N and B
[2003] FMCAfam 72
•14 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| N & B | [2003] FMCAfam 72 |
| CHILD SUPPORT – Child in shared care – calculation of exempted income amount – allowance for relevant dependent child. Child Support (Assessment) Act – ss.4, 5, 8, 39, 48, 117 – part 6A Rocca v Corelli 22 FAMLR 663 |
| Applicant: | S H N |
| Respondent: | R F B |
| File No: | DNM2653 of 2002 |
| Delivered on: | 14 March 2003 |
| Delivered at: | Darwin |
| Hearing date: | 10 March 2003 |
| Judgment of: | Brown FM |
REPRESENTATION
| The Applicant in person: | Mr S N |
| The Respondent: | No appearance |
ORDERS
That the amended application in form 64 filed on the 9th of December 2002 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM2653 of 2002
| S H N |
Applicant
And
| R F B |
Respondent
REASONS FOR JUDGMENT
Application
The applicant in these proceedings is S H N. The proceedings relate to an appeal from a decision of the Child Support Registrar made on the 13th of September, 2002.
In his amended form 64 application filed on the 9th of December, 2002, the applicant seeks to appeal the decision of the Child Support Registrar on the following grounds:
(1)a) The Child Support Assessment does not reflect the ‘Particular Objects’ of the Act, specifically s.4(2)(a) “that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and. In particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support”; and
b)That the rate of child support specified in the assessment was incorrect assessed; and
(2)a) The ‘Exempt Income Amount’ in the assessment does not reflect that an ‘Eligible Carer’ of the Shared Care Child of the assessment is also a Principle Provider of that dependant; and
b)The assessment does not justly and equitably reflect the Basic Living Expenses for an ‘Eligible carer’ who shares substantially equally the ongoing daily care of the Shared Care Child of the assessment.
He seeks the following orders:
(1)That the Child Support Registrar adjust the Assessment by increasing the Paying Parent’s (father’s) Exempted Income Amount to reflect that the Shared Care Child of the Assessment is a Relevant Dependent of the Paying Parent; and
(2)That any adjustment to the Assessment be made retrospective to the 29th April, 2002 being the date of commencement of this Child Support case.
The applicant has appeared on his own behalf in these proceedings and prepared his own documents. The respondent to the application is R F B. She elected not to take any part in the proceedings, as did the Registrar of the Child Support Agency. However, I am satisfied that both Ms B and the Registrar were served with the application and had notice of the hearing on the 10th of March 2003.
Background
The applicant and the respondent were married on the 16th of September, 1989 and separated on the 1st of June, 1992. They are the parents of one child, R F N, who was born on the 21st of February, 1990. Accordingly, R is currently 13 years of age.
R is the eligible child who is the subject of this application. Since the 17th of November, 1998, R has been living in a shared care arrangement with both of his parents. He spends seven days of each fortnight living with each of his parents alternately.
Section 5 of the Child Support (Assessment) Act (hereinafter referred to as the Act) defines shared child care as follows:
Shared care child means a child of whom each of the parents is an eligible carer because he or she shares ongoing daily care of the child substantially equally with the other parent.
Section 8(1) of the Act defines “shared ongoing daily care” as follows:
For the purposes of this Act, if :
a)a person is the principle provider of ongoing daily care for a child;
b)another person has care of the child for at least 40% of the nights in the twelve months immediately after the start of the child support period concerned;
the other person is to be taken to share ongoing daily care of the child substantially equally with the first mentioned person.
By virtue of the fact that R spends alternate weeks with each of his parents, there is no doubt that he is in shared ongoing daily care with both the applicant and the respondent in this case.
It is the application of the relevant child support formula to this situation that is the subject of this appeal.
On the 29th of April 2002, Ms B sought an administrative assessment of child support in respect of R. She was entitled to seek such an assessment. Ms B has re-partnered and has two other children, J B and T B with her current partner, Mr B. I have not been provided with the exact dates of birth of either J or T, but understand that they are both under 13 years of age.
The respondent mother and Mr B are both in the paid workforce. They currently live together and provide financial support for J and T on a full time basis. In addition, as indicated earlier, R lives with them for seven days each fortnight.
It is the relevance of J and T to the calculation of the child support payable by the mother in respect of R that the applicant challenges in this case and in particular, the relevance of these children in calculating her exempted income amount as defined by section 39 of the Act.
There are no issues of fact to determine in this matter. It is strictly a question of the application of the formula provided by the Act to the circumstances of the parties. Mr N is critical of what he sees as the essential unfairness of the current assessment. The basis of his perception is that he believes that Mr and Mrs B have a superior income to his but as a result of the application of the formula, the respondent is assessed to pay less child support than him. However, this application is not a departure application pursuant to Part 6A of the Act and in particular section 117.
