Merriman and Allsebrook (Child support)

Merriman and Allsebrook (Child support) [2022] AATA 2376 (10 May 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/SC021671
APPLICANT:  Mr Merriman
OTHER PARTIES:  Child Support Registrar
Ms Allsebrook

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 10 May 2022
DECISION:

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

for the period from 5 June 2020 to 31 July 2021 the adjusted taxable income of Mr Merriman is varied to $127,490;

for the period from 10 August 2020 to 31 October 2021 the cost of child amount in the formula is to be increased by $7,028 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 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 review is about whether or not there should be a departure from the administrative assessment of child support.
Mr Merriman and Ms Allsebrook are the parents of [Child 1] (born April 2018). There has been a child support assessment in place since 4 June 2018 and Mr Merriman is the liable parent under the assessment.
The following administrative assessments of child support are under consideration:
· for the period from 1 December 2019 to 31 July 2020 Mr Merriman was assessed to pay an annual rate of $19,886 based on an adjusted taxable income of $164,250 for Mr Merriman as set under a previous change of assessment decision and a 2018-19 adjusted taxable income of $79,490 for Ms Allsebrook with the annual rate increased by $4,754 to take account of [Child 1]’s child care costs; and
· for the period from 1 August 2020 to 31 October 2020 Mr Merriman was assessed to pay an annual rate of $20,052 based on an adjusted taxable income of $164,250 for Mr Merriman as set under a previous change of assessment decision and a 2019-20 adjusted taxable income of $81,621 for Ms Allsebrook with the annual rate increased by $4,754 to take account of [Child 1]’s child care costs.
On 14 May 2020 Mr Merriman applied to the Child Support Agency for a change to the assessment on the basis of a parent’s earning capacity (the ground commonly referred to as Reason 8B) and later added the grounds of a parent’s income, property and financial resources (Reason 8A) and his legal duty to support another person (Reason 9).
On 29 June 2020 Ms Allsebrook lodged a cross-application on the basis of the high cost of child care (Reason 6) and a parent’s income, property, financial resources and earning capacity (Reasons 8A and 8B).
On 25 August 2020 the Child Support Agency made the decision to change the assessment (the original decision) so that:
· for the period from 1 August 2020 to 31 December 2021 the adjusted taxable income of Mr Merriman is set at $130,000; and
· for the period from 10 August 2020 to 31 December 2021 the cost of child amount used in the assessment of child support shall be increased by $6,780.
On 7 January 2021 Mr Merriman objected to this decision and on 5 May 2021 the Child Support Agency allowed the objection in part and made the decision to change the assessment (the objection decision) so that:
·     for the period from 14 May 2020 to 31 December 2020 the adjusted taxable income of Mr Merriman is set at $176,171;
·     from 1 January 2021 the usual provisions of a formula assessment apply; and
·     for the period from 10 August 2020 to 31 October 2021 the cost of child amount for [Child 1] in the formula is to be increased by $7,028 per annum.
On 3 June 2021 Mr Merriman applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 16 December 2021. Mr Merriman and Ms Allsebrook attended by conference telephone. Prior to the directions hearing the Child Support Agency provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (622 pages).
Mr Merriman and Ms Allsebrook were directed to provide further information and both complied to the satisfaction of the Tribunal.
A hearing was held on 7 April 2022. Mr Merriman and Ms Allsebrook gave evidence on affirmation by Microsoft Teams audio. Prior to the hearing the Tribunal received documents folioed A1 to A32 from Mr Merriman and B1 to B91 from Ms Allsebrook and these were distributed to the parties. Additional documents were also received from the Child Support Agency (pages 623–730).
At the directions hearing and at the commencement of the hearing the Tribunal sought clarification from Mr Merriman and Ms Allsebrook as to the reasons for their concerns. Mr Merriman said his only concern related to the treatment of his income for the purposes of child support which had been incorrectly assessed by the Child Support Agency. Mr Merriman said he accepted the decision in relation to the costs of child care for [Child 1] and did not contest the finding of the Child Support Agency as it dealt with his legal duty to support another person. Ms Allsebrook said she was satisfied with the outcome of the objection decision but pointed out that the cost of child care for [Child 1] had since increased.
Both Mr Merriman and Ms Allsebrook advised the Tribunal at the commencement of the hearing they had yet to receive the additional documents from the Child Support Agency (pages 623–730). The Tribunal agreed to request that these be resent and to give the parents additional time to provide any written comments. During the hearing the Tribunal also agreed that Mr Merriman could send additional evidence relevant to the matter. This was received on 7 April 2022 (A33–A35) and a copy was sent to Ms Allsebrook for her consideration. On 21 April 2022 the Tribunal received additional written comments from Ms Allsebrook (B92). No further written comments were received from Mr Merriman.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act, the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process such that the issues for determination by this Tribunal are:
·     whether a ground is established to depart from the administrative assessment of child support; and if so,
·     whether it is just and equitable to make a particular departure determination; and if so,
·     whether it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held that:
as a generality 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 formula in the ordinary run of cases.
In Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If the Tribunal is satisfied that a ground exists 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.
The range of determinations which can be made includes variations to the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

