Modi and Moustafa (Child support)

Modi and Moustafa (Child support) [2020] AATA 3650 (26 June 2020)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2019/PC018032
APPLICANT:  Ms Modi
OTHER PARTIES:  Child Support Registrar
Mr Moustafa

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 26 June 2020
DECISION:

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

for the period from 24 January 2019 to 15 July 2019 the adjusted taxable income of Ms Modi is varied to $44,372;
for the period from 16 July 2019 to 31 July 2020 the adjusted taxable income of Ms Modi is varied to $0;
for the period from 24 January 2019 to 30 June 2019 the adjusted taxable income of Mr Moustafa is varied to $85,000;
for the period from 1 July 2019 to 5 January 2020 the adjusted taxable income of Mr Moustafa is varied to $89,786;
for the period from 6 January 2020 to 31 July 2020 the adjusted taxable income of Mr Moustafa is varied to $58,037;
for the period from 24 January 2019 to 31 December 2019 the annual rate payable by Mr Moustafa is increased by $1,650 being his half contribution towards the costs of [the child]’s special needs in 2019; and
for the period from 1 January 2020 to 31 July 2020 the annual rate payable by Mr Moustafa is increased by $750 being his half contribution towards the costs of [the child]’s special needs.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education – manner expected by both parents – costs of maintaining child significantly affected - 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

This review is about whether or not there should be a departure from the administrative assessment of child support.
Ms Modi and Mr Moustafa are the parents of [the child] (born February 2012). There has been a child support assessment in place since 6 September 2016 and Mr Moustafa is the liable parent under the assessment.
The following administrative assessments of child support are under consideration:
·     for the period from 1 December 2018 to 23 January 2019 Mr Moustafa was assessed to pay an annual rate of $10,880 based on a 2017–18 adjusted taxable income of $92,627 for Mr Moustafa and a 2017–18 adjusted taxable income of $30,460 for Ms Modi;
·     for the period from 24 January 2019 to 30 June 2019 Mr Moustafa was assessed to pay an annual rate of $3,057 based on a 2018–19 estimate of income of $42,515 for Mr Moustafa and a 2017–18 adjusted taxable income of $30,460 for Ms Modi; and
·     for the period from 1 July 2019 to 29 February 2020 Mr Moustafa was assessed to pay an annual rate of $10,880 based on a 2017–18 adjusted taxable income of $92,627 for Mr Moustafa and a 2017–18 adjusted taxable income of $30,460 for Ms Modi.
On 18 December 2018 Ms Modi applied to the Child Support Agency for a departure from the administrative assessment on the basis of the special needs of the child (the ground commonly referred to as Reason 2), the high costs of caring for, educating or training the child (Reason 3), the high cost of child care (Reason 6) and the income, property, financial resources and earning capacity of Mr Moustafa (Reasons 8A and 8B). Ms Modi later withdrew Reason 6 from her application.
On 22 May 2019 the Child Support Agency made the decision to change the assessment (the original decision) so that:
·     for the period from 24 January 2019 to 24 January 2021 the adjusted taxable income of Ms Modi is set at $45,812;
·     for the period from 24 January 2019 to 24 January 2021 the adjusted taxable income of Mr Moustafa is set at $90,516;
·     for the period from 24 January 2019 to 31 December 2019 the annual rate of child support payable is further increased by $7,827 due to school tuition fees for the 2019 year;
·     for the period from 1 January 2020 to 31 December 2020 the annual rate of child support is further increased by $8,453 due to school tuition fees for the 2020 year; and
·     for the period from 24 January 2019 to 24 January 2020 the annual rate of child support is increased by $123 due to costs for psychological treatment.
On 3 July 2019 Mr Moustafa objected to this decision and on 21 November 2019 the Child Support Agency allowed the objection and made the decision to change the assessment (the objection decision) so that:
·     for the period from 24 January 2019 to 31 October 2021 the adjusted taxable income of Mr Moustafa is set at $88,000;
·     for the period from 24 January 2019 to 31 October 2021 the adjusted taxable income of Ms Modi is set at $44,372; and
·     for the period from 1 May 2019 to 30 April 2020 the annual rate payable by Mr Moustafa is increased by $2,020 per annum to reflect his contribution towards [the child]’s special needs.
On 12 December 2019 Ms Modi applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A telephone directions hearing was held on 27 February 2020. Both Ms Modi and Mr Moustafa attended by conference telephone. Prior to the telephone 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 (567 pages).
Ms Modi and Mr Moustafa were directed to provide further information to the Tribunal. Both parents complied.
A hearing was held on 4 June 2020. Ms Modi and Mr Moustafa gave evidence on affirmation by conference telephone. The Tribunal received documents folioed A1 to A316 from Ms Modi and B2 to B53 from Mr Moustafa. Additional documents were also received from the Child Support Agency (pages 568–623).
At the telephone directions hearing and at the commencement of the hearing the Tribunal clarified with Ms Modi and Mr Moustafa the reasons for their concerns. Ms Modi said the Child Support Agency had not considered all the facts and accepted evidence from Mr Moustafa without documentation. Ms Modi confirmed she wanted the Tribunal to consider the income, property, financial resources and earning capacity of Mr Moustafa as well as costs associated with [the child]’s education and his special needs. Mr Moustafa raised issues relating to his income in particular and also wanted the Tribunal to review the costs associated with [the child]’s special needs.

