Meier and Meier (Child support)

[2020] AATA 3660

Meier and Meier (Child support) [2020] AATA 3660 (21 July 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC018616

APPLICANT:  Mr Meier

OTHER PARTIES:  Child Support Registrar

Mrs Meier

TRIBUNAL:Member A Schiwy

DECISION DATE:  21 July 2020

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that:

·      For the period 1 January 2019 to 30 June 2024 Mr Meier’s adjusted taxable income is varied to $75,000.

·      For the period 1 February 2020 to 30 June 2020 Mrs Meier’s adjusted taxable income is varied to $29,000.

·      For the period 1 November 2019 to 30 April 2020 Mr Meier’s annual child support liability is increased by $1,800 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - benefits derived from business – adjusted taxable income of the liable parent varied - 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. Mr Meier and Mrs Meier are the separated parents of twins, aged eight years.  This application is about the amount of child support payable by the parents.

2. There has been a child support case in place since 2014. The Department of Human Services (‘Child Support’) has determined that Mrs Meier has 61% care of the children and Mr Meier has 39%.

3. A departure determination was made on 30 August 2017 (by this tribunal, differently constituted) varying Mr Meier’s adjusted taxable income to $55,000 for the period 31 August 2016 to 31 December 2018.  As at 31 December 2018 Mr Meier’s child support liability was $3,448 per annum.

4. An administrative assessment was issued for the period 1 January 2019 to 30 September 2019 based on adjusted taxable incomes of $30,033 for Mr Meier and $42,426 for Mrs Meier.  This resulted in Mrs Meier having a child support liability of $532.  Her liability increased to $2,674 from 1 October 2019 based on the parents’ adjusted taxable incomes of $29,816 for Mr Meier and $68,811 for Mrs Meier.

5. Mrs Meier lodged a departure application with Child Support on 2 February 2019 on the basis that the rate of child support payable under the administrative assessment was unfair because of Mr Meier’s income and financial resources.

6. On 28 June 2019 a Child Support case officer decided to make a departure determination which varied Mr Meier’s adjusted taxable income to $56,375 for the period 1 January 2019 to 31 December 2019 and then to $57,784 from 1 January 2020 to 31 December 2020.  Mrs Meier’s adjusted taxable income was varied to $57,500 from 1 January 2019 to 31 December 2019.

7. On 5 September 2019 Mr Meier objected to the decision and an extension of time to lodge the objection was granted on 23 September 2019.  On 3 February 2020 a Child Support objections officer decided to partly allow the objection.  The objections officer decided to make a departure determination to:

   ·vary Mr Meier’s adjusted taxable income to $57,450 for the period 1 January 2019 to 31 May 2021; and

   ·vary Mrs Meier’s adjusted taxable income to $68,811 for the period 1 January 2019 to 30 September 2019. 

8. On 12 March 2020 Mr Meier lodged an application with this tribunal for an independent review of the objections officer’s decision.

9. A hearing was held on 16 July 2020.  Both Mr Meier and Mrs Meier attended the hearing via teleconference and gave evidence on affirmation.  Mrs Meier was represented by [Ms A] (Victorian Legal Aid).  Mr Meier’s tax agent, [Mr B], gave evidence during the hearing.

10. After the hearing I directed Mr Meier to provide further documents and the matter was adjourned until 20 July 2020. 

11. In considering this matter I took into account the oral evidence of Mr Meier and Mrs Meier; and the relevant documentation provided by the Child Support Registrar (numbered 1 to 337); Mr Meier (numbered A1 to A187), and Mrs Meier (numbered B1 to B16).  Copies of all of the numbered documents, apart from A124 to A187 were provided to all parties prior to the hearing.  Documents A124 to A187 are attached to this Decision.

