Naff and Caetano (Child support)

[2020] AATA 4285

Naff and Caetano (Child support) [2020] AATA 4285 (16 June 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC017795

APPLICANT:  Mr Naff

OTHER PARTIES:  Child Support Registrar

Ms Caetano

TRIBUNAL:Member T Bubutievski

DECISION DATE:  16 June 2020

DECISION:

The decision under review is varied such that:

a)Ms Caetano's adjusted taxable income is set at $45,000 from 16 June 2020 until 30 September 2020; and

b)Ms Caetano’s adjusted taxable income is set at $85,709 from 1 October 2020 until 31 May 2021.

All other aspects of the decision under review remain unchanged.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – benefits derived from business – decision under review varied

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Naff and Ms Caetano are the parents of a son. The case was registered with the Department of Human Services – Child Support (the Department) for collection from 6 September 2011.

2. Mr Naff made an application to the Department for a change to the child support assessment. On 10 September 2019 a departmental delegate decided to depart from the administrative assessment due to Ms Caetano's income not being correctly reflected in the child support assessment. The decision set Ms Caetano’s adjusted taxable income at $105,000 for the period 1 December 2018 to 31 December 2021.

3. Mr Naff objected to this decision, and on 6 November 2019 a departmental delegate of the Child Support Registrar partly allowed the objection. As a consequence of the objection decision, the original decision was varied as follows:

   ·   For the period 22 November 2017 to 30 June 2018 Mr Naff’s adjusted taxable income was set at $110,606 and Ms Caetano’s adjusted taxable income was set at $134,578;

   ·   For the period 1 July 2018 until 31 August 2019 Mr Naff's adjusted taxable income was set at $120,112;

   ·    For the period 1 July 2018 to 30 November 2020 Ms Caetano’s adjusted taxable income was set at $85,709.

4. On 8 November 2019 Mr Naff made an application for review by the Social Services and Child Support Division of this tribunal. The tribunal held a telephone directions hearing on 18 February 2020 and issued Directions, with which Mr Naff complied, but Ms Caetano did not. Ms Caetano sought extra time to comply due to the impact that COVID-19 had had on her business. The tribunal granted an extension for compliance and Ms Caetano largely complied with the Directions.

5. The matter was heard by the tribunal on 16 June 2020. Mr Naff and Ms Caetano both attended the hearing by telephone and gave sworn evidence. The Child Support Registrar did not seek leave to appear. Both parties and the tribunal had access to documents numbered 1 to 717 from the Department, and after all submissions, documents A1 to A50 from Mr Naff and B1 to B186 from Ms Caetano.

ISSUES

1. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Assessment Act). This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided, the income of each parent and the costs of the children.

2. The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the administrative assessment under Part 6A of the Assessment Act. The application for departure is authorised by section 98B of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. In order to depart from the administrative assessment the Registrar, and the tribunal standing in place of the Registrar, must be satisfied:

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

   (ii)that it would be:

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

   (B)otherwise proper;

   to make a particular determination under this Part;

3. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Assessment Act.

4. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Assessment Act. Section 98S permits a range of determinations, including varying the annual rate of child support payable or the adjusted taxable income of the parties.

Issue 1 – Does a ground exist to depart from the administrative assessment?

Does a ground exist to depart from the administrative assessment under Reason 8A?

1. Mr Naff sought a departure from the administrative assessment on the ground that the administrative assessment of child support does not reflect Ms Caetano’s income, property and financial resources. This is the ground reflected in subparagraph 117(2)(c)(ia) of the Assessment Act.

2. Mr Naff was of the view that Ms Caetano is not being honest with her income and her taxable income is much less than she actually receives from her businesses. He said that as a consequence, he was assessed to pay more child support than he should. Mr Naff said that this was evidenced by the fact that Ms Caetano’s 2017/18 taxable income was amended three times for the purpose of her securing a home loan, increasing from $75,192 to $134,578. He felt that if she was able to manipulate her income to such an extent the income amount maintained for her in the child support assessment cannot possibly be right. Mr Naff told the tribunal that he thought her income would be in the vicinity of $150,000 per annum. Mr Naff told the Department that he believes that a significant part of Ms Caetano’s income is received in cash.

