Merritt and Polley (Child support)

Merritt and Polley (Child support) [2020] AATA 4280 (30 August 2020)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2019/SC017604
APPLICANT:  Ms Merritt
OTHER PARTIES:  Child Support Registrar
Mr Polley

TRIBUNAL:Member J Thomson
DECISION DATE: 30 August 2020
DECISION:

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

For the period 1 August 2018 to 31 December 2021, Mr Polley’s adjusted taxable income is varied to $70,174;
For the period 21 December 2018 to 26 April 2019, Ms Merritt’s adjusted taxable income is varied to $96,277;
For the period 27 April 2019 until 30 June 2020, Ms Merritt’s adjusted taxable income is varied to $98,221;
For the period 1 April 2019 to 30 June 2019, the annual rate of child support payable by Mr Polley is increased by $13,000; and
For the period 1 July 2019 to 30 June 2020 the annual rate of child support payable by Mr Polley is increased by $13,000; and
For the period 1 July 2020 to 31 December 2021, the annual rate of child support payable by Mr Polley is increased by $9,500.

CATCHWORDS
CHILD SUPPORT – departure determination – costs of child-care significantly affect the cost of maintaining the child – income, property and financial resources of both parents – 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

Mr Polley and Ms Merritt are the parents of [Child 1], born 2011, and [Child 2], born 2015 (the children), both of whom are in the 100% care of Ms Merritt.
The administrative assessment currently in place requires Mr Polley to pay child support to Ms Merritt at the annual rate of $10,490 for the period 1 August 2018 to 31 October 2019, based on an adjusted taxable income (ATI) of $70,174 for Mr Polley, and an ATI of $65,305 for Ms Merritt.
On 21 December 2018, Mr Polley applied to the Child Support Agency (the Agency) for a change of assessment on the following grounds:
·That he has provided money, goods or property to Ms Merritt for the benefit of the children in the assessment, making the assessment unjust and inequitable (the ground commonly referred to as Reason 5);
·That his necessary expenses for self-support significantly reduce his ability to support the children in the assessment (the ground commonly referred to as Reason 7); and
·That the incomes, financial resources and property of the parents made the assessment unjust and inequitable (the ground commonly referred to as Reason 8A).
On or about 15 April 2019, Ms Merritt cross applied to the Agency for a change of assessment on the following grounds:
·That her child-care costs for the children exceeded 5% of her ATI (the ground commonly referred to as Reason 6); and
·That the incomes, financial resources and property of the parents made the assessment unjust and inequitable (Reason 8A).
On 11 June 2019, [an Agency decision maker] found Reason 8A established in Mr Polley’s application, and Reasons 6 and 8A established in Ms Merritt’s cross application, and changed the assessment as follows:
·For the period 21 December 2018 to 31 December 2019, the ATI for Ms Merritt is set at $96,655;
·For the period 21 December 2018 to 31 December 2019, the ATI for Mr Polley is set at $77,168; and
·For the period 1 April 2019 to 31 December 2019, the annual rate of child support otherwise payable by Mr Polley is increased by $12,000, in consideration of his contribution to the children’s child-care costs.
On 5 July 2019, Mr Polley objected to [the decision maker]’s decision of 11 June 2019, and on 11 September 2019, an Agency objections officer partially allowed his objection, setting aside [the decision maker]’s decision, and, in substitution, deciding that:
·For the period 21 December 2018 until 26 April 2019, Ms Merritt’s ATI is set at $96,277;
·For the period 27 April 2019 until 31 October 2021, Ms Merritt’s ATI is set at $98,221;
·The ATI amount for Ms Merritt will be adjusted annually commencing 1 July 2020 and each relevant year thereafter by the Consumer Price Index (CPI) Nationally Weighted Average for the preceding March quarter; and
·for the period 1 April 2019 until 16 July 2019, the annual rate payable by Mr Polley is increased by $12,000.
On 11 October 2019, Ms Merritt applied to the Tribunal for review of the objections officer’s decision of 11 September 2019.
The Tribunal heard the matter on 30 June 2020. Both parents attended the hearing via conference telephone and gave affirmed evidence. The Tribunal had before it documentation provided by the Agency and each of the parents. The Agency’s documents were admitted into evidence and marked Exhibit 1. Ms Merritt and Mr Polley’s documents were admitted into evidence and marked Exhibits A and B respectively. Both parents had copies of these documents with them at the hearing.
At the conclusion of the hearing, the Tribunal directed Ms Merritt to provide the Tribunal with copies of her 2018/19 financial year PAYG summary and her last pay slip for the 2019/20 financial year. She has complied with this direction and copies of those documents have been added to Exhibit A. The Tribunal did not consider it necessary to provide Mr Polley with copies of these documents for comment.
The Tribunal also directed Mr Polley to provide a completed, dated and signed Statement of Financial Circumstances (SOFC), his last three [Employer 1] pay slips and PAYG summary for the 2019/20 financial year, and his [Employer 2] contract extension agreement from August 2019 to 14 November 2019. He has substantially complied with the Tribunal’s directions, and the additional documents he has provided have been added to his documents, Exhibit B. Copies of these documents were circulated to Ms Merritt for her consideration and comment, and her response has been added to her documents, Exhibit A.

