be reflected in any decision that I make. Ms Calladine argued that Mr McLennan had greater earning capacity and child support payments ought to be based on his earning capacity even though the actual circumstances had changed.

8. Ms Calladine further submitted that any decision should be backdated to December 2019 (18 months prior to the date she lodged her application). Mr McLennan lodged his 2018/19 tax return late (in April 2020) and this is when she noticed his income had decreased significantly. He also lodged a reduced income estimate for the 2019/20 financial year around that time. She then noticed that Mr McLennan was still making significant mortgage payments (into the joint account) and it occurred to her that he may have additional financial resources. She said that she did not know why it took her so long to lodge a change of assessment application. She did not think of it at the time.

9. I have considered the evidence before me but I am not persuaded that the departure determination should be backdated. There appears to be nothing that would have prevented Ms Calladine from lodging a change of assessment application earlier. She contacted Child Support in April 2020 to apply for collection of child support and she could have discussed a possible change of assessment application at that point, if she thought that the administrative assessment was incorrect.

10. The objections officer commenced their departure determination on 1 July 2021, the time Mr McLennan was aware of a possible change to the assessment. I see no reason to change that date. I will, however, substitute the new income amount of $77,375 for Mr McLennan from that date.

11. I will end my determination on 18 January 2022, the day before Mr McLennan became eligible for carer payment/carer allowance. I have not found that Mr McLennan has additional earning capacity after that date. From 19 January 2022 Mr McLennan’s child support liability will therefore be administratively assessed based on his annual tax returns.

12. I have estimated that my decision will decrease Mr McLennan’s current child support arrears by about $700, but his ongoing liability will be less. He will, however, be required to pay the outstanding arrears. Based on the evidence before me I am not persuaded that my decision will cause significant hardship for either party.

13. I have reached a different conclusion than the objections officer and I therefore set aside their decision.

DECISION

The decision under review is set aside and a decision substituted that:

• For the period 1 July 2021 to 18 January 2022 Mr McLennan’s adjusted taxable income is set at $77,375 per annum.