In circumstances where multiple grounds for departure are put forward, the Tribunal needs only be satisfied that one ground is established before going on to determine whether or not a particular determination is just and equitable and otherwise proper.

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
Mr Merriman told the Tribunal he was currently employed in a permanent position as an [Occupation 1] at [Employer 1] and had been since 5 June 2020. Mr Merriman said his salary was approximately $132,000 per annum as reflected in his individual tax return for 2020-21.
In response to directions Mr Merriman provided the Tribunal with a copy of his 2020-21 individual tax return. It shows gross income of $133,295 comprised of his salary from employment at [Employer 1] of $132,793, gross interest of $184 as well as franked dividends and franking credits totalling $318. Mr Merriman had a taxable income of $127,490 in 2020-21 after allowing for work-related deductions and donations totalling $5,805.
Mr Merriman said he had recently received an increase in his salary at [Employer 1] which he believed was now approximately $135,000 per annum. Mr Merriman added that he did have a small share portfolio, most of which he had sold through the 2020-21 financial year, which was now valued at approximately $1,100.
Mr Merriman explained that prior to commencing at [Employer 1] he was working in a similar role for [Employer 2] but on a contractual basis. Mr Merriman said he was employed by an agency called [Agency 1] and paid approximately $730 per day. Mr Merriman said as a contractor he was paid at a higher rate than his current salary but this was normal practice. Mr Merriman added that he was earning approximately $3,650 a week at [Employer 2] but this could be higher depending upon the number of days a week he worked.
Mr Merriman told the Tribunal he left [Employer 2] after his role was reprioritised due to uncertainty arising from the COVID-19 pandemic. Mr Merriman said he was informed by [Employer 2] the project he was working on would not be continuing and so he resigned rather than receive a letter of termination. Mr Merriman said he felt this was a preferable approach as he thought a letter of termination might impact his employment prospects at some point in the future. He said his last day at [Employer 2] was 15 May 2020, however, after submitting his final timesheet his salary was deposited into his bank account a few days later.
The Tribunal notes in evidence from the Child Support Agency what appears to be correspondence from [Agency 1] dated 25 May 2020 which states that as at the day of the response Mr Merriman was still employed with the organisation. The Tribunal further notes a copy of bank statements for a smart access account in the name of Mr Merriman for the period from 8 April 2020 to 5 July 2020. These statements show Mr Merriman received his final salary from [Agency 1] on 20 May 2020, received one jobseeker payment on 4 June 2020 and received his first salary from his current employer on 17 June 2020. A payslip provided by Mr Merriman to the Child Support Agency for the pay period commencing 5 June 2020 indicates regular hours of 76 hours per fortnight and an annual full-time salary of $130,000.
Mr Merriman said after his role at [Employer 2] ended he applied for the jobseeker payment through Centrelink. He said this was approved from 21 May 2020 but, as it turned out, there was a period of only around three weeks between roles when he was not working.
The Tribunal notes in evidence from the Child Support Agency a copy of Mr Merriman’s individual tax return for 2019-20. It shows gross income of $136,921 comprised of salaries from three employers – [Agency 2], [Agency 1] and [Employer 1] – as well as an Australian Government allowance. Mr Merriman had a taxable income of $130,448 in 2019-20 after allowing for work-related deductions and donations.
Ms Allsebrook told the Tribunal she believed Mr Merriman had a long history of deliberately providing misleading information about his income in order to minimise his child support. Ms Allsebrook said this had been going on since the child support assessment commenced in 2018. Ms Allsebrook pointed to a comment in the objection decision which states that “as Mr Merriman has been under assessed for a period of time, the short time where he has been over assessed negates any inequity”. In a written submission to the Tribunal Ms Allsebrook argued that Mr Merriman should be assessed on a higher income based on his earning capacity.
Mr Merriman also provided the Tribunal with a Statement of Financial Circumstances received on 23 June 2021. In this document Mr Merriman states he has a gross income of $2,500 per week. His total average weekly expenditure is $1,153 and his total personal expenditure is $1,049 including child support for [Child 1] of $356 per week. Mr Merriman has assets totalling $9,300 including a [specified] motor vehicle valued at $6,000. As previously noted Mr Merriman also has shares valued at approximately $1,100. His liabilities total $3,250. Mr Merriman did not provide the amount of his superannuation.