Accordingly, Mr N did not provide any evidence other than that set out in the affidavit he filed in support of his application on the 15th of October, 2002. To this affidavit were attached the following relevant documents:
(i)
Assessment of child support for the period 29 April 2002 –
28 July 2003 dated 5 July 2002;
(ii)Objection of Mr N dated 10 July 2002;
(iii)Notification of decision on objection dated 13 September 2002.
It is as a result of the rejection of his objection by the Child Support Registrar that the applicant has commenced these proceedings.
Discussion
The principal object of the Act is set out in section 4(1) as follows:
4(1) The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
Some of the particular objects of the Act are set out in section 4(2) as follows:
4(2) Particular objects of this Act include ensuring:
a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with the legislatively fixed standards; and
c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them.
In essence, the Act provides a formulaic process by which child support payable by the biological parents of the child concerned is calculated. It is not a discretionary system but aims to provide a certain formula by which the child support payable in any given care situation can be readily calculated.
In basic terms, the formula works as follows:
·First, the taxable income of the non-custodial parent is taken into account.
·Second, an amount is deducted from that income for the living expense of the non-custodial parent and any natural or adopted children living with that parent.
·Third, if the custodial parent’s taxable income exceeds average weekly earnings, plus a fixed allowance for child care costs, the excess reduces the non-custodial parents income.
·Finally, a percentage of the non-custodial parent’s remaining income is paid as support for the child or children involved.
·The Act provides for a range of modifications to the formula in cases where the care of children is split or shared by the child’s biological parents.
·An appeal lies to a Court, such as this one, where one of the parties considers that the application of the applicable formula provided by the Act has been incorrectly applied or interpreted.
If the parents have a “shared cared child”, the basic formula is applied as if both parents have the child for 50% of the time and, by necessary implication share equally in the costs of caring for that child. In a technical sense, they are both considered liable parents, as both are assessed, on their income, for child support.
It is the applicant’s position that the assessment of 5 July 2002 does not accord with the objects of the Act and has resulted in an inequitable assessment that requires him to pay a monthly amount of child support of $176.42 for R , when the respondent and Mr B have a combined income that is higher than his. However, as I understand things, for the purposes of these proceedings, it is his position that the relevant provisions of the Act have been incorrectly applied to both of the parties in these proceedings, particularly in so far as the Agency has calculated the relevant amount of income that is to be exempted from the calculation, to which the child support formula is to be applied.
In cases of shared care, if all the children of the relationship are shared; neither of the parents of those children has any other child or children financially dependant on them and the incomes of the parents are equal; there will be a nil assessment of child support in each of their cases. However, the assessment will change depending on any disparity between the incomes of the parties concerned and the number of children towards whom they have a legal obligation to provide financial support. In cases of shared care, the child support formula treats both parents as if they were paying child support to each other and calculates an annual rate for both parents based on their relevant incomes and number of dependants. The child support that is payable by one parent to the other is the difference between those two rates.
In cases of shared care, the relevant child support percentage is 12%. This is applied to both parents’ relevant income. As a matter of principal, in cases of shared care, the amount of child support payable by the parents to one another will be nil, where the circumstances for child support are identical. Where there are differences between the parties in terms of their income and the number of children they are required to financially support, the formula will recognise that difference and one parent will be required to pay child support to the other.
The relevant assessment
The relevant assessment for the purpose of these proceedings is dated
5 July 2002 and refers to the period from 29 April 2002 until 28 July 2003. Although, due to changes in the parties taxable income, this assessment has been supplanted by one dated 13 September, 2002. The assessment reads as follows:
THE INFORMATION USED TO CALCULATE THE AMOUNT PAYABLE
FOR: | MRS R A B |
Annual Rate: | $3,155.00 |
Child Support Percentage: | 12.00% |
Child Support Income Amount: | $53,248.00 (2001 Taxable income plus any supplementary amounts) |
Exempted Income Amount: | $26,960.00 |
Adjusted Income Amount: | $26,288.00 |
Pensioner or Beneficiary: | Unknown |
RELEVANT DEPENDENT CHILDREN: | 2 children younger than 13 |
| CHILDREN WHOSE CUSTODY IS SHARED BETWEEN BOTH PARENTS: | R born 21 February 1990 |
FOR: | MR S N |
Annual Rate: | $5,272.00 |
Child Support Percentage: | 12.00% |
Child Support Income Amount: | $58,698.00 (2001 Taxable income plus any supplementary amounts) |
Exempted Income Amount: | $14,765.00 |
Adjusted Income Amount: | $43,933.00 |
The difference between the two assessments is $2,117.00 for the relevant tax year, which results in Mr N’s having been assessed to pay $176.46 per month to Ms B as child support for R.