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 of the Act provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three-step process such that the issues for determination by this Tribunal are:
·     whether or not a ground is established to depart from the administrative assessment of child support; and if so
·     whether or not it is just and equitable to make a particular departure determination; and if so,
·     whether or not 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

Issue 1 – is there a ground for departure?

In circumstances where multiple grounds for departure are put forward, the Tribunal need 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.
A ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner expected by the parents (subparagraph117(2)(b)(ii) of the Act). The most common costs that arise under this reason are private school fees.
Ms Modi told the Tribunal both parents had agreed that [the child] should attend a private school called [Named] College. She said although the parents separated in March 2013 they had toured the school in May 2013 and subsequently signed the school registration form. Ms Modi said [the child] was then placed on a waiting list and the following year, after an interview with the school, both parents signed the pre-enrolment form.
Ms Modi explained that Mr Moustafa had attended a private school and so was in favour of [the child] also attending a private school.
Ms Modi said [the child] commenced at [College] in 2015 and was now in Year [number]. She said there was a significant debt for outstanding school fees in 2018 and 2019, which had been addressed in a recent decision of the Family Court. As a result Mr Moustafa was required to meet all outstanding costs for [the child]’s attendance at [College] including any extracurricular costs. Ms Modi said that since the court decision she was paying approximately $200 per month towards the cost of school fees for [the child] in 2020.
Mr Moustafa said from day one he was not supportive of [the child] going to a private school and his preference was for a public school. Mr Moustafa agreed that he signed the forms for [the child] to attend [College] but said he felt pressured by Ms Modi to do so.
Mr Moustafa told the Tribunal he could not afford private school fees. He said the outstanding debt for the fees in 2018 and 2019 confirmed that Ms Modi could not afford such costs either. He said the Child Support Agency had previously increased his child support in recognition of these fees and yet Ms Modi had obviously not been paying them. Mr Moustafa said there was no guarantee she would pay the fees going forward.
Mr Moustafa said he was in considerable debt and his financial position had been exacerbated by the court decision relating to school fees. He said Ms Modi had not been paying the fees and he was now responsible for the outstanding amount. Mr Moustafa said he had been having discussions with the school in relation to the debt and [the child]’s ongoing attendance. Mr Moustafa said he believed the school understood that neither parent could afford the fees and [the child] would soon transfer to another school.
The Tribunal notes in evidence from the Child Support Agency copies of the registration form and pre-enrolment form for [the child] at [College]. The registration form is dated 11 October 2013 and signed by both parents while the pre-enrolment form is dated 1 December 2014 and signed by both parents. The Tribunal also notes a copy of a junior school interview document indicating both parents attended on 10 December 2014.
The Tribunal finds, based on the evidence provided, that both parents made the decision for [the child] to be educated at [College] and this was, therefore, the manner of education the parents expected. The Tribunal is satisfied that at the time Ms Modi made her application for a departure from the administrative assessment [the child] was being educated at [College].
Mr Moustafa provided the Tribunal with a copy of court orders delivered by the Family Court on 13 March 2020. The Tribunal notes the orders state that Mr Moustafa is to indemnify Ms Modi in relation to all monies owed to [College] as at 11 February 2020. Mr Moustafa said he accepted that he was responsible for all costs up to that date.
In response to directions Ms Modi provided the Tribunal with a document outlining the outstanding fees for [College] as at 6 February 2020. It shows an amount owed of $28,924.60. This includes outstanding tuition fees and other charges for the 2018 and 2019 school years. It also includes a monthly charge for fees of $1,472.50 on 21 January 2020, an information technology (IT) charge of $32.00, an outdoor learning charge of $33.00, a year level charge of $28.50 and a P&F fee of $70.00.
The Tribunal examined the website for [College][1] and determined the fees for [the child] to attend in Year [number] in 2020 to be $14,725. These can be paid in 10 monthly instalments ($1,472.50 per month) and Ms Modi confirmed this was the case for [the child]. In addition to the tuition fees there is a year level charge of $285.00, an outdoor learning charge $330.00 and an IT charge of $320.00.
[1] [URL deleted]
Ms Modi requested that, in addition to school fees, the Tribunal consider the cost of uniforms and other school clothing for [the child]. In support of her claim Ms Modi provided the Tribunal with a receipt for such items totalling $210.00.
The Tribunal is of the view that costs for such things as books, school clothing, excursions or camps, laptop devices and software are ordinary costs across all schools and not unique to a private school education. These costs are allowed for in the normal child support assessment and so the Tribunal will not consider them further.
The Tribunal notes in evidence from the Child Support Agency a copy of consent orders issued by the Family Court on 19 September 2019. These state that Ms Modi has sole parental responsibility in relation to [the child]’s education. The orders are silent in relation to the cost of [the child]’s education and the Tribunal is satisfied these costs can be considered.
The Tribunal considers the total education costs for [the child] in 2020 to be $15,010 (tuition fees plus year level charge). The cost of child rate under the formula assessment at the time Ms Modi made her application for a departure was approximately $11,826. The Tribunal is satisfied the education costs are significant, affect the cost of maintaining [the child] and constitute special circumstances. This means a ground for departure is established.
The Tribunal acknowledges Mr Moustafa’s assertion that he cannot afford to contribute to the education costs. The Tribunal will take this into account when considering a just and equitable determination.