12. On 17 July 2020 Mr Meier wrote to the Tribunal seeking that I recuse myself and a new hearing be held.  Mr Meier’s primary concern was that he was humiliated and denigrated when I asked him why he had been so unsuccessful in his career.  He said he was unable to focus for the balance of the hearing.   The question was asked in the context that although he was [an Occupation] with 30 years’ experience, he had only earned around $30,000 per annum for the last 20 years.  The median wage for [an Occupation 1] is $60,000.  Mr Meier expressed disapproval about the question and I apologised, saying it was a bad choice of words.  I restated the question asking why his income was so low given his experience.  Mr Meier answered the question and I noted his response in the discussion below.  Mr Meier answered the questions put to him in the hearing and also responded to Mrs Meier’s evidence and questions.  He provided a further written submission after the hearing which was taken into account.

13. A decision by a tribunal member to recuse themselves is not a decision to be taken at all lightly. Indeed, a decision to recuse oneself without proper basis may potentially be no less damaging to the general administration of justice than a failure to recuse when that is warranted. On 21 July 2020 I decided not to recuse myself, finding that no proper basis for so doing is made out. There was the testing of both parents’ contentions at hearing; the father may not have appreciated the wording of one the questions, but it is not a basis for recusal. Thus, I considered it appropriate that I continue to decide Mr Meier’s application.  I also decided that Mr Meier was given a fair hearing and opportunity to put forward his case and respond to questions asked.  I therefore decided not to hold a further hearing.

ISSUES

1. The statutory provisions relevant to this review are set out in the Child Support (Assessment) Act 1989 (the Assessment Act) and in the Child Support (Registration and Collection) Act 1988.

2. The Assessment Act provides for an administrative assessment of the child support payable. It uses a formula that contains variables including the parents’ adjusted taxable incomes; their percentages of care for the children; and costs of the children. The Assessment Act also makes provision for a departure from the administrative assessment in certain circumstances.

3. The issues which arise in this case are:

   ·      does a ground for departure from the administrative assessment for child support exist? And if so,

   ·      is it just and equitable to make a particular determination? And if so,

   ·      is it otherwise proper to make a particular determination?

CONSIDERATION

Issue 1 – Does a ground for departure from the administrative assessment for child support exist?

Mr Meier’s income

Income

1. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment Act relating to the 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 children because of the income, property and financial resources of either parent.

2. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 (Gyselman) the Full 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.

3. Mrs Meier made her application on the basis that Mr Meier’s lifestyle was not supported by an income of around $30,000.  She stated that as he is self-employed he can take advantage of tax deductions for such things as home office, car and phone. She alleged that he travels overseas and has two fishing boats.

4. Mr Meier has worked as [an Occupation 1] for around 30 years.   For the last 20 years Mr Meier has been self-employed and predominantly working in the area of [job projects].  His taxable incomes in recent years have been:

   ·      2016/17        $30,275

   ·      2017/18        $30,039

   ·      2018/19        $29,816

Low income

1. When Mr Meier was asked to confirm that he had only earned around $30,000 per annum for the last three financial years he stated that he had only earned that amount for the past 20 years, since he had been doing [job projects].  When Mrs Meier submitted that he earned $90,000 while they were married, Mr Meier said that had happened for one year only.

2. When asked why his income was so low, given his experience, Mr Meier said his current working arrangements give him more time to be with the children and he manages on his low income; he does not need to earn a higher amount.  When asked why he didn’t earn more income pre-children, he again stated that he got by on that level of income.

3. Mr Meier also stated that his income had been declining and said that in the last couple of years his work had been ‘drying up’ and he has been ‘feeling it’.  He said he has not had much work this year.  He had been working as a site manager but was mostly doing hands-on work last year.  Mr Meier said he had only had two clients in 2017-18 and 2018-19; [Client company 1] and [Client company 2].  He no longer has any work with [Client company 2] as they no longer operate in Victoria. He has been looking for new clients but with no success.  I noted that despite his work apparently declining, he is still earning around $30,000 per year.