I understand that the applicant does not challenge the child support income[1] of either himself or Ms B. What Mr N does not accept is the calculation of the exempt income amount in either his case or Ms B’s case.
[1] Child Support Income defined by section 38 of the Act as each of the party’s taxable income for the last relevant year. In this case the 2001 tax year.
Section 39 of the Act provides the basis on which a liable parent’s exempt income is calculated. In this case, as already noted, both Mr N and Ms B are liable parents because of the shared care arrangement they have for R .
Section 39 reads as follows:
39(1) The liable parent’s exempted income amount is:
a)if the liable parent does not have a relevant dependent child – 110% of the annual amount of the relevant unpartnered rate of Social Security pension for the child support period ; and
b)if the liable parent has a relevant dependant child – the aggregate of :
(i)220% of the annual amount of the relevant partnered rate of Social Security pension for the child support period; and
(ii)the additional amount ascertained under subsection (2) for each child who is a relevant dependent child of the liable parent.
39(2) Subject to subsection (5), the additional amount for a child who is a relevant dependent child of the liable parent is:
a) if the child will be 16 or over 12 months after the start of the child support period – 50% of the annual amount of the relevant partnered rate of social security pension (within the meaning of the Social Security Act 1991) for the child support period; or
b) if the child will be under 16 12 months after the start of the child support period – the amount worked out using the formula:
[Standard FTB rate – Base FTB rate] x 26
where:
base FTB rate means the base FBT child rate for the child under clause 8 of Schedule 1 to the Family Assistance Act, for which the liable parent was eligible on 1 January immediately before the child support period.
standard FBT rate means the FBT child rate for the child under clause 7 of Schedule 1 to the Family Assistance Act, for which the liable parent was eligible on 1 January immediately before the child support period.
Section 5 of the Act provides definitions of the following terms referred to in section 39:
relevant unpartnered rate of Social Security pension, in relation to a child support period, means the maximum basic rate of a social security pension (within the meaning of the Social Security Act 1991) payable on 1 January of the year in which the child support period started to a person:
a)who was not a member of a couple; and
b)who had turned 21; and
c)who was not permanently blind within the meaning of that Act
relevant partnered rate of Social Security pension, in relation to a child support period, means the maximum basic rate of a social security pension (within the meaning of the Social Security Act 1991) payable on 1 January of the year in which the child support period started to a person:
a) who was a member of a couple; and
b) who had turned 21; and
c) who was not permanently blind within the meaning of that Act
relevant dependent child, in relation to a liable parent, means a child or step-child of the parent, but only if:
a) the parent:
i)is the sole or principal provider of ongoing daily care for the child or step-child; or
ii)has major contact with the child or step-child; and
b) the child or step-child is under 18 and is not a member of a couple; and
c) in the case of a step-child;
i) an order is in force under section 66M of the Family Law Act 1975 in relation to the parent and the step-child; or
ii)the parent has the duty, under section 124 of the Family Court Act 1997 of Western Australia, of maintaining the step-child
Mr N accepts that pursuant to these definitions that, for the child support period commencing on or after the 1st of January 2002, pursuant to section 39(1)(a) 110% of the relevant unpartnered rate of pension without dependent children is $11,740.00 and that pursuant to section 39(1)(b) the relevant partnered rate of pension with dependent children is $19,597.00.
Pursuant to section 39(2)(b) additional amounts are added for relevant dependent children according to the age of the child concerned and referenced to the partnered rate of social security pension or the family tax benefit rate. There is no dispute that for the relevant child support period these rates were as follows:
i) Under 13
$2,169.00
ii) 13 to under 16
$3,025.00
iii) 16 to 18
$4,454.00
Using those figures the respondents exempted income, pursuant to section 39, is as follows:
$19,597.00[2]
$ 4,338.00[3]
TOTAL $23,935.00
[2] 22% of the relevant partnered rate of social security
[3] $2,169.00 x 2 for J and T B, both of whom are under 13
The Child Support Registrar has assessed the applicant’s exempted income pursuant to section 39, on the basis that he has no relevant dependent children is as follows:
$11,740.00[4]
[4] 110% of the relevant unpartnered rate of social security
There is no dispute that the applicant has no other children, besides R, for whom he has any legal duty to provide financial support.
However, in each of the parties’ cases, this was not the final basis on which their exempt income was calculated. For pursuant to section 48(1)(d) of the Act, because R is in shared care, a further calculation has to be made by reference to the figure provided by section 39(2).