The Tribunal finds that in 2020-21 Mr Merriman had an adjusted taxable income of $127,490. At the time Mr Merriman made his application for a change of assessment on 14 May 2020 the administrative assessment of child support was based on a previous change of assessment decision made by the Child Support Agency. The Tribunal has established, however, that Mr Merriman’s circumstances altered when he started new employment at [Employer 1]. This was just prior to the commencement of the 2020-21 financial year. The Tribunal is satisfied the amount of $127,490 fairly represents the income, property and financial resources available to Mr Merriman from the time he began working at [Employer 1]. The Tribunal notes that Ms Allsebrook believes Mr Merriman has a higher earning capacity and the Tribunal will consider this under the earning capacity of each parent.
The Tribunal also considered the income, property and financial resources of Ms Allsebrook.
Ms Allsebrook told the Tribunal she was an [Occupation 1] and had started a new role at [Employer 3] around 23 November 2020. Ms Allsebrook said her starting salary was approximately $125,000 per annum but this had recently increased to $130,000 per annum.
In response to directions Ms Allsebrook provided the Tribunal with a payslip from [Employer 3] for the monthly pay period ending 31 January 2022. It shows a gross monthly salary of $10,416.67 which equates to $125,000 per annum.
Ms Allsebrook said she had been working at [Employer 4] for more than four years until moving to her current role. She said there were a few days between roles when she was not working.
In response to directions Ms Allsebrook provided the Tribunal with a copy of her 2020-21 individual tax return. It shows a taxable income of $115,018 comprised of her salaries from [Employer 4] and [Employer 3] less work-related deductions and donations.
Ms Allsebrook also provided the Tribunal with a Statement of Financial Circumstances received on 2 August 2021. It shows a total average weekly income of approximately $2,759 including her salary of $2,406 and child support of $353. Ms Allsebrook lists total weekly household expenditure of approximately $2,261 including mortgage costs, child minding and other expenses. Ms Allsebrook explained that her other expenses included religious obligations and legal costs. Her total weekly personal expenditure is $976 with $652 of this being income tax. Ms Allsebrook has total assets of approximately $676,699 including her home valued at $620,000 and a [specified] motor vehicle valued at $7,000. Her liabilities total $676,294 including her home mortgage of $557,073, legal costs and a Centrelink debt which she said she was currently repaying. Ms Allsebrook declares superannuation of approximately $60,911.
The Tribunal finds that in 2020-21 Ms Allsebrook had an adjusted taxable income of $115,018. The Tribunal is satisfied this is an accurate reflection of her income, property and financial resources for the purposes of child support. The Tribunal notes that in 2019-20 Ms Allsebrook had an adjusted taxable income of $81,621.
The administrative assessment in place at the time Mr Merriman made his application for a change on 15 May 2020 was based on an income of $164,250 for Mr Merriman and a 2018-19 adjusted taxable income of $79,490 for Ms Allsebrook. The income for Mr Merriman was set under a previous change of assessment decision, being a decision on objection, made by the Child Support Agency on 23 April 2020. It followed a change of assessment application made by Ms Allsebrook on 6 November 2019. It appears neither parent sought a review by the Tribunal of the objection decision made on 23 April 2020.
The change of assessment process is not available as an avenue of appeal against a previous decision. In the ordinary course of events the Tribunal would only consider a subsequent change of assessment when the circumstances of the parent or child are significantly different such that the previous decision is unfair or new evidence has become available which was not considered by the original decision maker.
In this case the Tribunal is satisfied that when Mr Merriman left his employment at [Employer 2] his position had changed and a new review of his income, property and financial circumstances was warranted. Mr Merriman has told the Tribunal his last day at [Employer 2] was 15 May 2020, however, correspondence from [Agency 1] suggests he was still employed through them as at 25 May 2020. Bank statements show Mr Merriman received his final payment from [Agency 1] on 20 May 2020 and he has explained this was because he was paid in arrears after the processing of his timesheet. Mr Merriman commenced in his role at [Employer 1] on 5 June 2020.
The income, property and financial resources available to Mr Merriman as determined by the Tribunal are less than those used in the administrative assessment. By using the amount of $127,490 for Mr Merriman and the 2018-19 income for Ms Allsebrook of $79,490 and applying these in the child support formula, Mr Merriman would be required to pay child support only of approximately $13,549. The Tribunal finds this to be significantly less than his annual liability of approximately $16,468 under the administrative assessment (these amounts do not include an increase in the annual rate for child care costs). The Tribunal notes even when using Ms Allsebrook’s 2019-20 adjusted taxable income amount of $81,621 in the assessment the amount of child support Mr Merriman would be liable to pay does not vary greatly. The Tribunal finds the income used for Ms Allsebrook is appropriately reflected in the administrative assessment.
The Tribunal determines there are special circumstances and that the application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Mr Merriman in respect of [Child 1].