4. When asked how much child support he thinks he should pay, Mr Meier said he had once offered Mrs Meier child support of $300 per month but she refused.  Now he could only afford $200 per month because things were tough ‘at the moment’ and he was on jobkeeper which is about half of what he normally earns.  When it was pointed out that jobkeeper is more than $30,000 per year (it equates to $39,000 per year) and he was therefore apparently earning more than normal, Mr Meier said it is unknown how long jobkeeper will last and that he meant it was half of what he earned when he was working on a project.

5. Mr Meier said he not received cash income for at least three years ­, he was emphatic about this.  [Mr B] said that any cash deposits to Mr Meier’s bank account would be cash income as Mr Meier told him that if he receives cash he banks it.  I accept that this evidence does mean that Mr Meier did receive cash.

6. Mr Meier said he uses cash a lot and when he gets paid he withdraws the income in cash.  He said any cash deposits to his account would be from his cash reserves and he would have deposited it because he needed to pay for something through the bank account and there was not enough in the account.  He said he paid for business expenses, anything that is deductible, through the account so that he has a record, but otherwise he prefers to pay for things in cash.  When asked why he took such large amounts of cash from his account (up to $20,000 in one withdrawal), Mr Meier said he has always done this and paying in cash is often cheaper due to discounts.

7. I noted that the current minimum wage in Australia is $39,198 and the median wage for [an Occupation 1] is around $59,000. 

Business profit and loss

1. Mr Meier operated his business through a company, MSM Fitout Constructions Pty Ltd (‘the company’) up until 30 June 2018 and then as a sole trader from 1 July 2019.  The tax returns for the company and Mr Meier, and information provided by [Mr B], provide the following business information:

2017-18 (company)	2018-19 (sole trader)
Gross income	$61,290	$51,265
Depreciation	$4,684
Materials	$8,978	$8,431
Superannuation Mr Meier	$2,850
Motor vehicle	$5,263	$4,434
Salary Mr Meier	$30,000
Office costs	$2,350
Phone	$1,250
Other	$14,864

1. Mr Meier was directed to provide profit and loss statements for 2017-18 and 2018-19 (which would have provided details of ‘other expenses’) and he stated that he had provided a copy of the directions to [Mr B] and [Mr B] provided him with a copy of the tax returns only.  At the hearing [Mr B] did not appear prepared to answer questions about the expenses claimed and could not locate his records for 2017-18.  He could not recall what the ‘other’ expenses in 2018 were made up of. 

2. According to the bank deposits, Mr Meier only worked for [Client company 2] in 2017-18 and he was reimbursed separately for items purchased for them.  It is therefore difficult to understand why materials would have cost $8,978 if he only worked for [Client company 2].  I concluded that Mr Meier either claimed private purchases as materials or he was doing other work (not disclosed) that he needed to buy materials for.

3. Given Mr Meier has stated he has only had two clients in two years it is difficult to know how he would have incurred $1,250 per annum in telephone expenses.  His bank statements show he pays $30 per month to Telstra and he told me he pays for two $10/month plans for the children. 

4. Again, given there have only been two clients (disclosed), and the fact that Mr Meier works onsite, it is difficult to see how he would incur home office expenses of $2,350.

5. Mr Meier travels extensively to pursue his hobbies of fishing and hunting (see further discussion below) and it is therefore likely that some of the motor vehicle costs claimed is for private use.

6. I concluded that is more likely than not that some of the expenses claimed were not legitimate business expenses and Mr Meier was purchasing materials for work that he has not disclosed.

Loan repayments

1. Mr Meier provided evidence to this tribunal (differently constituted) at a hearing on 30 August 2017.  The evidence included the following:

   ·Mr Meier received regular assistance from his family and in particular a lump sum of $35,000 from his mother in December 2016 which was paid into his mortgage.  This meant that he was in advance of his payments but he was trying to pay at least $1,000 per month to cover the interest.

   ·His mother made a sworn affidavit that any money she had given Mr Meier was a loan and Mr Meier agreed with this and said there was no formal requirement for him to repay the loan but he did so when he could.

   ·He owed $48,640 on a car loan (repayments of $1,100 per month).

