Motram and Altman (Child support)

[2022] AATA 4986

Motram and Altman (Child support) [2022] AATA 4986 (2 December 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC024140

APPLICANT:  Mr Motram

OTHER PARTIES:  Child Support Registrar

Ms Altman

TRIBUNAL:Member R King

DECISION DATE:  2 December 2022

DECISION:

The tribunal affirms the decision under review.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – decision to depart - decision under review affirmed

REASONS FOR DECISION

BACKGROUND

1. This review is about whether or not there should be a departure from the administrative assessment of child support.

2. Mr Motram is the father and Ms Altman is the mother of [Child 1] (age nine years) and [Child 2] (age three years). 

3. There has been a child support assessment in place, with initial registration by the Child Support Agency (the CSA) on 27 July 2021.  Both children are in Ms Altman’s primary care  The CSA collects child support from Mr Motram for payment to Ms Altman.

4. The pre-existing administrative assessment in this case was based on Mr Motram having an adjusted taxable income of $18,500 (2020-21 tax assessment) and Ms Altman having an adjusted taxable income of $13,025 (derived).

5. On 7 October 2021 Ms Altman applied to the CSA for a departure from the current assessment on the grounds that the existing assessment is unjust and inequitable because of the income, earning capacity, property or financial resources of Mr Motram (the grounds commonly referred to as Reason 8).

6. On 8 December 2021 the CSA found that reason 8 had been established.  For child support purposes, the CSA set Mr Motram’s adjustable taxable income at $49,300 from 27 July 2021 to 26 October 2022. The assessment used Ms Altman’s adjusted taxable income of $13,025

7. On 14 December 2021, Mr Motram objected to the change of assessment decision on the grounds that his income was substantially lower than determined by the CSA and included a non-taxable stipend that should be disregarded.  On 7 March 2022 an objections officer disallowed the objection.  The objections officer found that Mr Motram’s student stipend ($28,957 pa) was equivalent to a gross taxable income of approximately $33,500 per annum, that he was in receipt of jobseeker payment of approximately $7,500 per annum and that he was in receipt of consultancy fees in the sum of $8,159 in respect of work undertaken as [an occupation 1].  This yielded a total income equivalent to $48,659 per annum.  The objections officer found that this sum provided an accurate estimate of the resources Mr Motram had at his disposal from which to pay child support, which meant that it would be unfair to use his taxable income of $18,500 and Reason 8 was established.  The objections officer found that Ms Altman was reliant solely on Centrelink payments in the sum of $13,025, which was insufficient to meet her living expenses.  The objections officer was satisfied that a small discrepancy between the amount of child support payable under the decision of the original decision-maker and the amount payable on the objection calculations was insufficient to render the original decision unfair.

8. On 29 April 2022, Mr Motram applied to the Administrative Appeals Tribunal (the tribunal) for external review of the objection decision.

9. The tribunal convened a pre-hearing conference under section 103 of the Child Support (Registration and Collection) Act 1988. The conference took place on 5 October 2022. Both Mr Motram and Ms Altman attended by conference telephone. Prior to the telephone conference the CSA provided the tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975.

10. Subsequent to the pre-hearing conference and pursuant to section 33 and section 33A of the Administrative Appeals Tribunal Act 1975, the tribunal issued directions to both parties.  Both parties provided additional evidence and/or submissions in response to the directions and these were exchanged between the parties.

11. A hearing was held on 16 November 2022.  Both Mr Motram and Ms Altman gave evidence on affirmation by conference telephone.  The tribunal was assisted by an interpreter in the Farsi language

12. At the conference and at the commencement of the hearing the tribunal clarified with  Mr Motram the reasons for his application.  Mr Motram told the tribunal that believed that the objections officer erred in treating his university stipend as income for the purposes of child support.  Mr Motram also told the tribunal that he could not see how or why the stipend was increased beyond the actual amount he receives.  Ms Altman said that she wanted the tribunal to investigate the possibility that Mr Motram received undeclared consultancy fees in addition to the fees that he declared.  Both parties wanted the tribunal to consider whether the other party had greater capacity to earn income and thereby better support the children.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. 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).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process such that the issues for determination by this tribunal are:

   ·      whether a ground is established to depart from the administrative assessment of child support; and if so,

   ·      whether it is just and equitable to make a particular departure determination; and if so,

   ·      whether it is otherwise proper to make a particular departure determination.

5. Section 98S allows for a change of assessment to be prospective and/or to cover a period of up to 18 months prior to the request for a change of assessment.

6. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.  Section 117 designates 10 grounds for departure.  A departure may be based on one or more of these designated grounds.

7. 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.

8. 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”.

9. If the tribunal is satisfied that one or more grounds exist 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.

10. 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?

1. A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child.  Special circumstances can only be considered in respect of one or more of the 10 reasons set out in subsection 117(2) of the Act.  Reason 8 is before the tribunal as this provided the grounds for the change of assessment that the tribunal is reviewing.