Issue 2 – Is it just and 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,[2] which are as set out in subsection 117(4) of the Act:
[2] 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 duty has priority over nearly all other commitments.
In this case the parents have the primary duty to financially support [the child]. The Tribunal is not aware that either parent has a 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 has found there are extra costs to be taken into account in relation to [the child]’s education.
Ms Modi told the Tribunal that [the child] also had special needs that incurred additional costs. She said [the child] was seeing an occupational therapist on a regular basis following a referral from his school due to developmental difficulties. Ms Modi said he was also seeing a psychologist.
Ms Modi said [the child] had been attending [Occupational Therapy] on a weekly basis since his initial assessment in August 2017. Ms Modi said she believed [the child] would continue his occupational therapy treatment for the foreseeable future particularly given he was now being tested for autism spectrum disorder. She said it was her view that [the child] was benefiting greatly from his regular attendance at the occupational therapist.
The Tribunal notes in evidence from the Child Support Agency copies of two paediatric occupational therapy assessment summaries provided by [Occupational Therapy]. The first, dated 19 September 2017, confirms that [the child] was referred by his school for an assessment. It states [the child] was assessed on 23 August 2017 and 31 August 2017 for “concerns regarding his classroom behaviour and sensory processing”. Weekly occupational therapy sessions were recommended commencing at school. The second summary, dated 7 December 2018, sets out ongoing occupational therapy goals for [the child] of sensory processing, emotional regulation, sensorimotor skills and fine motor skills. The summary states:
It is recommended that [the child] continues to attend weekly occupational therapy sessions for a minimum of two school terms to meet his therapy goals in 2019. After this time, a reassessment of [the child]’s progress will be completed to evaluate his further occupational therapy needs.

Ms Modi told the Tribunal the reassessment of [the child]’s occupational therapy needs referred to in the summary dated 7 December 2018 was completed in 2019.
Following the directions hearing held with the parents on 27 February 2020 the Tribunal requested any medical reports or other documentation evidencing [the child]’s condition in relation to his sensory processing, emotional regulation and fine motor skills including his prognosis and ongoing treatment. Ms Modi did not include a copy of the reassessment of [the child]’s occupational therapy needs completed in 2019 in her response, however, she did provide a letter from [Occupational Therapy] dated 2 April 2020. The letter states that [the child] has been attending weekly therapy sessions and “continues to require this input to support his sensory processing, emotional regulation, handwriting and fine motor skills.”
Mr Moustafa told the Tribunal he was concerned about the open-ended nature of the occupational therapy treatment for [the child]. He said there was no certainty about when the treatment might be completed. Mr Moustafa said if he was required to contribute to the future treatment costs through child support there was nothing to prevent Ms Modi from pocketing these additional funds. He added there should be some scrutiny to ensure Ms Modi did not receive the funds and then stop taking [the child] for treatment.
Ms Modi said she was offended by the suggestion she might use [the child] to gain monetary reward. She said this was not the case as [the child] had a legitimate need for occupational therapy.
The Tribunal notes in evidence an invoice statement from [Occupational Therapy] for the period from 24 August 2017 to 13 December 2018. It shows [the child] attended on an approximately weekly basis with payments made totalling $5,790 during this period.
In response to directions Ms Modi also provided the Tribunal with an invoice statement from [Occupational Therapy] for the period from 6 December 2018 to 17 April 2020. The statement shows that in 2019 [the child] attended on 25 occasions and Ms Modi made payments totalling $3,000. The statement also shows that from 1 January 2020 until 17 April 2020 [the child] attended on seven occasions and Ms Modi made payments totalling $802. The Tribunal notes that the pattern of appointments in 2020 would indicate slightly fewer appointments and therefore less expenditure in that year than in 2019.
Ms Modi told the Tribunal she did not have private health insurance and there were no rebates from Medicare for occupational therapy without a medical diagnosis. Ms Modi said the costs for [the child]’s occupational therapy were her out-of-pocket costs. Mr Moustafa said he could not be certain there were no rebates for these occupational therapy costs.
Ms Modi said that in addition to his occupational therapy treatment [the child] had also been seeing a psychologist since mid-2016.
The Tribunal notes in evidence provided by the Child Support Agency a letter from clinical psychologist, [Dr A], at [Psychology]. The letter, dated 2 September 2019, states that [the child] has been receiving psychological assistance following concerns by his GP regarding emotional, behavioural and attentional problems at home and school. The letter also refers to [the child]’s occupational therapy and states that his behaviour at school “has improved markedly, however ongoing OT, as directed by the therapist, is indicated in order to consolidate gains”.
Ms Modi told the Tribunal that [the child] was on a mental health plan and was able to receive a rebate for 10 sessions each year with all other costs met by her. Ms Modi explained the Medicare rebate was approximately $124 each session. Ms Modi said in accordance with the consent orders dated 19 September 2019 Mr Moustafa was now required to pay for [the child] to see the psychologist and so she only wanted the costs of treatment considered up until that date.
Mr Moustafa accepted that he was required to meet the costs of [the child] seeing the psychologist in line with the consent orders. He said it was his view that when the 10 sessions under [the child]’s mental health plan had been used the parents were then able to receive further rebates for him under their own respective mental health plans.
The Tribunal notes in evidence from the Child Support Agency a receipt for services for [the child] from [Psychology] for the period from 8 June 2016 to 16 November 2018. The receipt confirms that [the child] was referred by [Dr B] on 23 October 2017. The receipt shows payments made totalling $2,535 in 2016, $1,950 in 2017 and $1,244.50 in 2018.
In response to directions Ms Modi provided the Tribunal with an invoice statement for psychological services provided by [Dr A] in 2019. This statement shows that from 30 January 2019 to 13 September 2019, [the child] attended 11 sessions which were paid by Ms Modi. Each session was $140 at a total cost of $1,540 to Ms Modi. With the Medicare rebate, the out-of-pocket cost to Ms Modi would be $300.
The term ‘special needs’ is not defined in the legislation. The Tribunal must be satisfied that the needs of the child relate to a condition or disability that is out of the ordinary. These special needs can be because of a physical, mental or learning disability or because of a special talent or ability of the child.[3]
[3] Lightfoot v Hampson [1996] FLC 92-663)
The Tribunal is satisfied that [the child] has special needs in relation to his requirement for occupational therapy and psychological treatment. The Tribunal will consider the cost of meeting these special needs when determining a just and equitable outcome.