On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

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

As the Tribunal finds there is a ground to depart from the administrative assessment of child support, the next step is to consider whether or not it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider the matters discussed below,[1] which are as set out in subsection 117(4) of the Act:
[1] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886.
(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 nature of the duty of a parent to maintain a child (as stated in section 3 of the Act)

Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments. In this case the parents have a duty to support [Child 1].
The Tribunal was not made aware that either parent has a legal responsibility to any other child or person.

The proper needs of the child

In relation to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).
The Tribunal was not made aware that the parents expected [Child 1] to be cared for, educated or trained in a particular way or that he had any special needs. The Tribunal is satisfied it is therefore appropriate to calculate the costs of his needs by reference to the Costs of the Children Table (provided for in section 155 of the Act).

The income, earning capacity, property and financial resources of the child

The Tribunal is satisfied that [Child 1] has no income, earning capacity, property and financial resources which should be taken into account for the purposes of child support.

The income, property, financial resources and earning capacity of each parent

The Tribunal has already considered in detail the income, property and financial resources of both parents.
Ms Allsebrook also raised the earning capacity of Mr Merriman. Ms Allsebrook told the Tribunal that the manner in which Mr Merriman had resigned from [Employer 2] led her to believe he was deliberately attempting to reduce his child support. Ms Allsebrook pointed out that Mr Merriman submitted his new change of assessment application on 14 May 2020 almost immediately after the Child Support Agency had made the objection decision on 23 April 2020 to set his income at $164,250.
Ms Allsebrook said the explanation provided by Mr Merriman – that his project at [Employer 2] had been reprioritised and so he had resigned rather than receive a letter of termination – was not believable. Ms Allsebrook said it appeared Mr Merriman had resigned voluntarily and not because his contract had ended. Ms Allsebrook said [Employer 2] was a large organisation and it would be expected the bank, or the contracting organisation through which Mr Merriman was employed, would have issued some form of confirmation of his resignation. She said this was not the case.
Mr Merriman reiterated that once he had been informed about his work situation he had resigned rather than being terminated. Mr Merriman said he had informed his project leader at [Employer 2] of his decision but had not received a response. He said he did receive an acknowledgement from [Agency 1].
The Tribunal notes in evidence from the Child Support Agency a copy of an email from Mr Merriman to [Employer 2] dated 22 April 2020 which states in part:
Please accept this email as formal notification of my resignation from [Employer 2] as [position]. My last working day with the company will be Friday 15^th of May 2020.
Before I leave, I will ensure that all my tasks are completed as far as possible and I am happy to assist for a smooth handover of my work to my replacement.
Following the hearing Mr Merriman provided the Tribunal with an email to his employer at [Agency 1] dated 3 May 2020 in which he advises that he has resigned from [Employer 2]. In a response dated 4 May 2020 his employer acknowledges receipt of the email and asks if Mr Merriman had informed his manager at [Employer 2].