ISSUES

The issues which arise in this case are:
· Mr Polley’s and Ms Merritt’s income and financial resources, and his income earning capacity for child support purposes; and
· Ms Merritt’s child-care costs for the children.

CONSIDERATION

In reaching its decision, the Tribunal has considered the affirmed evidence given by the parents at the hearing, and the documents contained in Exhibits 1, A and B.
The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. A formula is used. It takes into account variables including each parent’s ATI for the last relevant year of income, the number of children, and the level of care provided by each parent. Part 6A of the Act allows for a departure from the administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:
·      One, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(ii));
·      A departure is just and equitable as regards the children and each parent (sub- subparagraph 98C(1)(b)(ii)(A));
·      It is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)).
Subsection 98C(2) provides that the grounds for departure are the same as the grounds 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 Registrar may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the ATI or the cost percentage of a child.

Grounds for departure

Subparagraph 117(2)(c)(ia) of the Act provides as a ground for departure:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child …
(ia) because of the income, property and financial resources of either parent; or…
The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, 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 legislation in subsection 117(2) must be guided by the qualification that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92–279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial positions.

Ms Merritt’s evidence

Ms Merritt’s case at the hearing primarily centred on Mr Polley’s income and income earning capacity for child support purposes, and his contributions to the after-school care costs for the child [Child 1], and the child-care costs for the child, [Child 2]. These costs have been significantly impacted by the recent intrusion of COVID-19 education and employment restrictions to which the Tribunal will need to give consideration in its decision, as the objection decision under review affecting those issues was made on 11 September 2019, prior to the impact of the COVID-19 restrictions coming into effect in March 2020.
Ms Merritt is employed by [Employer 3] in Sydney, New South Wales as [an Occupation 1] on a part-time contract basis. She has 100% care of the children, [Child 1], aged 9 years, and [Child 2], aged 5 years.
Ms Merritt gave evidence that in November 2019, Mr Polley sent her an email, relevantly, informing her of his decision to resign his position as a casual [Occupation 2] with [Employer 2], and move to [Town 1], on the New South Wales north coast to live with his current partner, [Ms A] and her parents on the parents’ [produce] farm, where he said [Ms A]’s father had offered Mr Polley a job. The email reflects that his decision to relocate to [Town 1] was also motivated by his partner having secured a job with [Employer 4] in Brisbane, and was able to commute to work in Brisbane from her parents’ farm at [Town 1].
Ms Merritt submitted that it was a major purpose in Mr Polley’s decision to resign his position with [Employer 2] to affect his liability to pay child support for the children, including his contribution to the child-care costs for [Child 1] and [Child 2], because he had no real prospect of securing a job and income working for [Ms A]’s father on the family [produce] farm in [Town 1].
There was evidence before the Tribunal in the form of an email submission from Mr Polley, dated 25 November 2019, relevantly, confirming that he was not employed by his father-in-law on the family [produce] farm, but, rather, was self-employed, and as such not able to estimate his income, as it would take a while for his self-employment (author’s words) opportunities to turn into income.
The other issue Ms Merritt raised in her submissions related to the amount of the after-school child-care costs for the child [Child 1], and the child-care costs for the child [Child 2] she paid.
In that respect, Ms Merritt gave evidence that, as an immigrant from [Country], she had only been accorded residency status in July 2019, and although she had applied for government assistance on 2 September 2019 to meet the child-care costs for the children, she did not receive any financial assistance in that respect from Centrelink until late January 2020, following Centrelink’s approval of her application on 24 December 2019.
She provided evidence in the form of tax invoices issued by [an after-school care provider] for after-school care services for the child, [Child 1] for the period 26 January 2020 to 29 March 2020, and [a child care provider] for child-care costs relating to the child, [Child 2] for the period 5 January 2020 to 29 May 2020.
Ms Merritt gave evidence that, in consequence of the COVID-19 pandemic restrictions affecting education facilities, introduced in late March 2020, for the months of April and May [Child 1] was required to remain at home with Ms Merritt during the pandemic lockdown. He resumed after-school care two days per week (Tuesdays and Thursdays) from 2 June 2020. However, [Child 2] attended child-care approximately five days per week from 5 January 2020 and throughout the pandemic lockdown period.
In the decision under review, the objections officer declined to make a determination as to Ms Merritt’s child-care costs beyond 17 July 2019 because Ms Merritt’s Centrelink application lodged on 2 September 2019 had not been determined as at the date of the objection decision on 11 September 2019.
Ms Merritt provided a copy of Centrelink’s letter of 24 December 2019 as part of her documents contained in Exhibit A, notifying her that her child-care subsidy application had been determined and that her subsidy had been assessed as follows:
[Child 1]
·Subsidy percentage: 35.62%
·Subsidised hours per f/night: 100
·Annual cap $10,373
·Withholdings: 5%
[Child 2]
·Subsidy percentage: 35.62%
·Subsidised hours per f/night: 100
·Annual cap: $10,373
·Withholdings: 5%.
Ms Merritt provided two letters from her current employer, [Employer 3] dated respectively 5 July 2018, reflecting her annual salary from the commencement of the financial year 1 July 2018 as $96,655, and 26 April 2019, reflecting an increase in her annual salary from 24 April 2019 to $98,588 (see Exhibit 1 pages 210 and 281). The objections officer in the decision under review accepted this evidence as an accurate reflection of Ms Merritt’s income for the 2018/19 financial year, and after allowing deductions of $378 (consistent with the deductions she claimed in the previous financial year’s income tax return), determined her ATI for the period 21 December 2018 to 26 April 2019 at $96,277, and from 27 April 2019 to 31 October 2019 at $98,221. Mr Polley did not challenge these incomes at hearing. The Tribunal accepts the objections officer’s determinations of Ms Merritt’s ATI for those periods as an accurate reflection of her incomes for that period.