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

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

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

Ms Modi told the Tribunal she was employed at the Australian Taxation Office in a part–time role but was currently on extended leave without pay. Ms Modi said she had taken leave for a range of reasons including her own health, stress related to court proceedings, the need to take [the child] to medical appointments and to assist him with his schooling.
The Tribunal notes the Child Support Agency has received advice relating to Ms Modi’s 2018–19 adjusted taxable income which has been recorded as $44,372. At the time Ms Modi made her application on 18 December 2018 for a departure from the administrative assessment she was being assessed on her 2017–18 adjusted taxable income of $30,460.
Ms Modi explained that she became unwell in June 2019 and was on sick leave for nearly one month. She said following this she decided in consultation with her employer to take extended leave.
Ms Modi said her initial leave without pay was from 16 July 2019 until 9 February 2020. She said it was always anticipated that she would have a further discussion with her employer closer to the end of this period to allow her to extend this leave if necessary.
The Tribunal notes in evidence from the Child Support Agency a letter from the Australian Taxation Office dated 12 September 2019 which confirms Ms Modi was on leave without pay from 16 July 2019 until 9 February 2020. She was expected to return to work on 10 February 2020.
Ms Modi said she had been struggling with domestic violence and the compounding impact of the many other issues she had been dealing with led her to postpone her return to work. She said her employer also considered a postponement would be the best outcome for all involved. Ms Modi added that she had not returned to work since her initial leave.
The Tribunal notes in evidence provided by Ms Modi a letter from the Australian Taxation Office dated 14 April 2020. This letter confirms Ms Modi has been granted leave without pay for the period 16 July 2019 to 16 February 2021.
In her Statement of Financial Circumstances received on 6 January 2020 Ms Modi claims her total average weekly income is approximately $487 comprised of single parenting payment and family tax benefit. Ms Modi told the Tribunal she had recently started receiving a carer’s payment which had replaced her single parenting payment. Ms Modi also states she received approximately $100 per week in child support payments, which is less than the assessed amount. Her total weekly household expenditure is $1,847, which includes $300 in education expenses, $285 in mortgage payments, $200 for food, $150 in occupational therapy and psychologist costs and $100 on holidays. Ms Modi lists total personal expenditure of $1,116 per week although this also includes her mortgage payments. The total value of property owned by Ms Modi is $551,864 which includes, amongst other things, her home worth $480,000, a disputed amount of cash in a [bank] account of $55,754 and a motor vehicle valued at $1,000. Her liabilities total $438,160 which includes the mortgage on her home of $211,010, a loan from her parents of $124,750, a personal liability of $71,000 for legal fees, a school fee debt of $28,000 and a credit card debt of $3,400. Ms Modi has superannuation totalling $165,871.
Ms Modi told the Tribunal that property settlement had now been finalised. Ms Modi said she had received $20,000 of the $55,754 cash in the [bank] account and Mr Moustafa had received the remainder. She said each parent had retained their own superannuation. Ms Modi pointed out that since completing her Statement of Financial Circumstances her debt for legal fees had increased to approximately $91,000 and was still rising. She said her split of the cash in the [bank] account had gone towards legal fees but the lawyers had nonetheless placed a caveat over her home in [Suburb 1].
The Tribunal finds that prior to taking extended leave without pay from 16 July 2019 Ms Modi had an adjusted taxable income of $44,372. The Tribunal is satisfied that from 16 July 2019 Ms Modi had income, property and financial resources equivalent to a person with an adjusted taxable income of $0. The Tribunal notes that while a carer’s payment is a benefit that would ordinarily be included in a parent’s adjusted taxable income, this amount would not be significant enough to impact the child support assessment.
Mr Moustafa told the Tribunal he believed Ms Modi was not working in order to achieve a better child support outcome. He said that in his view her medical issues were not major and did not impact her ability to work and Ms Modi should not be able to misuse the system in order to receive more child support.
The Tribunal notes in evidence from the Child Support Agency a record of a conversation between the objections officer and Ms Modi which took place on 10 September 2019. Ms Modi advises the objections officer that she had taken leave without pay because she was struggling with her own health and stresses. Ms Modi also confirms her leave was not due to any medical recommendation.
In response to directions Ms Modi provided the Tribunal with a letter from her GP, [Dr B], dated 18 March 2020. [Dr B] states that Ms Modi is unable to work because she is attending and responding to ongoing court cases, has a new medical problem and is being treated by a specialist at [Hospital 1], has ongoing [body parts] pain from a motor vehicle accident in 2017, which affects her daily functioning including her employment, and she is attending therapy following domestic violence. Ms Modi also provided a letter, undated, from [Dr C], Head of [Department] at [Hospital 2]. This letter states Ms Modi has been attending the [clinic] since 21 February 2019 for treatment, however, “No significant medical consequences are expected to occur from this.” In addition Ms Modi provided a letter from the Senior Manager of [Services] at Relationships Australia dated 26 March 2020. This letter confirms Ms Modi has attended several sessions since 17 September 2015 as part of a specialist [program].
In order to establish that Ms Modi’s earning capacity is greater than that reflected in the child support assessment and therefore renders 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 his or her 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 his or her 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 his or her 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)).
Ms Modi is not currently working and has elected to go on extended leave without pay. This means the first criterion is met.
Ms Modi has advised the Tribunal she took leave to focus on her health, deal with stress related to a number of personal issues including the impact of family violence and manage appointments and school matters for [the child]. While the Tribunal acknowledges the difficulty Ms Modi has been experiencing in dealing with these issues, the medical evidence does not indicate the change in her working arrangements was due to her state of health alone. Ms Modi has, instead, elected to take leave without pay. As Ms Modi has had 100 per cent care of [the child] since 2012 and this remains unchanged the Tribunal is not satisfied her work arrangements and the decision to take leave can be justified by her caring responsibilities. The second criterion is therefore met.
The courts have held that the onus of proving “a major purpose” for the decision about a change in working arrangements was not to affect child support rests on the person who made the choice. Ms Modi has explained there were several reasons for her decision to take unpaid leave. The Tribunal is not satisfied, based on the evidence provided, that affecting the child support assessment was “a major purpose”, or one of the most important factors, in Ms Modi’s decision to take extended leave from her employment.