2. In a written statement provided to Child Support in around May 2019 (F123) Mr Meier states that his mother had not been assisting him financially and “in fact (sic) have been slowly repaying back the personal loan agreement that is still outstanding.  All loans are repayable and should be considered as debts and not income.  I enclose a copy of the loan agreement”.  The loan agreement (F137) was dated 6 February 2018 and states that [Mr Meier’s mother] lent Mr Meier $14,000 which was to be repaid when Mr Meier could afford to do so.

3. In a written statement dated 14 June 2019 (F147) Mr Meier states that he is not receiving any regular or irregular financial assistance from his family members.   He states that in 2017 he paid out his car loan from his mortgage (redraw) together with a $14,000 loan from his mother.  A bank statement (F154) shows that on 1 December 2017 Mr Meier withdrew $27,000 from his home loan

4. At the hearing Mr Meier was emphatic that not only had he not received any financial support in recent years, he has also repaid in full all the money that his mother had lent him in the past.  When asked how much he had owed and when he repaid it, Mr Meier could not answer with clarity but said it was at least two years ago.

5. After the hearing Mr Meier was directed to provide his home loan statements from 1 July 2016.  Mr Meier complied with this and made a written statement that he thought the $35,000 deposited to the account in December 2016 was from a job he did in New Zealand.

6. I had access to Mr Meier’s home loan statements which show that he borrowed $304,000 on 31 August 2016.  Three years later he had paid $33,700 in interest and reduced the loan balance to $276,600.  In addition he purchased a car for at least $48,600 and now owes nothing on the car loan.  He has made a statement that any money borrowed from family has been repaid.

7. I concluded that in a three-year period Mr Meier was able to finance the car, loan reduction and home loan interest; a total of $109,700 or an average of $36,566 per annum.  He would have also financed interest on the car loan until it was paid out (the amount is unknown).

Lifestyle and personal expenses

1. Mr Meier stated that only needs around $600 to meet all of his living expenses, including $250 for his mortgage.  He included $80 per week for food for himself and the children which appeared to be very low.  He said he goes fishing and hunting and provides all the meat for the family.  I noted that for a four-month period (September to December 2019) Mr Meier spent approximately $1,800 on food (debited from his bank account); this equates to $104 per week and there is likely further cash expenditure.

2. Mr Meier stated to Child Support (F123) that he had not been overseas since 2017 indicating that he had been overseas in 2017.

3. Mr Meier owns two boats.  One boat he values at $24,000.  It is kept at [Town] (which is nearly 800 km from Mr Meier’s residence).  The other is a smaller boat and worth around $1,000.  When asked why he keeps and maintains a relatively expensive boat, given his income, Mr Meier said he has always had a boat; he worked hard to buy it.

4. Mrs Meier submitted that Mr Meier could not afford his lifestyle based on his income.  She stated the following at the hearing (Mr Meier’s responses are in brackets):

   ·He travels to [Town] frequently to go fishing; she knows this because he tells her and/or the children when he is going.  She said he goes either every month or two months. They used to go there all the time when they were married.  They used to stay in [a rented house], and when the children ‘face-timed’ her from [Town] last summer they were clearly at the house. (Mr Meier said he only goes two or three times a year.  Normally he sleeps in his boat but the trip last summer was with some family members and they shared the cost of the accommodation.)

   ·He buys the children expensive gifts including a quad bike and safety gear each, telephones and Pandora jewellery for Christmas and a $900 dog.  (Mr Meier said the bikes only cost $300 each and his family bought the safety gear.  His partner contributed around $700 for the dog.  The phones were only around $250 each and the jewellery around $150.)

   ·She visited Mr Meier’s house over the summer and there was new flooring, a brand-new smart TV, new outdoor furniture and pendant light fittings.  (Mr Meier said he was given the flooring that was left over from a job, the furniture cost $600 and the lights were $40 each.)

   ·It is likely he works for his brother-in-law’s [business] and other people that he knows; she had heard he was getting a lot of work.  Mr Meier denied this, saying it had been a number of years since he worked for his brother-in-law.