Mr Polley’s evidence

Mr Polley’s issues at the hearing were directed to the child-care costs for the children, the extent to which Ms Merritt receives government assistance in the form of the Centrelink subsidy payments, and the date from which the subsidy payments commenced, and his income earning capacity for child support purposes.
He gave evidence that he migrated to Australia, arriving in June 2010. He holds a Master’s degree in [Subject] from [a University], but his qualifications are not recognised in Australia.
Following his arrival in Australia, he obtained various casual jobs in Sydney. In May 2019 he secured a three-month contract with [Employer 2] as [an Occupation 2], commencing on 16 May 2019 and ending on 16 August 2019, at a gross salary of $61,435. His contract was extended at his request for a further three months to 16 November 2019 at an increased salary package totalling $68,953 per annum (salary component – $62,971 per annum, and superannuation component – $5,982 per annum). However, he resigned his position with [Employer 2] on 14 November 2019. His Employment Separation Certificate at pages B36 and B37 of Exhibit B confirmed he resigned his position.
Mr Polley said he decided to resign his position with [Employer 2] because his partner, [Ms A] had secured a position with [Employer 4] in Brisbane, and they had decided to move to [Town 1], on the northern New South Wales coast where her parents had [a produce] farm, with sufficient accommodation where they could reside, and accommodate the children for care periods in better circumstances than the limited premises he and [Ms A] occupied in Sydney. He said [Ms A] was able to commute daily from [Town 1] to [Employer 4] in Brisbane where she had secured employment. Her father also had health issues, and generally, they considered their future prospects were better in [Town 1], rather than remaining in Sydney. He acknowledged at the hearing that he did not seek an extension of his contract with [Employer 2] because he and his partner, [Ms A] had already decided to move to [Town 1] prior to his resigning his [Employer 2] position on 14 November 2019.
He also gave evidence that he intended enrolling in a [course] at [a University’s Town 2] campus while working on [Ms A]’s parents’ [produce] farm.
Mr Polley acknowledged in response to questioning by the Tribunal that he did not have an employment agreement with [Ms A]’s father to work for remuneration on the [produce] farm, nor did he ever receive any form of payment for any work he carried out on the farm, although he said that [Ms A]’s parents provided them with food and accommodation for the period they resided with them.
The intended course at the [University] did not eventuate because the course was cancelled due to funding restrictions placed on the [University].
The [Town 1] venture came to an end when the [Town 3] produce agent with whom [Ms A]’s parents had a contract for the supply of [produce] for local restaurants and other retail outlets was terminated due to an economic downturn in the [Town 3] area, and Mr Polley and [Ms A] decided to return to Sydney where Mr Polley could seek secure employment.
Mr Polley acknowledged that he had placed himself in a vulnerable position financially by resigning from his position with [Employer 2] without having secured permanent employment in [Town 1], and with the primary intention of enrolling in the [course] at the [Town 2] campus of the [University].
There was evidence before the Tribunal of Mr Polley’s efforts to find employment in the form of responses to job applications, and a schedule of applications he had made as far back as 8 March 2018 through until 18 May 2020. The schedule suggests he and [Ms A] returned to Sydney in February 2020, where he continued to apply for positions.
In May 2020, Mr Polley secured a casual, level 2, position with [Employer 1]. However, his position was made redundant in consequence of a downturn in the economy, and his employment was terminated on 18 June 2020. His final pay slip reflected his year-to-date salary of $5,240.76, including a redundancy payment of one week’s wages of approximately $796, calculated at the hourly rate of $26.53 for an average of 30 hours per week. On that basis, the Tribunal finds his annualised income would have been approximately $71,418 ($23.53 x 30 x 52 = $71,418).
The Agency’s records contained in Exhibit 1 reflect he lodged a $0 estimate of income for the period 27 November 2019 to 30 June 2020, which was accepted by the Agency on 27 November 2019. Apart from the brief period of employment with [Employer 1], he has been unemployed since 18 June 2020.
When considering the earning capacity of a parent, the Tribunal is required to have regard to the provisions of subsection 117(7B) of the Act. In summary, this section requires the Tribunal to be satisfied of three criteria:
(a) One or more of the following:
I.the parent does not work despite ample opportunity to do so;
II.the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupational industry in which the parent is employed or otherwise engaged;
III.the parent has changed his or her occupation, industry or pattern of work; and
(b) the parent’s decision not to work, to reduce the number of hours or to change his or her occupation, industry or working pattern, is not justified on the basis of:
I.the parent’s caring responsibilities; or
II.the parent’s state of health; and
(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