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 Ms Modi in this case.
The Tribunal also considered the income, property, financial resources and earning capacity of Mr Moustafa.
Mr Moustafa told the Tribunal he was currently working as [an Occupation] for [Employer 1] on a casual basis. He said his hours were determined by his employer on an as needs basis and pointed out that most casual [workers], including him, had their hours reduced as a result of the coronavirus pandemic. Mr Moustafa said priority was given to full-time [workers] and his hours were only just starting to slowly pick up again.
Mr Moustafa said at one point he was also working as a casual [worker] for [Employer 2]. He said he was working two jobs in order to try and make ends meet but it was not sustainable. Mr Moustafa explained that he left [Employer 2] because the business was giving more work to permanent [workers] and there were less hours available for casuals. He said he was also burning out trying to keep both jobs.
In response to directions Mr Moustafa provided the Tribunal with two documents relating to his employment at [Employer 2]. The first is a letter from the HR Officer dated 22 January 2020 which states that, while remaining a casual employee, Mr Moustafa has not worked for the business since 5 January 2020. The second is an employment separation certificate which shows Mr Moustafa was employed at [Employer 2] from 15 January 2015 until 24 January 2020.
Ms Modi said Mr Moustafa travels extensively and had been on an international holiday in June 2019 which shows he has disposable income. She added that Mr Moustafa had also worked as [a Company] [worker] and not disclosed his full income in the past. In addition he had previously received rental income from the property in which he currently lived. She also referred to comments made by the judge in their recent Family Court proceedings. Ms Modi said she believed Mr Moustafa had the capacity to pay more child support.
The Tribunal notes in evidence provided by Ms Modi a transcript of proceedings in the Family Court delivered on 13 March 2020. At clause 78 the transcript states:
The husband initially did not disclose that in addition to his employment with [Employer 1] he was working as [a Company] [worker]. He admitted having misled the Child Support Agency about is employment with [Employer 1], and subsequently about his work with [Company].
Mr Moustafa responded by saying that [Employer 1] was currently his only source of income. Mr Moustafa said he had stopped receiving rent on the property in [Suburb 2] when the tenant moved out in November 2019 and he moved in. He said, in any case, the rent simply went towards paying the mortgage on the home which was approximately $650,000.
The Statement of Financial Circumstances provided by Mr Moustafa was received on 4 May 2020. Mr Moustafa lists his total average weekly income at $1,100. His average weekly expenses total $1,111, which includes $675 in mortgage payments and $100 in medical expenses. His total personal expenditure is $640 per week which includes $300 in income tax, $240 in child support payments and $100 in superannuation. Mr Moustafa states the total value of his property is $752,020 which includes his home in [Suburb 2] valued at $750,000, a [motor vehicle] valued at $1,500, household contents of $320 and a small amount of cash at bank. The total value of his liabilities is $679,000 with the majority being his mortgage and the remainder a legal debt of approximately $21,000. Mr Moustafa said this was before he was liable to pay the outstanding fees at [College]. He has superannuation of $41,000.
Mr Moustafa told the Tribunal he had yet to submit his 2018–19 tax return. He said [Employer 1] was his primary source of income in that financial year.
In response to directions Mr Moustafa provided the Tribunal with his payment summaries from [Employer 1] and [Employer 2] for 2018–19. The first shows gross payments of $57,071 and the second shows gross payments of $29,892. The combined gross income from employment is $86,963. There is no evidence before the Tribunal to indicate Mr Moustafa was receiving any income as [a Company] [worker] in 2018–19.
