Mitchell and Arianto (Child support)

[2018] AATA 3280

Mitchell and Arianto (Child support) [2018] AATA 3280 (31 July 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/SC012937

APPLICANT:  Mr Mitchell

OTHER PARTIES:  Ms Arianto

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  31 July 2018

DECISION:

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

• Mr Mitchell’ adjusted taxable income is varied to $54,000 per annum from 6 May 2017 to 31 December 2019; and

• Ms Arianto’s adjusted taxable income is varied to $32,241 per annum from 6 May 2017 to 31 July 2018.

CATCHWORDS
Child support - Departure determination - Income and financial resources of the liable parent - Business income - A ground for departure exists - 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 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

Introduction

1. Mr Mitchell and Ms Arianto are the parents of [Child 1] and [Child 2]. A child support case was registered with the Department of Human Services – Child Support (“the CSA”) in 2010. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. From 22 March 2017 the administrative assessment was based on Mr Mitchell’ 2015-16 adjusted taxable income of $23,729 and his 26% recorded care of the children, and Ms Arianto’s provisional income of $20,124 per annum and her 74% recorded care of the children, and Mr Mitchell was assessed to pay a nil rate of child support.

2. The Act also provides for a departure from the administrative assessment in certain circumstances. Ms Arianto lodged a departure application on 6 May 2017. The CSA granted her application and made a departure decision. Mr Mitchell objected to that decision. An objections officer allowed his objection and varied his adjusted taxable income to $58,000 per annum from 6 May 2017 to 31 October 2018. Mr Mitchell sought further review by the Tribunal. I conducted a directions hearing on 28 June 2018 and a full hearing on 31 July 2018. Mr Mitchell and Ms Arianto attended the hearings by conference phone.

3. Subsection 98C(1) of the Act relevantly provides that a decision to depart from the administrative assessment may be made if:

   (i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and

   (ii)... it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part …

A ground for departure

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to as Reason 8, provides as a ground for departure:

   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; …

2. Mr Mitchell is [an occupation]. He generally earns his income through self-employment. The Australian Taxation Office (“the ATO”) assessed his 2015-16 adjusted taxable income to be $23,729 and his 2016-17 adjusted taxable income to be $40,966.

3. The CSA obtained Mr Mitchell’s bank account statements for the period from 1 April 2017 to 30 June 2017. According to that documentation, he received revenue of $21,726 from [Company 1] during that period, which equates to $86,904 per annum. The CSA subsequently obtained further information from [Company 1]. It appears that he received revenue of $11,416 from that source during the period from 1 July 2017 to 30 September 2017, which equates to $45,664 per annum. It follows that during the six-month period from 1 April 2017 to 30 September 2017, Mr Mitchell received $33,142 from [Company 1], which equates to $66,284 per annum.

4. At the directions hearing, Mr Mitchell stated that he had recently commenced full-time employment with [Company 2] and he was earning less than he had been earning when he was working as a self-employed subcontractor. He said he was earning $800 to $900 net per week through his full-time employment. According to the ATO’s gross pay calculator, a net income of $850 per week equates to a gross income of approximately $54,600 per annum.

5. Mr Mitchell was directed to provide the following:

   -     his 2016-17 individual tax return, including all schedules;

   -     his 2017-18 individual tax return, including all schedules, if available;

   -     a letter from his current employer stating the date on which he commenced his employment and his annual salary;

   -     a copy of his most recent payslip; and

   -     another AAT Statement of Financial Circumstances.

6. Mr Mitchell provided his 2016-17 tax assessment notice. He did not provide his 2016-17 individual tax return. He has not lodged his 2017-18 individual tax return. He stated at the full hearing that [Company 2] had not employed him, and he continued to work as a subcontractor, and he had therefore not obtained a letter from [Company 2], but he nevertheless provided what appears to be a payslip from [Company 2] in respect of “salary and wages” for the week ending 15 July 2018. He did not earn any wages during that week but had gross year-to-date wages of $996. He also provided a partly completed AAT Statement of Financial Circumstances.

7. Mr Mitchell submitted that the information that the CSA had obtained, and upon which it had based its decision to vary his adjusted taxable income to $58,000 per annum, was not representative of his annual income. However, he did not provide any detailed evidence, such as additional bank account statements, in support of that submission. I made a number of observations about the unsatisfactory state of the evidence he had provided and I invited him to respond to my observations. He declined to do so.

8. The evidence does not allow me to precisely calculate the adjusted taxable income that would fairly reflect Mr Mitchell’s income and financial resources for child support purposes, but it does allow me to discern a range of adjusted taxable incomes that might fairly achieve that purpose. Ms Arianto submitted that Mr Mitchell’s adjusted taxable income should be varied to $54,000 per annum, and Mr Mitchell agreed with that submission. In my opinion, $54,000 per annum falls at the lower end of that range of adjusted taxable incomes. I am not bound by the parents’ submissions but they are a relevant consideration and, on balance, I accept their submissions on that matter.

9. As noted earlier, when Ms Arianto lodged her departure application the administrative assessment was based on Mr Mitchell’s 2015-16 adjusted taxable income of $23,729. The difference between that income and the adjusted taxable income that Mr Mitchell has acknowledged would fairly reflect his income and financial resources for child support purposes, i.e. $54,000 per annum, and the consequential difference between the rates of child support payable pursuant to those two incomes, constitutes special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. Reason 8 is established.

Just and equitable

1. 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.