The Tribunal considers that in failing to explore the prospects of having his contract with [Employer 2] extended beyond 16 November 2019, and, instead, deciding to resign his position without securing alternative employment, Mr Polley has changed his occupation, industry and pattern of work. No evidence was provided to suggest that the circumstances in which he decided to resign his position with [Employer 2] was justified on the basis of his caring responsibilities or his state of health, and the evidence on balance does not satisfy the rebuttable presumption that it was not a major purpose of his decision to resign his position with [Employer 2], without first securing alternative employment, to affect the administrative assessment of child support in relation to the children. Consequently, all three of the criteria referred to above are satisfied.
The Tribunal finds that the evidence on balance is that Mr Polley has a demonstrated capacity to earn an income of between $68,953, which was his annual salary as [an Occupation 2] with [Employer 2] up until his resignation on 14 November 2019, and $71,418, which was his annualised income as [an Occupation 3] for [Employer 1] for the period 14 May 2020 to 18 June 2020, an average income of $70,185 ($68,953 + $71,418 / 2 = $70,185).
The administrative assessment for the period 1 August 2018 to 31 October 2019 required Mr Polley to pay child support to Ms Merritt at an annual rate of $10,490, based on his ATI of $70,174, and Ms Merritt’s ATI of $65,305. The Tribunal has found that Ms Merritt’s ATI for the 2018/19 financial year was between $96,277 and $98,221. This makes the assessment unjust and inequitable, the case special, and a ground for a departure from the administrative assessment established.
Mr Polley took issue with determination of his contribution to Ms Merritt’s child-care costs, submitting that the calculation did not take into account the child-care subsidy to which the children were entitled upon being accorded permanent residency status on 17 July 2019.
Ms Merritt gave evidence that she applied for the subsidy in September 2019, and as noted by the objections officer in the decision under review, no determination of Ms Merritt’s child-care costs for the children beyond 17 September 2019 could be made until the outcome of her application to Centrelink for the subsidy was known.
Mr Polley did not challenge the objections officer’s determination of Ms Merritt’s child-care costs for the relevant child support period 1 August 2018 to 31 October 2019 in the amount of $44,980, calculated at the rate of $130 per day for five days per week for [Child 2], and [Child 1]’s after-school care costs of $21 per day for two days per week; his issue related to the date of application of the child-care subsidy, adjustments for the home schooling lockdown periods during the COVID-19 pandemic crisis, when the children were at home with Ms Merritt from late March 2020 to early June 2020, and the government-ordered free child-care period from June to July 2020, impacting on [Child 2]’s child-care costs.
The objections officer decided to commence Mr Polley’s contribution to the child-care costs from 1 April 2019, the month in which Ms Merritt lodged her cross application on 15 April 2019. The Tribunal finds that is an appropriate commencement date, in the circumstances of this case.
Ms Merritt’s evidence was that, although she applied for the child-care subsidy in September 2019, her application was not approved until 24 December 2019, and she did not receive the first of the subsidy payments until 5 February 2020 (see pages A33, A39, A41 and A47 of Exhibit A). She said [Child 1] was being home schooled in her care and not attending school during the lockdown period from April to June 2020, and did not require after-school care during this period. However, [Child 2] was attending child-care five days per week during this time, the cost of which was being met by the Federal Government.