3. Mr Naff did not believe that the mortgage for Ms Caetano’s recently purchased property could be serviced on her declared income. He noted that her 2019 income tax return declares a taxable income of approximately $24,000, but her bank statements show that in that year she paid $35,000 in rent alone. Mr Naff also said that in his opinion the bank statements show around $65,000 of discretionary spending over and above the necessary expenses, including overseas travel. He said that her declared expenses total $96,000.

4. He noted that Ms Caetano has declared a gross income from her business of $1,200 per week, but the bank statements show that this is a net amount, as $200 per week is paid for tax separately. The tribunal confirmed that this is the case, as it is clearly shown in the business bank statements.

5. The tribunal asked Mr Naff if he was dissatisfied with the part of the objection decision which set Ms Caetano’s income at $134,578 for the period to 30 June 2018. Mr Naff said that as long as the assessment was in the vicinity of around $150,000 per annum, he felt that would be right. Mr Naff said that he does not object to paying child support and is up to date with his payments, but he wants to pay the right amount.

6. Mr Naff said that he wanted Ms Caetano’s income to be set for at least five years, as he was of the opinion that she would “manipulate” her income again within the next 18 months as she would need to refinance her mortgage.

7. Ms Caetano operates [businesses] under the business name “[Business 1]”. She has been a sole trader for 11 years. The tribunal asked Ms Caetano about the manner in which she was paid from the business. Ms Caetano confirmed that she tries to take $1,200 per week as an “owner’s wage”. She said that this had been the case for some time. The tribunal notes that this amount, plus the additional $200 per week which is paid before taxation would equate to an annual income of $72,800. The tribunal asked Ms Caetano how this related to her taxable income for the 2018/19 financial year of $23,685. Ms Caetano confirmed that part of the income she takes would be considered drawings, rather than wages, and would therefore show in the balance sheet of the business (rather than in her personal taxable income) as drawings against her capital in the business or as a Division 7A loan. Ms Caetano said that she has been doing the bookkeeping for the business herself for the past couple of years and although she could produce a balance sheet from MYOB, she doubted that it would be accurate. She agreed that her taxable income is not reflective of her total benefits from the business.

8. Ms Caetano said that her car is also paid for by the business. She has no finance on the vehicle, but it is heavily covered in signage so it is claimed as a business expense and she does get fuel and tolls paid for by the business. Her phone, which she also uses for personal use, is paid for by the business at a total cost of $79 per month.

9. In response to Mr Naff’s specific claims in relation to her rent and her travel expenses Ms Caetano said that she received a property settlement. Part of the settlement included a $35,000 redraw from the property mortgage to pay her rent. She also received a lump sum payment, which she did use for travel. Ms Caetano said that her property matters are not yet concluded, with the final hearing being in September 2020, so she expected she would receive more money from this.

10. The tribunal asked Ms Caetano about several personal expenses which appear in the business bank accounts such as babysitting, Uber trips, and what appears to be personal legal expenses. Ms Caetano confirmed that such expenses were sometimes paid through the business but then when the accounts were done they were allocated to her as drawings.

11. Mr Naff has also made claims of Ms Caetano having cash income from her business. The tribunal asked Ms Caetano about payments made from an organisation called [Name 1]. Ms Caetano said that this organisation manages lump-sum payments, such as a memberships paid in advance for a year, which were not able to be done through the usual Ezydebit arrangement. The tribunal could see no evidence of Ms Caetano having cash income in either her personal or business bank statements, and Ms Caetano categorically denied this. This is a claim which is made frequently in this forum, and one which is extremely difficult to substantiate. In the absence of any specific evidence about the receipt of cash payments the tribunal accepts that Ms Caetano does not receive cash through her business.