Ms Allsebrook responded to this new evidence from Mr Merriman by stating this simply confirmed that it was his decision to leave his employment at [Employer 2]. Ms Allsebrook added that there was no acknowledgement from [Agency 1] to confirm the project at [Employer 2] had been discontinued due to the impact of COVID-19 on business conditions. Ms Allsebrook also said there would be no reason for Mr Merriman to ensure a handover of his work if the role no longer existed due to a reprioritisation of projects at the bank.
Mr Merriman said he had always believed his role at [Employer 2] would be short-term because it was a contract position. He said the position at [Employer 1] also offered permanent employment which was better for him. Mr Merriman added that he did not deliberately leave [Employer 2] to impact the child support assessment.
In order to establish that Mr Merriman’s earning capacity might be greater than that reflected in the child support assessment and render the assessment unfair, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied. Those three criteria are:
(a)    one or more of the following applies:
·the parent does not work despite ample opportunity to do so (subparagraph 117(7B)(a)(i));
·the parent has reduced the number of hours per week of their 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 (subparagraph 117(7B)(a)(ii));
·the parent has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
(b)    the parent’s decision not to work, to reduce the number of hours, or to change their occupation, industry or working pattern is not justified on the basis of:
·the parent’s caring responsibilities (subparagraph 117(7B)(b)(i)); or
·the parent’s state of health (subparagraph 117(7B)(b)(ii)); 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 (paragraph 117(7B)(c)).
Mr Merriman has moved from a role as a contractor at [Employer 2], where he was employed through [Agency 1], to a permanent position at [Employer 1]. Even though the two roles were similar, as Mr Merriman has explained, he was paid at a higher rate as a contractor. This is not unusual. As Mr Merriman has changed his working pattern the first criterion is, therefore, met. There is no suggestion the decision by Mr Merriman to move to permanent employment at [Employer 1] was justified on the basis of his caring responsibilities or state of health. The second criterion is also met.
Mr Merriman has argued that it was in his best interests to resign from [Employer 2] rather than receive a letter of termination after he was told the project he was working on had been reprioritised. Mr Merriman has also stated that his role at [Employer 1] was preferable as it was a permanent position. Ms Allsebrook has told the Tribunal it was her view Mr Merriman resigned because he was assessed to pay child support on an income of $164,250 set under a previous change of assessment decision.
While there is uncertainty, based on the conflicting evidence, about exactly when Mr Merriman left [Employer 2] it is clear he commenced at [Employer 1] on 5 June 2020. This means Mr Merriman was not working for a maximum of 20 days but possibly less. His new salary at [Employer 1], as reflected in his 2020-21 tax return, was approximately $132,000.
The intent of the legislation in relation to earning capacity is primarily to guard against a situation where a parent has deliberately reduced their income and this has had a significant effect on the child support assessment. It is not designed to assess a parent on what they might be able to do or prevent them from making choices about their careers. Even if Mr Merriman did elect to leave [Employer 2] and move to a permanent but lower paying role at [Employer 1] the Tribunal is not satisfied that affecting the child support assessment was a major purpose for the decision to change his work arrangements.
As all three criteria must be satisfied, it follows that if one is not satisfied, then this ground cannot be considered. The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Mr Merriman in this case. The Tribunal is also satisfied that the earning capacity criteria are not met in relation to Ms Allsebrook.

Commitments of self-support or to support any other child or another person

The Tribunal was not made aware that either parent had commitments to any other child or person.