Ms Merritt provided schedules from [Child 2]’s [child-care facility] and [Child 1]’s [after-school hours care facility] reflecting the dates and corresponding cost of child-care and after-school care provided for the children during the period 14 April 2019 to 14 April 2020, including the Centrelink payments of child-care subsidies for both children from late 5 February 2020 as part of the documentation contained in Exhibits 1 and A.
Consistent with her evidence regarding the date on which the Centrelink child-care subsidy payments commenced, the first of those payments is reflected in the schedules as commencing on 5 February 2020.
The Tribunal will consider the child-care costs for both children over an annualised period of 48 weeks, to allow for annual leave and public and school holidays.
The [after-school hours care provider] schedules for [Child 1] reflect an average of two days per week after-school care at a daily cost of $21, annualised over the period 1 April 2019 to 31 March 2020 to $2,016 ($21 x 2 x 48 = $2,016). Allowing for the child-care subsidy payments from 5 February 2020 to 29 March 2020 reflected in the schedule of $130.35, Ms Merritt’s net out-of-pocket costs for [Child 1]’s after-hours child-care for the period 1 April 2019 to 31 March 2020 is $1,886 ($2,016 - $130.35 = $1,885.35 – rounded up to $1,886).
The [child care provider] schedules for [Child 2] reflect an average of five days per week child-care at a daily rate of between $130 and $135 (averaged to $133), annualised over the period 1 April 2019 to 31 March 2020 to $34,580 ($133 x 5 x 48 = $31,920). The total of child-care subsidy payments reflected in the schedule of $1,431.90, and a waived gap fee of $630.38 amounted to $2,062 ($1,431.90 + $630.38 = $2,062.28 – rounded down to $2,062). Her net out-of-pocket costs for [Child 2]’s child-care for the period 1 April 2019 to 31 March 2020 were therefore approximately $29,858 ($31,920 - $2,062 = $29,858).
According to Centrelink’s letter to Ms Merritt of 24 December 2019, approving her child-care subsidy application, the subsidy is applied at the rate of 35.62%, with an annual cap of $10,373.
Assuming the daily rate of after-school care of $21 continues to apply for [Child 1] for the 2020/21 financial year, and the increased daily rate of child-care for [Child 2] remains at $135 for the 2020/21 financial year, Ms Merritt’s child-care costs for [Child 1] for the 2020/21 financial year, would be $2,016 ($21 x 2 x 48 = $2,016). The subsidy would be approximately $718 ($2,016 x .35.62 /100 = $718.09, rounded down to $718), and the net cost to her would be approximately $1,298 ( $2,016 - $718 = $1,298). The child-care costs for [Child 2] would be $32,400 ($135 x 5 x 48 = $32,400). The cap of $10,373 would apply, as the subsidy, at 35.62% of $32,400 would amount to $11,540.88, exceeding the cap of $10,373, and accordingly, the net cost to Ms Merritt for [Child 2] for the 2020/21 financial year would be approximately $22,027 ($32,400 - $10,373 = $22,027). The combined child-care costs for both children would amount to $23,325 ($22,027 + $1,298 = $23,325).
The Tribunal finds that the combined child-care costs for both [Child 2] and [Child 1] over the 12-month period 1 April 2019 to 31 March 2020 are therefore $31,744 ($1,886 + $29,858 = $31,744), and the combined child-care costs for the 2020/21 financial year would be approximately $23,325.