12. There is no doubt that Ms Caetano’s taxable income is not reflective of the financial resources available to her through her business entities. In addition to anything she may take as taxable income she also takes drawings of capital or loaned funds; the business pays her vehicle expenses; the business pays for a mobile phone of which she has personal use; and it also pays additional personal expenses which then appear in the accounts as more drawings. In the 2017/18 financial year Ms Caetano did indeed have three taxable incomes. Firstly, her taxable income was $98,797. It was then amended to $75,192 and was at this amount at the time that Mr Naff made his application to change the child support assessment. It was then further amended to $134,578 in conjunction with Ms Caetano seeking finance for a property purchase. This is a significant variation and indicates the degree of control that Ms Caetano has over the proportion of her income that she takes as taxable income, as opposed to non-taxable income.

13. The absence of a balance sheet for the business complicates any determination about the quantum of the benefits being received by Ms Caetano at any time. Nonetheless, at the time that the child support assessment was proceeding on the basis of Ms Caetano’s financial resources being $75,192, her financial benefits from her business were in fact much more than this. The fact that she was then able to declare a much higher taxable income for the same financial year when it suited her to do so is a demonstration of the divergence between her taxable income and her available financial resources.

14. The Family Court has established the principle that in the case of self-employed parents, their taxable income may not be an accurate reflection of their earning capacity and financial resources. Several cases in particular have examined this issue closely, including Scott and Scott (1994) FLC 92-457, and Carey and Carey (1994) FLC 92-489. The Courts consider that self-employed people are able to derive additional benefits from their business in addition to wages. They also have greater control over the structure of their finances than an employee receiving salary or wages, and so may be able to use the income of the business in ways other than paying wages. Expenses and deductions which may be legitimate for tax purposes may not be considered to take precedence over child support obligations. Under child support law, other than the basic expenses necessary for self-support there are very few expenses which take precedence over the support of children. There is considerable divergence between the taxation system, which is intended to provide general support for many, and the child support system, which is intended to provide specific support for the children of relationships.

15. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary. The tribunal is satisfied that the significant difference between Ms Caetano’s taxable income and her financial resources amount to a special circumstance. Mr Naff was required to pay child support of $10,473 per annum when Ms Caetano’s income was $75,192, but this reduces by more than half, to $4,008 per annum, once an income amount of $134,578 is used. The tribunal finds this ground established. As a ground is established, the tribunal must also consider whether it is just and equitable, and otherwise proper, to change the assessment. This involves a consideration of all the circumstances of the parents, including a fairly detailed assessment of both parents' income, financial resources and financial obligations.

Issue 2 – Would departure from the administrative assessment be just and equitable?

1. As the tribunal is satisfied that a ground has been established to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable, the tribunal must have regard to the following matters set out in subsection 117(4) of the Assessment Act:

   (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.

2. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. All children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute. The tribunal only has to consider the factors set out in subsection 117(4) of the Assessment Act to the extent they are relevant in any particular case (see Gyselman).

3. In cases such as these, it is not the tribunal's role to conduct a forensic accountancy examination. The tribunal only needs to be broadly satisfied that the person has income and financial resources that are reasonably reflected in the assessment. The income does not need to be correct down to the last dollar. 

4. There is no doubt that Ms Caetano requires as much child support from Mr Naff as he is reasonably able to pay to her. She has all the usual expenses to be expected in the support of herself and her children. Their son attends a public school and has no special needs.

5. The assessment which has been amended goes back to 22 November 2017, but her circumstances have changed over time. An examination of her business structure shows that she was in a better financial position in 2017/18 than she has been since. Ms Caetano has three business structures. One is a sole trader business which operates the [Business 1] studio at [Suburb 1]. The second is a Pty Ltd company, [Business 2]. Ms Caetano says that she has a business partner in this venture. The third entity is [Business 3]. Mr Naff was concerned about this entity and the fact that it may hold resources under the name of [Name 2] which were being “hidden”. Ms Caetano explained that this entity existed solely for the purpose of holding the lease for a previous studio at [Suburb 2] and is about to be deregistered. Mr Naff provided the tribunal with the ABN for this entity and following the hearing the tribunal was able to confirm through ASIC that Ms Caetano’s evidence about [Business 3] appears correct. This just leaves “[Business 1]” and “[Business 2]”.