2. Pursuant to subparagraph 117(2)(c)(ia) of the Act, Reason 8A is established when an administrative assessment would result in an unjust and inequitable child support determination because of the income, property and financial resources of either parent.  Pursuant to subsection 117(7B), Reason 8B is established when an administrative assessment would result in an unjust and inequitable child support determination because the earning capacity of one or both parents is not properly reflected in their taxable income for one or more specified reasons.

3. An administrative assessment takes into account the adjusted taxable income of both parents.  The CSA relies on information provided by the Australian Taxation Office (ATO) when determining the adjusted taxable income.

4. Mr Motram had an adjusted taxable income of $18,500 in the 2020-21 tax year. 

5. The objections officer was of the view that information provided by the ATO did not provide an accurate picture of Mr Motram’s financial resources, because a substantial part of his income (his university stipend) was tax free.  This meant that he had the use of this income and it was potentially available for child support but it was not assessed as part of his taxable income by the ATO.

6. Ms Altman submitted that the tribunal should consider the possibility that Mr Motram has been receiving consultancy payments in addition to those declared.  The tribunal notes that the CSA obtained evidence from the person for whom Mr Motram provides [occupation 1] services and the evidence provided was consistent with Mr Motram’s evidence.  The tribunal notes that this person is described as a friend of Mr Motram, which means that his evidence is not completely independent.  His evidence was also unsworn.  However, the tribunal is satisfied that here is nothing in the financial statements provided by Mr Motram to suggest a stream of income or a pattern of expenditure that is inconsistent with the income sources identified by the CSA.  The tribunal is therefore satisfied that Mr Motram’s income is limited to his stipend, his jobseeker payment and the consultancy that he has declared either by providing invoices or in declarations to Centrelink.

7. Ms Altman told the tribunal that she believes that Mr Motram has the capacity to earn a more substantial income by working as [an occupation 1] or even taking on low skilled work.  She said that he spent a lot of time engaged in unproductive study when they were living in [Country 1], and she was not convinced that undertaking a PhD in Australia was the best way to support his children.

8. Mr Motram told the tribunal that his PhD was in an area of practical value ([specified]) and it is also improving his English language skills.  He said that he had been unsuccessful obtaining work as [an occupation 1] without Australian qualifications and he believed that a higher degree from a prestigious Australian university would advance his career prospects and better enable him to support his children in the longer term.  Mr Motram also said that he believes that Ms Altman, who has a [level] degree from [Country 1], has the capacity to obtain work.

9. The tribunal is not satisfied that either parent has the capacity to earn significantly greater income at the present time.  The tribunal accepts Mr Motram’s evidence that he is unable to obtain greater amounts of consultancy work and that his PhD has the potential to assist him to obtain well paid professional work in the future.  Given the age of the youngest child and Ms Altman’s limited English at the present time, the tribunal is of the view that it is unreasonable to expect her to obtain employment now, although this may be a future prospect.

10. Mr Motram submitted that there was no legal basis for the approach to estimating his income that was taken by the CSA.  The tribunal is satisfied that section 98C of the Act allows for a departure from the administrative assessment (the assessment that is based on information provided by the ATO), so long as the grounds for departure fall within one of the designated circumstances set out in section 117 of the Act. 

11. Mr Motram also submitted that the CSA failed to explain how they had obtained an income estimate from his tax free stipend.

12. The tribunal is aware that the CSA uses specially developed mathematical tools to estimate gross income when the available information is tax-free income.  This process is commonly known as “grossing-up”.  The tribunal cross checked the estimate using a calculator provided on the ATO website.

13. The objections officer estimated that. If Mr Motram’s stipend was taxable he would require a total taxable income of $48,659 to obtain the net income he receives as a result of his untaxed stipend, his jobseeker payments and his consultancy fees.  Using the ATO calculator, the tribunal has estimated a somewhat higher gross income of around $51,000 would be required.  However, this is without legitimate tax deductions that would probably be available to Mr Motram.  When such deductions are taken into account, the estimate determined by the original decision-maker appears to be reasonable.  The tribunal is therefore satisfied that the income estimate of the original decision maker ($49,300), which was accepted by the objections officer, notwithstanding a small discrepancy with her estimate, is a proper estimate of Mr Motram’s income when considering his capacity to pay child support.

14. Mr Motram submitted that the CSA has made a more recent change of assessment and that he currently has no child support liability.  He submitted that the tribunal should decide accordingly.

15. The tribunal does not accept this submission.  The tribunal has to consider the merits of the change of assessment before it.  The tribunal is not required to align its decisions with subsequent decisions of the CSA.

16. There is a significant difference between the income of $18,500 used in the pre-existing child support assessment and the tribunal’s estimate of $49,300.  The tribunal is of the view that an administrative assessment based on an income of $18,500 would result in a child support assessment that does not properly reflect  the income, property and financial resources of Mr Motram, which means that special circumstances exist..

17. The tribunal agrees with the objections officer that Ms Altman’s adjusted taxable income, which is derived solely from Centrelink payments, adequately reflects her income, property and financial resources for child support purposes.