Just and equitable

The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

Ms Merritt’s SOFC

Ms Merritt affirmed the SOFC she provided, dated 11 November 2019. However, she sought leave to amend her current income details to reflect her increased weekly income from employment from $1,235.50 to $1,280. Post hearing, and at the direction of the Tribunal, she provided a copy of her pay slip for the period 18 June to 1 July 2020 recording the increase in her gross salary from March 2020 to $100,559 per annum.
She confirmed she is no longer salary sacrificing $1,307.75 child support costs since her child-care subsidy application was approved by Centrelink on 24 December 2019. She also amended her listed bank account balance to $6,000, in consequence of her having received the child-care subsidy in January 2020.
Ms Merritt listed her partner’s gross weekly income at $3,749.51.
She also amended her SOFC regarding her assets, confirming that she has since disposed of her [motor vehicle 1]. She listed household contents and personal items to a value of $1,000, and her combined total value of assets including the amended bank balance of $6,000 amounted to $7,000. Her superannuation entitlement was reported at $57,026. Liabilities were unremarkable, consisting of negligible credit card debt, as were her personal expenditure items.
Ms Merritt listed her combined family average weekly household expenses totalling $2,503.65 of which $639 were her expenses, and $864.40 related to the children. She also gave evidence that she contributes $125 per week to her partner’s weekly mortgage repayment of $460 on the family home and to the household utilities. Otherwise, the expenses were unremarkable.
Apart from the minor query concerning Ms Merritt’s contribution to her partner’s mortgage payments, Mr Polley did not challenge Ms Merritt’s SOFC.