In relation to the rental income the Tribunal notes in evidence that Australian Taxation Office records indicate Mr Moustafa made a net rental loss in 2017–18 of $14,243. Such losses can be claimed as a deduction for taxation purposes and hence reduce taxable income. As a result a net rental loss is added back to a parent’s income for child support purposes. In this case, however, the Tribunal has determined that Mr Moustafa had a gross income from employment of $86,963 in 2018–19 which is before taking into account any net rental loss. There is, therefore, no need to add back an amount for such a loss.
The Tribunal is satisfied that in 2018–19 Mr Moustafa had income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $86,963. Allowing for reasonable work-related deductions this would amount to approximately $85,000.

Mr Moustafa ceased his casual role at [Employer 2] on 24 January 2020, however, he did not receive paid employment after 5 January 2020. This means he was still working as a casual [worker] for two employers in the first half of the 2019–20 financial year.
In response to directions Mr Moustafa provided the Tribunal with a payslip from [Employer 2] for the period from 30 December 2019 to 5 January 2020 (when he last received paid employment). This shows gross year-to-date income of $16,439.87 which equates to approximately $31,749 on an annualised basis. Mr Moustafa also provided the Tribunal with pay advice from [Employer 1] for the period 23 March 2020 to 29 March 2020. This shows gross year-to-date income of $48,256.25 which equates to approximately $64,756 on an annualised basis. The Tribunal accepts, however, that for the remaining three months of the 2019–20 financial year Mr Moustafa is likely to have a reduced income due to the impact of the coronavirus pandemic. The Tribunal considers an income of approximately $60,000 from his employment at [Employer 1], which is slightly higher than his income from the same employer on 2018–19, to be reasonable for 2019–20.
In relation to the rental income in 2019–20, Mr Moustafa has told the Tribunal he was residing in the property from January 2019. It is unlikely Mr Moustafa will receive any net income from the property in 2019–20.
The Tribunal is satisfied that from 1 July 2019 up until his last day of paid employment at [Employer 2], Mr Moustafa had income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $91,749. From 6 January 2020 Mr Moustafa has income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $60,000. Allowing for reasonable work-related deductions this would amount to approximately $89,786 and $58,037 respectively.
Ms Modi told the Tribunal it was her view Mr Moustafa reduced his working hours so he would pay less child support. She said the judge in their Family Court proceedings had concluded Mr Moustafa had an earning capacity of $90,000. She added that Mr Moustafa had provided a number of different reasons for leaving his employment at [Employer 2].
Mr Moustafa has told the Tribunal that he left [Employer 2] because there was less work available for casual [workers] and he found it difficult to continue working two jobs. In response to directions Mr Moustafa provided the Tribunal with a mental health treatment plan from his GP, [Dr D]. The plan, dated 14 October 2019, states Mr Moustafa has adjustment disorder and refers to his relationship break-up, ongoing litigation and a subsequent inability to focus at work.
As with Ms Modi, to establish that Mr Moustafa’s earning capacity is greater than that reflected in the child support assessment, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied.
Mr Moustafa is currently working but changed his working pattern when he resigned from [Employer 2] where he had been employed since 15 January 2015. Hence the first criterion is satisfied.
Mr Moustafa has provided a mental health treatment plan, however, there is no indication it was the state of his mental health that caused him to resign from [Employer 2] and work only at [Employer 1]. As Mr Moustafa is not caring for [the child], this played no role in his decision to change his working pattern. Hence the second criterion is also satisfied.
Mr Moustafa has provided a number of reasons for his decision to leave [Employer 2]. The Tribunal notes the objection decision which varied Mr Moustafa’s income to $88,000 per annum was made on 21 November 2019 and he did not resign from [Employer 2] until 24 January 2020. The Tribunal is unable to conclude, based on the evidence provided, that a “major purpose” of his decision to resign was to affect the child support assessment.
The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Mr Moustafa in this case.