   ·He recently had to get his mother to babysit as he was working.  (Mr Meier said he picked up a job with [Client company 1] for a couple of weeks.)

   ·He visits his new partner every week and she lives an hour and a half away.  (Mr Meier said his partner lives 50 minutes away and he is not visiting her much now due to COVID-19 restrictions and because she is a health care worker.  Prior to COVID-19 he did visit weekly and they have been together for six months.)

1. Mr Meier’s bank statements from 1 July 2017 to 30 May 2019 provided the following information:

   ·He withdrew over $60,000 in cash;

   ·He paid $1,313 to Webjet in November 2018 (Mr Meier stated that this was for a trip to Sydney with the children for around four to five days; staying with his partner’s sister.)

   ·He paid $1,375 to Carpet Call on 13 November 2019.

   ·He paid over $7,000 in legal fees ([Lawyers]).

   ·He paid $481 for an ice box in December 2019.

   ·He paid $795 to [a Company] and $147 to Bulk Bike in December 2019 (bike gear).

   ·Regular amounts are spent at fish and camping supply stores.

Summary

1. In summary, after considering the evidence, I found that:

   ·Mr Meier’s reported net income is less than the minimum wage and around $30,000 per annum less than the median wage for [an Occupation 1].

   ·It is more likely than not that some of the expenses claimed were not legitimate business expenses and Mr Meier was purchasing materials for work that he has not disclosed.

   ·Mr Meier has financed a car, reduction in his home loan and interest costs, and over a three-year period this cost an average of $36,566 per annum.

   ·Mr Meier does not appear to be living a frugal lifestyle as evidenced by the fact that he could afford to buy the children relatively expensive presents (quad bikes, Pandora jewellery, telephones), buy flooring coverings, fly the children to Sydney at a cost of $1,313; store and maintain a boat valued at around $24,000, payment of over $7,000 in legal fees, and engage in hobbies of fishing and shooting etc.

2. I concluded that Mr Meier is earning significantly more than what he has declared in his income tax returns.  This is either by way of cash income or income that is being deposited to an undisclosed bank account.  I decided that Mr Meier must be earning a minimum of $75,000 per annum to fund his loan reductions and lifestyle (allowing for around $38,000 in living costs in addition to the financing costs).

3. Mr Meier’s current taxable income results in a child support liability for Mrs Meier of $2,674 per annum. An assessment based on Mr Meier having an income of $75,000 would result in him having a liability of $4,740 – a difference of $7,414 per annum. As there is a significant difference in liability I was satisfied that there are special circumstances in this case and finds that the ground for departure in subparagraph 117(2)(c)(ia) of the Assessment Act does exist in relation to Mr Meier’s income.

Issue 2 – Is it just and equitable to make a particular determination?

1. As I am satisfied that a ground to depart from the administrative assessment exists I must consider whether it is just and equitable as regards the children, the liable parent and the carer entitled to child support to make a particular determination

   (sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act). Subsection 117(4) of the Assessment Act sets out a variety of factors that must be considered in deciding whether it would be ‘just and equitable’ to make a particular determination. These factors include the proper needs and costs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Section 3 of the Assessment Act makes it clear that the parents have the primary duty to maintain their children and that this duty has priority over all commitments of the parents, other than commitments necessary for self-support or for the support of another person they have a duty to maintain. In this case Mr Meier and Mrs Meier have the primary duty to support the children.

Mr Meier’s financial position 

1. As discussed, I have found that Mr Meier is earning $75,000 per annum.

2. Mr Meier owns his residence which he values at $550,000.  He owes $276,000 on his home loan and therefore has equity of $274,000.  Other significant assets are his car ($30,000), boat (24,000) and superannuation (around $6,000).   Mr Meier has no other debts. 