2. At various times, Mr Mitchell has submitted that he has been unable to pay the rate of child support payable pursuant to the objections officer’s decision, which has been approximately $6,200 per annum. It is difficult to reconcile those submissions with his more recent submission that his adjusted taxable income should be varied to $54,000 per annum for child support purposes. I note that Mr Mitchell has not paid any child support whatsoever since 9 January 2018, which is more consistent with him having a general aversion to paying child support rather than a reduced capacity to pay child support.

3. In December 2017, Mr Mitchell provided the Tribunal with an unsigned and undated AAT Statement of Financial Circumstances. In January 2018, he lodged an undated departure application with the CSA. Someone appears to have placed a tick in the space where Mr Mitchell was required to sign the application. At the hearing, Mr Mitchell gave sworn evidence that the tick was his signature. I note that the original decision-maker’s reasons for decision included the following:

   It must also be noted that Mr Mitchell’s application is not dated. I also note that his application [which was received in January 2018] does have what appears to be a signature, but it does not match previous signatures supplied by Mr Mitchell.

4. The departure application included a Statement of Financial Circumstances and Mr Mitchell only partially completed that Statement. In July 2018, Mr Mitchell provided the Tribunal with another unsigned and undated AAT Statement of Financial Circumstances.

5. I questioned Mr Mitchell about the information he provided in the three Statements of Financial Circumstances. His evidence can be summarised as follows. In December 2017 he was earning approximately $780 net per week and he had $0.44 in savings. His debts included SPER fines which totalled $4,500. By January 2018 he had completely discharged his SPER fines and he had not borrowed any money to discharge those fines. By July 2018 he had incurred a further $3,800 in SPER fines. He had also borrowed $35,000 from his mother and he had spent the entirety of that loan on “surviving” and paying bills that he had failed to disclose in his previous two Statements of Financial Circumstances. I do not accept Mr Mitchell’s evidence on those matters. More generally, I found Mr Mitchell to be an unreliable witness. I do not accept his submissions that he has been unable to pay the rate of child support payable pursuant to the objections officer’s departure decision.

6. Ms Arianto is self-employed as a part-time [occupation]. She recently lodged her 2017-18 individual tax return. Her 2017-18 adjusted taxable income was $32,241. In response to my directions, she provided a copy of her tax return and a three-month sample of her bank account statements. I questioned her about the details of that documentation and she satisfactorily answered all of my questions.

7. Both parents’ Statements of Financial Circumstances included details of the children’s expenses. The children’s expenses are unremarkable for children of their ages.

8. I suggested, and both parents agreed, that it would be appropriate to made a new departure decision with effect from 6 May 2017, and to vary Mr Mitchell’s adjusted taxable income to $54,000 per annum and Ms Arianto’s adjusted taxable income to $32,241 per annum from that date.

9. I also suggested, and both parents agreed, that it would be appropriate to make a departure decision with effect until 31 December 2019.

10. Ms Arianto stated that she expects her 2018-19 adjusted taxable income to be less than her 2017-18 adjusted taxable income. As matters currently stand, her income does not have a significant effect on the rate of child support payable. For example, a current assessment based on Mr Mitchell having an adjusted taxable income of $54,000 per annum and 26% care of the children, and Ms Arianto having an adjusted taxable income of $32,241 per annum and 74% care of the children, would result in Mr Mitchell being required to pay $4,968 per annum in child support. If Ms Arianto’s adjusted taxable income were reduced to $0, Mr Mitchell’s rate of child support payable would only be increased by $476 per annum, to $5,444 per annum. However, given that the ATO has already assessed Ms Arianto’s 2017-18 adjusted taxable income, that adjusted taxable income will automatically be used in the administrative assessment from 1 August 2018 in the absence of a departure decision. It is appropriate in all the circumstances to vary Ms Arianto’s adjusted taxable income until 31 July 2018. After that date, Ms Arianto will have the option of lodging an estimate of income. If the CSA decides to accept an estimate of income, and Mr Mitchell disagrees with that decision, he will have separate objection rights in respect of that decision.

11. In summary, I propose to vary Mr Mitchell’s adjusted taxable income to $54,000 per annum from 6 May 2017 to 31 December 2019 and vary Ms Arianto’s adjusted taxable income to $32,241 per annum from 6 May 2017 to 31 July 2018. Such a decision would reduce Mr Mitchell’s child support arrears from approximately $6,300 to approximately $4,800, and it would require him to pay a current rate of child support of $4,968 per annum (and $4,928 per annum from 1 August 2018). Mr Mitchell has not provided the Tribunal with reliable and detailed evidence of his financial circumstances, but the evidence he has provided suggests that, at all relevant times, he has the capacity to pay the child support that was payable at the time. The arrears are simply the result of him failing to do so. The proposed decision would be just and equitable.

Otherwise proper

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 a child.

2. Ms Arianto received family tax benefit until July 2018 when it was cancelled. It appears that her estimate of her partner’s income, or her estimate of her and her partner’s combined incomes, exceeds the relevant threshold, but that does not prevent her from lodging a “past period” claim for 2018-19 in due course. Changing the child support payable by Mr Mitchell will result in a more 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:

• Mr Mitchell’s adjusted taxable income is varied to $54,000 per annum from 6 May 2017 to 31 December 2019; and

• Ms Arianto’s adjusted taxable income is varied to $32,241 per annum from 6 May 2017 to 31 July 2018.