   [Business 1] ([Suburb 1] – Sole Trader)

6. Ms Caetano said that she had originally operated a studio at [Suburb 2] but had moved to [Suburb 1] because the rent was cheaper. She said that she had about 220 clients at [Suburb 2], but only got up to about 99 clients at [Suburb 1], so although the rent had been cheaper she had lost a lot in revenue. In hindsight this has not turned out to be a good business move, but she did not know this at the time. Ms Caetano said that the business had been going reasonably well by July 2019, however, and she made the decision to open [Business 2]. The fit out and operating costs for this second venture was funded by [Business 1], which took on a loan of $40,000 and also used a credit card for purchases. This money was used to pay rent arrears, wages and other business expenses until her property settlement came in. When she got the settlement money she cleared a lot of the [Business 1] debts and used the rest as a deposit on a home for herself and her children. The business bank statements show a loan repayment of $138 per week in relation to the $40,000 loan. Ms Caetano said that [Business 2] will need to repay this to [Business 1]. Ms Caetano’s credit card, which was used for both [Business 1] and [Business 2] shows a relatively static balance of between $7,000 and $8,000 for the entire period between 23 September 2019 and 23 March 2020.

7. Ms Caetano’s business has been heavily affected by the COVID-19 pandemic. Both studios have been closed. Ms Caetano said that the effect of this began to be felt by her business in January and February [2020]. The Business Activity Statements for [Business 1] show total sales of $81,724 in the July to September 2019 quarter; $62,053 in the October to December 2019 quarter and $47,265 in the January to March 2020 quarter. Figures are not yet available for April to June 2020, but the studio has been closed. Ms Caetano confirmed that she had been able to move a lot of her content online, but 90% of her clients have claimed financial hardship and cancelled their memberships. A “handful” of clients are making a donation of $20 per week. Ms Caetano said that the income of [Business 1] is now around $700 per week from online content. She is also receiving JobKeeper for herself and the two staff members who have qualified for it.

1. Although the studio could reopen from 13 June 2020, Ms Caetano said that most [clients] are still not yet confident enough to attend [the business], so [the business] would not resume until at least 13 July 2020. In the meantime, she has just given back the keys to the premises at [Suburb 1] as she has been unable to afford the rent. She intends to seek new premises.

   [Business 2]

2. This business has no income at all at the present time. As none of the staff had been employed for more than a year they were not eligible for JobKeeper. The studio is closed. As it was just starting up, [Business 2] only had about 20 members before the pandemic. Ms Caetano said that paying rent on two studios while the businesses have been closed has been “catastrophic”. She does intend to re-open this studio on 13 July 2020.

3. Ms Caetano said that prior to the pandemic she was paying herself $1,200 per week (plus tax), but now she just takes what is left in the bank account. She still has about $37,000 of her property settlement money left and is using that to supplement her income.

4. Mr Naff acknowledged that Ms Caetano’s financial position would have been affected by COVID-19, but he felt that the reduction in her income would only be of a short-term nature.

5. When considering Ms Caetano’s income for the objection decision, the objections officer took account of Ms Caetano’s declared taxable income for the 2017/18 financial year of $134,578. That particular tax return showed total business income of $323,816, which was consistent with the Business Activity Statements lodged for that year. The officer accepted that the declared taxable income was a reasonable income on which to assess Ms Caetano for the 2017/18 financial year. This equated to 41% of the total business income and appears to have taken into account every benefit Ms Caetano receives from her business, so that her income looked as good as it possibly could for the purpose of securing finance. This income was declared to the Australian Taxation Office and to Ms Caetano’s mortgage provider, and the tribunal also considers that it is reasonable to assess her on this income for the 2017/18 financial year. The assessment of Ms Caetano’s income for the period 22 November 2017 to 30 June 2018 appears correct.