3. Mr Meier lives alone and estimated his weekly expenses to be $60 for tax and $600 for household costs including $250 per week for the mortgage.  Mr Meier confirmed that he did not have any out of the ordinary expenses. As discussed above I have found that Mr Meier spends around $38,000 per annum on living costs and allowing for tax and his mortgage payments of around $1,400 per month his total costs would be $57,900 ($3,100+$38,000+$16,800).   I noted that Mr Meier is saving a considerable amount of taxation by declaring an income much lower than what which has been found by this tribunal to be earning.

4. I concluded that Mr Meier has the capacity to pay around $17,000 per annum in child support which is significantly more than what he will need to pay if he is assessed on an income of $75,000.  In addition, he has significant equity in his home and would have no difficulty in funding any liability arising from a decision to depart from the formula assessment.  His current child support debt is around $2,000.  If, for example, he was assessed to pay child support based on an income of $75,000 from 1 January 2019, this will increase his liability by around $4,500 which would not result in any financial hardship.

5. If Mrs Meier’s income is reduced to $29,000 (see below), Mr Meier’s liability would increase to $7,840 per annum and his liability would increase by around $9,200. Again, given his income and home equity, I decided that this would not result in any financial hardship.  He would also have ample capacity to contribute to medical costs for the children (see below). 

Mrs Meier’s financial position

1. Mrs Meier is an [Occupation 2] and she has worked for the same employer for several years.  Her taxable incomes have been increasing and in recent years have been:

   ·2016-17    $37,396

   ·2017-18    $42,426

   ·2018-19    $68,811

2. Mrs Meier became seriously ill in late 2019 and required a [medical procedure].  She needed a significant period of time off work and used up her paid leave (her payslips show that she used a significant amount of long service leave and personal leave).  She was on leave without pay for around two weeks and then returned to work part-time (two days per week) on 10 March 2020 with a gross income of $455 per week.  She recently required surgery and took two weeks of leave without pay.  Mrs Meier provided medical evidence that she is unable to work full-time and she stated at the hearing that she may be able to increase her hours to three days per week next year.  She is receiving a part payment of jobseeker due to her low income.  This payment will reduce significantly when the CCOVID-19 supplement ceases to be paid/reduces.

3. I was satisfied that Mrs Meier has had a large drop in income and currently has no capacity to increase her hours.  If she is able to increase her hours in early 2021 it will still only be in a part-time capacity.

4. Mrs Meier’s year to date earnings as at 14 June 2020 were $45,649 and her likely earnings for the year will be $46,559.  Her adjusted taxable income will be a little higher given that jobkeeper forms part of her taxable income.  Her likely income for the following financial year, assuming she returns to three days per week in early 2021, will be around $29,000 plus a very small amount of jobseeker. 

5. Mrs Meier has $112,000 in superannuation and no other significant assets (she has a 2011 car).  She owes $5,000 in legal fees.

6. Mrs Meier is able to salary sacrifice some of her income and her tax liability is therefore decreased.  She is currently having no tax deducted from her pay.  She is paying around $86 per week in superannuation. 

7. Mrs Meier lives with the two children and lists her weekly expenses to be $22 for health insurance and household costs of $1,300 per week (including $340 for rent).

8. After discussing the expenses with Mrs Meier it was clear that some errors had been made in some of the figures listed.  Mrs Meier listed $170 per week for gas/electricity but it is more likely around $60 per week.  She listed some non-essential expenses, including $40 for entertainment and $20 for books.  The expenses included $105 per week for the children’s psychology appointments.  This is discussed further below but the figure is likely to much lower ongoing.  Apart from the psychology expenses there was nothing out of the ordinary listed.

9. Given Mrs Meier’s very low income, I was satisfied that she is currently in financial hardship and would benefit greatly from an increase in the amount of child support paid.