Costs incurred by the carer entitled to child support in providing care for the child

Ms Allsebrook told the Tribunal that [Child 1] attends child care for 50 hours a week for which she received a government subsidy. Ms Allsebrook said she did not dispute the objection decision in relation to her child care costs but argued her out-of-pocket costs had since increased.
Ms Allsebrook said the objection decision had accounted for her child care costs by increasing the cost of child amount for [Child 1] until 31 October 2021 while her out-of-pocket costs had risen from around 1 July 2021. Ms Allsebrook said the weekly gap she was paying after the child care subsidy was now $230.88 whereas previously it had been $154.60. Ms Allsebrook explained this was largely a result of her higher salary as reflected in her 2020-21 tax return. Ms Allsebrook said she had provided evidence to the Tribunal showing her new out-of-pocket costs.
The Tribunal notes in evidence child care statements for [Child 1] from the [named] Children’s Centre in [Suburb 1]. The statements cover the period from 28 June 2021 to 6 February 2022. A summary of fees and subsidies in the statements shows an actual fee less the subsidy paid of $154.60 for the week commencing 5 July 2021. This gap rises to $180.25 in the week commencing 12 July 2021, to $215.87 in the week commencing 26 July 2021, to $224.90 in the week commencing 20 September 2021 and to $230.87 in the week commencing 17 January 2022.
Ms Allsebrook also pointed out that a change of care for [Child 1] had also impacted the amount of child care costs met by Mr Merriman. She said because child care costs were added to the cost of child and care of [Child 1] had changed, the formula incorrectly assumed Mr Merriman was meeting 14 per cent of the child care costs through his care arrangements.
Ms Allsebrook said she had submitted a new change of assessment application with the Child Support Agency on 28 July 2021 to address these concerns. She said her application had been placed on hold pending an outcome from the current review by the Tribunal. Ms Allsebrook said she was happy to have these matters addressed by the Child Support Agency.
Mr Merriman told the Tribunal he did not challenge the objection decision in relation to child care costs and agreed he should be making a contribution towards these costs. Mr Merriman said child care costs were dynamic and he was happy for Ms Allsebrook to progress this through her new change of assessment application to the Child Support Agency.
Based on the evidence provided it appears Ms Allsebrook has out-of-pocket child care costs which may be higher, for a period of around three months, than the amount assessed by the objections officer. The Tribunal also acknowledges the concerns Ms Allsebrook has raised about the impact a change of care would have on the amount of child care costs Mr Merriman is meeting. The Tribunal notes, however, that as care of [Child 1] changed from 16 October 2021 and the objection decision in relation to child care costs ends on 31 October 2021 this will make little overall difference to the assessment.
Both parents have confirmed they are broadly comfortable with the outcome of the objection decision in relation to child care costs. Ms Allsebrook has raised concerns about her higher out-of-pocket costs from early July 2021 but is happy to have these addressed as part of her new change of assessment application to the Child Support Agency.
In such circumstances the Tribunal chooses not to disturb the objection decision as it relates to the child care costs for [Child 1].