This is the basis of the applicant’s objection to the way the Child Support Registrar has applied the formula in this case. He expressed it thus in the affidavit in support of his application:
“The CSA assessment and the current interpretation of the definition “Relevant Dependent Child” gives rise to the inequity that a child, being the subject of the assessment, in the Shared Care of a parent is not considered a dependent whilst a child, outside of the assessment, where the care of that child is shared with some other person, is considered a dependent.
This inequity is then reflected in the assessment where the Exempted Income Amount for a parent of a Shared Care Child of the assessment is that of having no dependents and the Exempted Income Amount for a parent of a Shared Cared Child having care of another child outside of the assessment, where the care of that child is shared with some other person, is an Exempted Income Amount having dependents.
The difference between the two Exempted Income Amounts, with and without dependents, is significant and in the order of $7,857.00 per annum.”[5]
[5] The applicant’s affidavit filed 15 October 2002 paragraph 14
As I understand it, it is essentially the applicant’s argument that R should be regarded as a “relevant dependent child” pursuant to the definition in section 5 of the Act and as a result that he should be entitled to a larger exemption of income pursuant to section 39.
I reject the argument. R cannot be both an “eligible child” under Part 3 of the Act and at the same time a “relevant dependent child”.
The applicant objects that both he and the respondent gain the addition of the sum of $3,025.00 in the calculation of their exempted income, for the purposes of the application of the formula by virtue of section 39(2) of the Act. The applicant is correct that the sum is calculated by reference to section 39(2) of the Act. He categorises this as illogical and internally inconsistent, as he argues that, for the purposes of section 39(1) R is not considered a relevant dependent child, but for the purposes of section 39(2), he is. The argument is misconceived. Section 39(2) provides only the formulaic basis on which both parties are entitled to an increase in the amount of their exempted income, as shared carers of an eligible child, by virtue of the operation of section 48(1)(d) which reads as follows:
48(1)(d)if the relevant parents are both liable parents of a shared care child or children, the exempted income amount of each parent is to include an additional amount, worked out under subsection 39(2), for the child, or for each of the children”
In this way, the parties being both liable parents of a child in shared care, gain an additional amount of exempt income in respect of R, their eligible child. R is not to be regarded as a relevant dependent child merely because the additional amount of exempt income is calculated pursuant to section 39(2) of the Act.
The character of J and T is intrinsically different to that of R . Their carers, Mr and Mrs B are not entitled to apply for a child support assessment in respect of either of them. Neither J nor T are eligible children. However, their existence is relevant to the essential equity of the application of the formula as recognised by section 39 of the Act. They are relevant dependent children for the purposes of the definition provided by section 5. In my view, it is not possible to argue otherwise.
Thus, the applicant’s argument is flawed. R retains his character as an eligible child and has never been classed as a relevant dependent child. It would be nonsensical if he was so classified.
The applicant argues that J and T are not relevant dependent children of the respondent herself but are rather dependent children of the respondent and Mr B and so are not within the strict interpretation of the definition of relevant dependent children provided by section 5. This argument was considered by Kay J in Rocca v Corelli[6]. In this case, His Honour said as follows:
“In my view it would be manifestly absurd or unreasonable not to make an allowance for the support provided by a liable parent to children living in his or her household where the task of carrying out the role of caring for the child is shared by the liable parent with some other person such as the other parent of the child.
In my view, it is clear from the material I have already referred to that it was the intention of the legislature to enable the exempted income amount of a liable parent to be calculated having regard to other commitments that that liable parent had to support children other than those the subject matter of the application. Accordingly, the expression “the sole or principal provider of ongoing daily care for the child” needs to be read as applying to “the sole or a principal provider of ongoing daily care”.
It would be appropriate in this case, when calculating the liability of the husband to provide child support, for his responsibility for the child C to be factored into his exempted income amount.”[7]
[6] Rocca v Corelli 22 FAMLR 663
[7] Rocca v Corelli (supra) at page 670
Accordingly, by virtue of the operation of section 48(1)(d) of the Act, which picks up the additional exempt income calculated by section 39(2), arising because R is a child in shared care, each party is entitled to an amount of $3,025.00 to be added to their exempt income. In the applicant’s case, this means that his exempt income rises to $14,765.00 and in the respondent’s case, her exempt income rises to $26,960.00. These are the same figures as calculated by the Child Support Registrar in the assessment of the 5th of July 2002.
The assessment will alter if the child support income of either party changes. However, the basis of the calculation of the exempted income amount will not change, other than if there is a change to the base pension rates as provided by reference to section 39.
From this analysis it must follow that the applicant’s application must be dismissed.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 14 March 2003
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