Mr Polley’s SOFC

Mr Polley provided a signed and completed SOFC post hearing, dated 25 November 2019. He mistakenly provided a blank copy of that document to the Tribunal prior to the hearing.
His completed SOFC listed his occupation as a self-employed [Occupation 4]. The Tribunal infers that, as his SOFC was dated 25 November 2019, he was unemployed and living on his partner’s parents’ [Town 1] [produce] farm, as he reports nil average weekly salary/wages income. Nor does he list the receipt of any government benefits. His partner, [Ms A] provided an attachment recording her weekly salary at $1,436.15.
Mr Polley listed assets totalling $7,744 comprising negligible bank savings, household contents and other personal property, together with a [motor vehicle 2] valued at $6,500. He listed liabilities totalling $9,212, recorded as a loan from his partner, [Ms A]. However, no evidence was provided to suggest that this was a recoverable loan. His superannuation entitlement was reported at $24,204. He reported negligible and unremarkable personal expenditure.
Average weekly household expenses totalled $1,995, of which $844 was attributable to him, $91 to the children, and $1,049.24 to other adults, presumably [Ms A]. Otherwise, his household expenses were unremarkable.

Conclusions

The Tribunal has found Mr Polley has a demonstrated income earning capacity of approximately $70,185. His income used in the administrative assessment for the period 1 August 2018 to 31 October 2019 is $70,174. The Tribunal will not disturb his income at that level, but will extend the period for the application of his ATI at $70,174 to 31 December 2021.
The Tribunal has found Ms Merritt’s income for the period 1 July 2018 to 23 April 2019 was $96,655, and from 24 April 2019 was increased to $98,588. Her income has since been increased to $100,559 from March 2020. The Tribunal has found that her income is not accurately reflected in the administrative assessment, and a ground for departure established.
As the Tribunal has reached the same conclusion as the objections officer in the decision under review regarding the determination of Ms Merritt’s income of $96,277, the Tribunal will not disturb the objections officer’s determination of her income for the period 21 December 2018 to 26 April 2019 at $96,277. However, as her income was increased from March 2020 from $98,588 to $100,559, the Tribunal will vary the period for which the income of $98,221 determined by the objections officer in the decision under review is to apply in the assessment from 26 April 2019 until 30 June 2020. Ms Merritt’s increased income from March 2020 will be reflected in her income tax return for the 2019/20 financial year and reflected in the child support assessment for the 2020/21 financial year.
As noted above, Mr Polley did not challenge the objections officer’s determination that the child-care costs incurred by Ms Merritt over the child-care period 1 August 2018 to 31 October 2019 exceeded her ATI calculated in accordance with the provisions of subsection 117(2B) of the Act. The Tribunal concurs with the objections officer’s determination in that respect. The Tribunal also finds that the children are less than 12 years of age, and that, in the special circumstances of this case, it was reasonably necessary for Ms Merritt to place [Child 2] in child-care five days per week and [Child 1] in after-school care two days per week to permit her to continue in her employment as [an Occupation 1] at [Employer 3].
The Tribunal is also satisfied that the high costs of child-care and after-school care incurred by Ms Merritt for [Child 2] and [Child 1] significantly affect the costs of maintaining the children.
The Tribunal considers the appropriate method for determining Mr Polley’s contribution to the child-care costs for both children is to apportion the costs in accordance with the relative percentages of the parents’ incomes.