18. This means that the tribunal is satisfied that Reason 8A is established but for the reasons set out in paragraph 31, above, Reason 8B is not established

19. As the tribunal finds there are grounds to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, Mr Motram (the liable parent), and Ms Altman (the parent entitled to child support) to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below,[1] which are as set out in subsection 117(4) of the Act:

    [1] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886.

    (4)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

    (a)    the nature of the duty of a parent to maintain a child (as stated in section 3); and

    (b)    the proper needs of the child; and

    (c)    the income, earning capacity, property and financial resources of the child; and

    (d)    the income, property and financial resources of each parent who is a party to the proceeding; and

    (da)  the earning capacity of each parent who is a party to the proceeding; and

    (e)    the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

    (i)   himself or herself; or

    (ii)  any other child or another person that the person has a duty to maintain; and

    (f)     the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

    (g)    any hardship that would be caused:

    (i)to:

    (A)the child; or

    (B)the carer entitled to child support;

    by the making of, or the refusal to make, the order; and

    (ii)to:

    (A)the liable parent; or

    (B)any other child or another person that the liable parent has a duty to support;

    by the making of, or the refusal to make, the order; and

    (iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

The nature of the duty of a parent to maintain a child (as stated in section 3 of the Act)

1. Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments.

2. The tribunal is satisfied that a change of assessment is consistent with this duty as it means that a higher proportion of Mr Motram’s financial resources will be allocated to maintenance of his children.

The proper needs of the child

1. 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).

2. The tribunal is satisfied that a change of assessment will be consistent with the proper needs of the children as it will result in an increase in the amount of child support paid by Mr Motram, thereby providing increased capacity to meet their proper needs.

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

1. There is no evidence before the tribunal to suggest that either child has 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

1. The tribunal has already given consideration to these matters when determining that a change of assessment was warranted.  Both parents have modest financial resources at the present time and the tribunal is satisfied that the change of assessment is just and equitable given the income, property, financial resources and earning capacity of each parent at present.

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

1. The tribunal is satisfied that neither Mr Motram nor Ms Altman has necessary commitments to support any other child or person.

2. With respect to self-support, the effect of the change of assessment is to reduce Mr Motram’s capacity for self-support.  Having considered the Statement of Financial Circumstances provided by each parent, the tribunal is satisfied that this is just and equitable given the primary duty Mr Motram has to maintain his children and Ms Altman’s dependence on Centrelink payments.

3. During the hearing, Mr Motram submitted that Ms Altman was paying higher rent than was necessary.  The rent paid by Ms Altman ($500 pw) is fairly typical for a three-bedroom apartment where she lives in an unremarkable southern suburb of Brisbane.  The tribunal does not accept that there is anything extravagant about Ms Altman’s accommodation.

The direct and indirect costs incurred by the carer entitled to child support in providing care for the child

1. Ms Altman is the parent entitled to child support.  The tribunal is satisfied that increased child support arising from the change of assessment is proportionate to the direct and indirect costs incurred by Ms Altman in providing care for the two children and is just and equitable for this reason.

Any hardship that would be caused

1. The effect of the tribunal’s decision is that the rate of child support that Mr Motram pays to Ms Altman will be increased when compared with the pre-existing administrative assessment that utilised his adjusted taxable income, based on ATO data but unchanged compared with his liability as determined by the objections officer. 

1. Neither parent is in a strong financial position, and the tribunal’s decision does cause hardship to Mr Motram compared with the pre-existing administrative assessment.  At the same time there is a reduction to the amount of hardship experienced by Ms Altman, as the amount of child support she receives as a result of this decision is greater than the amount that was paid to her on the basis of the pre-existing administrative assessment.

2. The tribunal is of the view that any additional hardship caused to Mr Motram is consistent with the objectives of the child support legislation and does not render the change of assessment unjust or inequitable.  The tribunal is satisfied that it was appropriate for the CSA to give effect to the change of assessment from 27 July 2021, notwithstanding that the effect is to leave Mr Motram with a liability for a period of a little over two months prior to Ms Altman’s request for a change of assessment.  The Act allows a period of up to 18 months prior to the application for a change of assessment to be considered and the tribunal is satisfied that Mr Motram had the financial resources imputed to him in this decision from at least 27 July 2021 and the amount of arrears arising is not unreasonably onerous.

Overall

1. Having regard to the seven considerations specified above, the tribunal is satisfied, for the reasons outlined, that the change of assessment in the special circumstances encapsulated in Reason 8, as initially determined by the original decision maker and affirmed by the objections officer is just and equitable.

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

1. 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 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.

2. It is not clear that the change of assessment carries implication for Ms Altman’s eligibility for family assistance payments.  However, insofar as it does it will be to reduce taxpayer support and increase the proportion of support provided by the parents.  As this would be consistent with the overall objectives of both child support legislation and family assistance legislation, the tribunal is satisfied that it is otherwise proper to affirm the change of assessment that is before it.

DECISION

The tribunal affirms the decision under review.