6. For the 2018/19 period the objections officer annualised Ms Caetano’s business income from her Business Activity Statements to $213,437, and then attributed 41% of this to Ms Caetano as income - $87,509.

7. An examination of Ms Caetano’s bank statements shows that in 2018/19 she paid herself an “owner’s wage” of $1,000 per week. Sometimes there was not enough money to do this. There is a break in the bank statements provided to the tribunal, but between 1 July 2018 and 30 November 2018 Ms Caetano paid herself $16,350 net. Some weeks she only took $500 or $750. Between 1 March 2019 and 30 June 2019 she paid herself $13,800. Again, some weeks there was not enough money to pay the full $1,000. In that eight-month period she paid herself $30,150. Allowing for some variation from the net amount of $1,000 per week in the remaining four months of the year Ms Caetano appears to have paid herself around $46,000 in 2018/19. This is equivalent to a gross income of around $57,336. In addition to this, the business paid a number of personal expenses including car, phone and family law expenses.

8. In setting Ms Caetano’s child support income the objections officer has made a transcription error, and the decision sets Ms Caetano’s child support income at $85,709, not $87,509. The assessment has proceeded on the basis of the lower income amount. Allowing for all the extra personal expenses (legal fees, babysitting, Uber trips, vehicle and phone expenses, groceries) that can be seen in the business bank accounts, it does seem possible that the total financial resources available to Ms Caetano in the 2018/2019 financial year were in the vicinity of $85,709, but they do appear unlikely to have been higher. The tribunal cannot find any basis on which to increase Ms Caetano’s child support income for that period.

9. This brings the tribunal to an examination of the current financial year. The Business Activity Statements show total turnover for the first three quarters of the year of $191,042. Ms Caetano’s evidence is that she is generating about $700 per week through her online programs, which would give an extra $8,500 in income for the final quarter. She has also received JobKeeper payment for herself and two employees, a further $27,000.

10. The business bank statements do demonstrate the fall in profitability, with January and February 2020 showing a shortfall of income over expenses of about $7,800, even allowing for Ms Caetano transferring $2,000 from another account to try and cover rent payments. There is no doubt that her financial circumstances changed from January 2020, and this change will continue for some time as Ms Caetano rebuilds her membership base after the pandemic.

11. The business bank statements show that Ms Caetano was able to continue to pay herself $1,200 per week, plus $200 per week tax, until 13 March 2020 (for 37 weeks, a total gross of $51,800). The next week there were insufficient funds and Ms Caetano would only have had JobKeeper from 23 March 2020 (14 weeks at $750 per week - $10,400). At this stage, this is due to continue until September 2020. It appears that the business has no profit at present, and in fact cannot meet its expenses, hence Ms Caetano is giving up the lease at [Suburb 1].

12. Allowing for the additional financial benefits Ms Caetano receives from the business, until 13 March 2020 it would have been reasonable to continue to assess her income at $85,709. The turnover for the July to September 2019 quarter was good, and if it had stayed at this level, Mr Naff assertions about Ms Caetano’s income would be close to correct. The turnover did not stay at this level, and in the circumstances the tribunal finds that it would be unjust to assess Ms Caetano’s income at an income higher than $85,709.

13. In fact, from 20 March 2020 it is apparent that Ms Caetano’s income has reduced significantly, and it would also be inequitable to assess her on an income of $85,709. JobKeeper is only $39,000 per annum. Even allowing for some extra benefits from the business (which is not in a position to pay much extra) it would be inequitable to assess Ms Caetano as having an income of more than $45,000. Given the current circumstances, the tribunal finds that this assessment should be correct until 30 September 2020, at which time the previous assessment should be reinstated.