The necessary commitments of self-support or to support any other child or person

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

Any hardship that would be caused

The Tribunal has found that Ms Modi currently has an income of $0. This commenced from 16 July 2019 when she took extended leave without pay. At the time she made her application for a departure from the administrative assessment, however, she had an adjusted taxable income of $44,372.
While she is not working Ms Modi relies on government benefits which amount to approximately $25,324 per annum. She estimated her household expenditure at $96,044 per annum although the Tribunal notes this includes $15,600 per annum for [the child]’s education costs, $7,800 per annum for [the child]’s health costs and $5,200 per annum for holidays. Ms Modi estimated her total personal expenditure at $58,032 per annum. The Tribunal notes this includes her mortgage payments of $14,820 per annum which are covered in her household expenditure as well as income tax and superannuation costs which are not relevant while she is on leave. It also includes credit card payments of $33,800 per annum which is high given her current credit card debt is listed as only $3,400.
Ms Modi said she was struggling financially but doing her best to ensure [the child] had some stability by keeping him at [College].
Mr Moustafa currently has access to income of approximately $58,037 per annum although his income at the time Ms Modi made her application for a change to the assessment was approximately $85,000. His total estimated household expenditure is $57,772 per annum and his total personal expenditure is approximately $33,280 per annum which includes child support of $12,480 per annum.
Mr Moustafa told the Tribunal he was also under considerable financial stress and drowning in debt. He reiterated that neither parent could afford private school fees.
The Tribunal notes that in her application for a departure from the administrative assessment made on 18 December 2018 Ms Modi requested that any change be backdated to January 2015. 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). The earliest date open to the Tribunal from which to make a determination would be 18 June 2017. The Tribunal must decide whether or not it is just and equitable to backdate the determination (prior to the change of assessment application date).
The Tribunal is of the broad view that retrospectively changing entitlements should be avoided without compelling reasons. The Tribunal must also consider the impact of backdating the assessment on Mr Moustafa who should ordinarily be able to rely on the child support assessment in place at least up until the time Ms Modi made her application.
In this case the Tribunal finds it just and equitable to commence the departure determination from 24 January 2019 and not from an earlier date. This is when Mr Moustafa submitted his estimate of income of $42,515 which was obviously not correct.
Having considered the interests of both parents the Tribunal proposes to make the following determination:
·for the period from 24 January 2019 to 15 July 2019 the adjusted taxable income of Ms Modi is varied to $44,372;
·for the period from 16 July 2019 to 31 July 2020 the adjusted taxable income of Ms Modi is varied to $0;
·for the period from 24 January 2019 to 30 June 2019 the adjusted taxable income of Mr Moustafa is varied to $85,000;
·for the period from 1 July 2019 to 5 January 2020 the adjusted taxable income of Mr Moustafa is varied to $89,786;
·for the period from 6 January 2020 to 31 July 2020 the adjusted taxable income of Mr Moustafa is varied to $58,037;
·for the period from 24 January 2019 to 31 December 2019 the annual rate payable by Mr Moustafa is increased by $1,650 being his half contribution towards the costs of [the child]’s special needs in 2019; and
·for the period from 1 January 2020 to 31 July 2020 the annual rate payable by Mr Moustafa is increased by $750 being his half contribution towards the costs of [the child]’s special needs.
The Tribunal established that [the child] has special needs and the total out-of-pocket costs in meeting those special needs was $3,300 in 2019 ($3,000 for occupational therapy and $300 for psychological treatment). The Tribunal is satisfied it is just and equitable for the parents to meet an equal share of these costs and has increased the annual rate payable by Mr Moustafa by $1,650 from 24 January 2019.
It appears the out-of-pocket costs for [the child]’s special needs in 2020 will be slightly less as the frequency of his attendance at the occupational therapist has declined. The Tribunal has some concerns that [the child] has not received a formal medical diagnosis in relation to his occupational therapy requirements. The report reassessing his progress and evaluating his ongoing needs undertaken by [Occupational Therapy] in 2019 was not provided. Ms Modi has also indicated that [the child] is to be formally assessed for autism spectrum disorder. It is for these reasons the Tribunal has only varied the contribution being made by Mr Moustafa for [the child]’s special needs until 31 July 2020. As [the child] is attending occupational therapy less frequently in 2020, the costs for the seven months from 1 January 2020 are likely to be approximately $1,500. The Tribunal has not included costs for psychological treatment in 2020 as Mr Moustafa is already meeting these.