In that respect, the Tribunal has found Ms Merritt’s ATI for the 2018/19 financial year was $96,277 up until 26 April 2019, and $98,221 from 27 April to 31 August 2019, an, average income of $97,249. Mr Polley’s 2018/19 income, according to his 2018/19 income tax return before the Tribunal at pages 446 to 452 of Exhibit 1, was $72,892. For the 2019/20 financial year, Ms Merritt’s ATI has been determined at not less than $98,221, and the Tribunal has found Mr Polley had an earning capacity of approximately $70,185, based on his annualised income from [Employer 2] as at the date of his resignation at $68,953 and [Employer 1] salary annualised to $71,418, but will adopt his ATI of $70,174 used in the current assessment.
Apportioning these incomes produces the following result:
For the 2018/19 financial year:
Ms Merritt’s average ATI – $97,249
Mr Polley’s ATI – $70,174
Combined total incomes = $167,423
$70,174 / $167,423 x 100 = 41.91% – rounded up to 42%
For the 2019/20 financial year:
Ms Merritt’s ATI – $98,221
Mr Polley’s ATI – $70,174
Combined total incomes = $168,395
$70,174 / $168,395 x 100 = 41.67% – rounded up to 42%
For the 2020/21 financial year:
Ms Merritt’s anticipated ATI $100,181 ($100,559 less deductions of approximately $378 = $100,181)
Mr Polley’s ATI – $70,174
Combined total incomes = $170,355
$70,174 / $170,355 x 100 = $41.19% rounded down to 41%
Applying the above percentages of apportionment to the Tribunal’s determination of Ms Merritt’s total child-care costs for the children determined above in the amount of $31,744, Mr Polley’s contribution in the 2018/19 financial year for the period 1 April 2019 to 30 June 2019 is $13,332 ($31,744 x 42% / 100 = $13,332.48 – rounded down to $13,332), and his contribution for the 2019/20 financial year for the period 1 July 2019 to 30 June 2020 is $13,332 ($31,744 x 42% / 100 = $13,332.48 - rounded down to $13,332). For the 2020/21 financial year, Mr Polley’s contribution is $9,563 ($23,325 x 41% / 100 = $9,563.25 – rounded down to $9,563).
The Tribunal considers it appropriate to increase Mr Polley’s annual rate of child support for the period 1 April 2019 to 30 June 2019 by $13,000, and for the period 1 July 2019 to 30 June 2020 by $13,000, and for the period 1 July 2020 to 31 December 2021, his annual rate of child support will be increased by $9,500, in consideration of his contribution to the children’s child-care costs.
There was no evidence before the Tribunal to suggest that either parent or the children had significant special needs.

Otherwise proper

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 a child. Varying Ms Merritt’s income on which child support is calculated from that used in the administrative assessment, based on her income and financial resources which are not reflected in the administrative assessment, and varying Mr Polley’s contributions to the children’s child-care costs as set out above, will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

DECISION

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

For the period 1 August 2018 to 31 December 2021, Mr Polley’s adjusted taxable income is varied to $70,174;
For the period 21 December 2018 to 26 April 2019, Ms Merritt’s adjusted taxable income is varied to $96,277;
For the period 27 April 2019 until 30 June 2020, Ms Merritt’s adjusted taxable income is varied to $98,221;
For the period 1 April 2019 to 30 June 2019, the annual rate of child support payable by Mr Polley is increased by $13,000; and
For the period 1 July 2019 to 30 June 2020 the annual rate of child support payable by Mr Polley is increased by $13,000; and
For the period 1 July 2020 to 31 December 2021, the annual rate of child support payable by Mr Polley is increased by $9,500.

[2020] AATA 4280

30 August 2020

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

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