The children

1. There is no evidence to suggest that the children have any income or significant financial resources of their own.

2. Mrs Meier started that when she became ill it was recommended that the children see a psychologist to help them deal with anxiety.  Mrs Meier was not able to be clear about how much she has spent on this treatment.  She said that there was a mental health care plan in place (allowing for 10 consultations each) but she had to pay the gap of $105 per week.  The therapy started in around November 2019 and the children went every week until the end of term 1.  It is possible that they will have to return but this is an unknown.  Mr Meier submitted that Mrs Meier did not have to pay anything because the children went to a school psychiatrist.  Mrs Meier stated that the psychologist worked at the school premises but was not a school (government-funded) psychologist.  Assuming payment of $105 per week for six months (November 2019 to April 2020) Mrs Meier would have spent around $2,730 on psychology costs; a significant expense given her income.

3. There was no evidence presented to me that the children have any other unusual expenses.  Their normal expenses are dealt with in the administrative assessment and addressed in the Costs of the Children Table.  Mrs Meier has 61% care of the children and it is likely that she incurs around two-thirds of their costs.

Summary – just and equitable

1. When considering ‘just and equitable’ I noted the following:

   ·      Both parents are responsible for maintaining the children.

   ·      Mr Meier has an income of $75,000 per annum and Mrs Meier is currently earning $29,000 from employment.

   ·      Mr Meier has significantly more assets than Mrs Meier; he has equity in his home and superannuation of around $280,000 whereas Mrs Meier has superannuation of $112,000, a difference of $168,000. Mr Meier also has a much more expensive car and a fishing boat worth $24,000.

   ·      Neither parent has any extraordinary personal expenses.

   ·      Mrs Meier incurred around $2,730 for medical costs for the children from November 2019 to April 2020.

   ·      Mr Meier would not suffer any financial hardship if he was required to pay child support based on the incomes of the parents, as found by me.  This would also be the case if he was required to contribute to some or all of the medical costs.

Issue 3 – Is it otherwise proper to make a particular determination?

1. The requirement to consider whether a departure would be otherwise proper 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 and benefits.  Parents, rather than the community, have the primary duty to maintain their children.  Both parents are in receipt of family tax benefit.  Any increase or decrease in child support payments from Mr Meier will have an impact on their payments which is otherwise proper.

Conclusion

1. It is open to me to vary the annual rate of child support payable, adjusted taxable income or the other variables such as costs of self-support used in the statutory administrative assessment formula.

2. I decided it would be just and equitable and ‘otherwise proper’ to assess Mr Meier on an adjusted taxable income of $75,000 and Mrs Meier on her 2018-19 adjusted taxable income until 1 February 2020 when it reduces to $29,000.  I also decided that Mr Meier’s child support liability should be increased by $1,800 per annum from 1 November 2019 to 30 April 2020 as a contribution to the medical costs incurred by Mrs Meier for the children.  It is around two-thirds of the total cost, reflecting his currently much higher income. 

3. I then considered what an appropriate start date for the departure determination would be, noting the maximum allowable is 18 months prior to the application being lodged. 

4. A departure determination was in place until 31 December 2018 and Mrs Meier applied for a new determination on 2 February 2019. I decided that it would be appropriate to commence the departure for Mr Meier’s income from 1 January 2019, which is only a month prior to when the application was made and noted that Mrs Meier’s income did not change until February 2020.

5. I then considered what an appropriate end date for the departure determination would be. 

6. Given Mr Meier’s taxable income history, it is very unlikely that his taxable income will ever reflect his actual income.  I decided that his income should be varied for a significant period of time to allow Mrs Meier some certainty of payment and chose an end date of 30 June 2020.

7. Mrs Meier’s new part-time income will not be reflected in her taxable income until she lodges her 2020-21 income tax return.  Given that there is a risk that she will require further leave without pay I decided to vary her income until 30 June 2020.  She will then be able to lodge estimates of her income as needed. 

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that:

·      For the period 1 January 2019 to 30 June 2024 Mr Meier’s adjusted taxable income is varied to $75,000.

·      For the period 1 February 2020 to 30 June 2020 Mrs Meier’s adjusted taxable income is varied to $29,000.

·      For the period 1 November 2019 to 30 April 2020 Mr Meier’s annual child support liability is increased by $1,800 per annum.