The Tribunal has also found a ground for departure from the administrative assessment on the basis of the high costs of [the child]’s private education. It is clear that neither parent has the financial capacity to meet the costs of [the child] attending [College]. As a result of a court decision Mr Moustafa must meet all outstanding costs for [the child]’s schooling up until 11 February 2020 which amounts to approximately $29,000. Ms Modi has acknowledged she is only able to afford to contribute a small amount towards the total costs of the fees. Both parents have considerable debts and their expenses outweigh their income. Neither parent explained to the Tribunal how they planned to meet the difference between their stated expenses and their current incomes.
It is for these reasons the Tribunal does not find it just and equitable to make a change to the assessment on the basis of the high costs of [the child]’s education. This may mean Ms Modi will be required to meet the total cost of school fees from 11 February 2020 onwards. As Mr Moustafa is already bearing considerable debt for past school fees, which diminishes his capacity to contribute any further, the Tribunal would consider this to be just and equitable. Mr Moustafa has told the Tribunal that [College] is currently in discussion with the parents about [the child]’s ongoing attendance and so this will be a decision both parents will need to make.
The Tribunal must determine if the extra costs of meeting [the child]’s special needs will cause hardship to Mr Moustafa.
The Tribunal applied the newly calculated income for Ms Modi and Mr Moustafa in the child support formula and found the level of child support alone payable by Mr Moustafa would be approximately $9,475 from 24 January 2019. The combined annual amount of child support and costs for [the child]’s special needs payable by Mr Moustafa would, however, be approximately $11,125 from 24 January 2019. The combined amount would rise to approximately $11,740 from 1 July 2019 as a result of the change to Mr Moustafa’s income. From 16 July 2019 the combined amount would rise again to approximately $12,175 as a result of the change in Ms Modi’s income, however, it would fall from 1 January 2020 to approximately $11,275 as the amount for [the child]’s special needs reduces. From 6 January 2020 the combined amount would fall to approximately $6,445 as a result of the change in Mr Moustafa’s income (child support of approximately $5,695 and costs for special needs of $750).
In making this decision the Tribunal has only varied the income of both parents until 31 July 2020. Ms Modi has indicated she is unlikely to go back to work before her current period of extended leave expires on 16 February 2021, however, it is possible she may decide to return sooner. The Tribunal is reticent to set the income of Mr Moustafa for a longer period given the uncertain impact of the coronavirus pandemic on his earnings.
Both parents may wish to consider submitting an estimate of income from 1 August 2020. Either parent is able to make a further application for a change of assessment at any time should they believe their financial circumstances at the time warrant it.
The Tribunal acknowledges the proposed determination may cause some hardship to Mr Moustafa from 6 January 2020 (when his income reduced) until he is able to rearrange his finances following the recent property settlement between the parents. The Tribunal also acknowledges the proposed determination may also cause some hardship to Ms Modi and the children while she is not working. The Tribunal considers this unavoidable given Mr Moustafa’s reduced capacity to support the children from 6 January 2020 and the expenses Ms Modi is currently incurring.

Issue 3 – is it otherwise proper to make a particular departure 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.
The Tribunal finds that Ms Modi receives family assistance in respect of [the child]. The Tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community and would be otherwise proper.

DECISION

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

for the period from 24 January 2019 to 15 July 2019 the adjusted taxable income of Ms Modi is varied to $44,372;
for the period from 16 July 2019 to 31 July 2020 the adjusted taxable income of Ms Modi is varied to $0;
for the period from 24 January 2019 to 30 June 2019 the adjusted taxable income of Mr Moustafa is varied to $85,000;
for the period from 1 July 2019 to 5 January 2020 the adjusted taxable income of Mr Moustafa is varied to $89,786;
for the period from 6 January 2020 to 31 July 2020 the adjusted taxable income of Mr Moustafa is varied to $58,037;
for the period from 24 January 2019 to 31 December 2019 the annual rate payable by Mr Moustafa is increased by $1,650 being his half contribution towards the costs of [the child]’s special needs in 2019; and
for the period from 1 January 2020 to 31 July 2020 the annual rate payable by Mr Moustafa is increased by $750 being his half contribution towards the costs of [the child]’s special needs.

[2020] AATA 3650

26 June 2020

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