Any hardship that would be caused

Although Mr Merriman made his application for a change of assessment on 14 May 2020 the Tribunal has found that his circumstances did not actually change until he left his role at [Employer 2]. The Tribunal is satisfied, based on the evidence provided, this was from 15 May 2020. Bank statements show Mr Merriman received his final payment of wages on 20 May 2020. He commenced his new employment at [Employer 1] from 5 June 2020. The Tribunal has found that Mr Merriman had access to income, property and financial resources of $127,490 in 2020-21 which was for a full year of employment at [Employer 1]. In effect Mr Merriman commenced earning this income from 5 June 2020.
Mr Merriman lists his total estimated household expenditure at $59,956 per annum and his total personal expenditure at $54,548 which includes an amount of approximately $18,512 in child support. Mr Merriman told the Tribunal he had an average lifestyle and was not lavish with his expenses. Mr Merriman added that he was currently living in a one-bedroom apartment and was looking at moving into a two-bedroom apartment so [Child 1] would be more comfortable when he came to stay.
Ms Allsebrook had an adjusted taxable income of $115,018 in 2020-21 and the Tribunal is satisfied the income used for Ms Allsebrook is appropriately reflected in the administrative assessment.
Ms Allsebrook has total average weekly expenses of $117,572 per annum and total personal expenditure of $50,752. Ms Allsebrook told the Tribunal that her mother assisted her with expenses for the children and, with the addition of child support, she considered her income and expenses were in balance. Ms Allsebrook said she had some flexibility in meeting her expenses during months when they might be higher than usual. She said she led a modest lifestyle.
Having considered the interests of both parents the Tribunal proposes that for the period from 5 June 2020 to 31 July 2021 the adjusted taxable income of Mr Merriman be varied to $127,490.
The Tribunal is limited to making a determination in respect of a day in a period that is not more than 18 months prior to the date the change of assessment application was made (paragraph 98S(3B)(a) of the Act). Mr Merriman made his application for a departure on 14 May 2020 and the Tribunal must decide whether or not it is just and equitable to backdate the determination. As Mr Merriman commenced his role at [Employer 1] from 5 June 2020 the Tribunal will commence its determination from this date and not earlier.
The Tribunal acknowledges that Mr Merriman finished working at [Employer 2] on 15 May 2020 and did not start his new role at [Employer 1] until 5 June 2020. Under the determination of the Tribunal this means Mr Merriman will continue to be assessed on an income of $164,250 (as set under the previous change of assessment decision) until 4 June 2020 even though he was not working for a period of three weeks. The Tribunal notes Mr Merriman received the jobseeker payment during this period (although the objections officer raises the prospect of Centrelink recovering this amount as an overpayment). The Tribunal is also conscious that Ms Allsebrook was not working for a brief time. The Tribunal is satisfied its determination will not cause Mr Merriman hardship and will not render the decision unfair for this short time.
From the start of the child support period commencing on 1 August 2021 the ordinary administrative assessment will apply with both parents being assessed on their last relevant year of income.
The Tribunal notes the objections officer found that special circumstances existed in relation to the out-of-pocket child care costs Ms Allsebrook was meeting and these costs significantly affected the cost of maintaining [Child 1]. The objections officer determined these out-of-pocket costs to be $7,028 per annum (for the child support period) and increased the cost of child for [Child 1] by this amount from 10 August 2020 until 31 October 2021. The Tribunal reviewed these calculations and is satisfied the approach taken in the objection decision is reasonable in the circumstances of this case.
As Ms Allsebrook has indicated she has applied for a new change of assessment to address a subsequent increase in her out-of-pocket child care costs and Mr Merriman has not challenged the objection decision in relation to this matter, the Tribunal has chosen to leave this part of the objection decision in place.
As previously calculated when using the amount of $127,490 for Mr Merriman and the 2018-19 income for Ms Allsebrook of $79,490 and applying these in the child support formula, Mr Merriman would be required to pay child support only of approximately $13,549. This amount will fall slightly when Ms Allsebrook’s 2019-20 income is used in the assessment. It is important to note this does not include the amount Mr Merriman will be required to meet in relation to [Child 1]’s child care costs.
The Tribunal is satisfied the proposed determination will not cause hardship to Mr Merriman, Ms Allsebrook or [Child 1] and is just and equitable.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be otherwise proper to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.

Ms Allsebrook told the Tribunal she was no longer in receipt of family tax benefit due to her higher income. At the time of the application made by Mr Merriman for a change of assessment, however, Ms Allsebrook was in receipt of family assistance in respect of [Child 1]. A decrease in the child support entitlement as determined by this decision may increase the extent to which the community will be supporting [Child 1]. The Tribunal is satisfied this is otherwise proper as its determination will result in an appropriate apportionment of financial responsibility between the parents and the taxpayer.

DECISION

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

for the period from 5 June 2020 to 31 July 2021 the adjusted taxable income of Mr Merriman is varied to $127,490;

for the period from 10 August 2020 to 31 October 2021 the cost of child amount in the formula is to be increased by $7,028 per annum.

[2022] AATA 2376

10 May 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Appeal

Judicial Review

Statutory Construction

Remedies