14. Ms Caetano is expecting more property settlement funds from her previous partner. She does have some credit card debt and legal bills, but she also has some savings from her property settlement money. The home she has purchased is relatively expensive, but her mortgage repayments are not overly high at present as she is on an introductory deal. She is in a superior assets position to Mr Naff, but at present her income is sorely depleted.

15. While Mr Naff wanted the assessment set for a period of five years, the tribunal considers that this would be unreasonable at the present time, as there is considerable uncertainty about how long it will take Ms Caetano’s businesses to recover from the pandemic. She appeared confident that they would recover and that within eighteen months she will be in a better financial position. It would be prudent to take a fresh look at her situation before that time.

16. In terms of Mr Naff’s income, the objections officer set Mr Naff’s income at $110,606 for the period 22 November 2017 to 30 June 2018. This was Mr Naff’s actual adjusted taxable income for the period and the tribunal accepts that the substitution of this amount into the assessment was reasonable. Mr Naff’s 2018/19 actual adjusted taxable income was $120,112, and this was also substituted into the assessment. Mr Naff agreed that his work supplies him with a vehicle, which he does occasionally use for private use if it is more convenient that using his own car. He also has personal use of a mobile phone but does have his own separate personal phone. The tribunal was satisfied that any allowances in this respect would be fairly negligible, and as Mr Naff’s taxable income is over $120,000 per annum would have a minimal effect on the child support assessment. The tribunal made no further changes in this regard, but the issue should be considered each time the matter is looked at in case there have been any significant changes.

17. Mr Naff said that he expects his current year taxable income to be in the vicinity of $120,000, so there is no necessity to make any alterations to this. His payslips show that his salary is $103,779.52 per annum, but he does overtime, which increases his wage. He is currently doing some overtime, but he does not expect this continue. He has a mortgage and around $7,000 in savings. Other than that, he has no significant assets and his car is fully financed. He has a new family and no doubt meets his financial liability for his son with Ms Caetano with some difficulty. The tribunal understands that Mr Naff wants to make sure that he is paying the correct amount of child support, but in this case there is an issue of timing as Ms Caetano’s businesses have been so heavily affected by the pandemic.

18. The Department’s records show that Mr Naff has been able to pay the child support assessment. He is not behind in his child support payments. This demonstrates that he has the capacity to pay child support at the current rate, but a higher rate may cause him some financial stress. The tribunal can see no benefit in backdating any change to the assessment to create arrears of child support for Mr Naff to pay. This may cause him financial hardship as he does have limited resources. As a consequence of this decision he will be required to pay a higher rate of child support for a short period and he may require these resources to do so.

19. The tribunal has decided that the determinations made in the objection decision about the incomes of both parties are largely correct. It proposes only to change Ms Caetano’s adjusted child support income to $45,000 from the date of the hearing on 16 June 2020 until 30 September 2020. This gives their son some additional support from Mr Naff during a period when Ms Caetano will not be able to support him as well as usual. From 1 October 2020 the current assessment of Ms Caetano’s income of $85,709 should be reinstated. The current determination ends on 30 November 2020. That does not seem to be enough time in the current circumstances to determine what is happening with Ms Caetano’s business income. The tribunal proposes to extend the determination until 31 May 2021. By that time the Business Activity Statements should be available for two full quarters of relatively normal trading and it will be possible to see how Ms Caetano is progressing.

20. The tribunal is satisfied that it would be appropriate to make this change as long as it is otherwise proper to do so.

Issue 3 – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the tribunal is to determine whether it is “otherwise proper” to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the tribunal to take into consideration the nature of the duty of a parent to maintain a child, and the effect that any change to the assessment would have on the rate of any Centrelink benefits being received by the parties or the children.

2. The child support law recognises that each parent has a primary duty to maintain their children. In the case that they cannot, the government may assist in the form of family assistance payments. This decision will reduce the amount of family assistance Ms Caetano receives and it is therefore no drain on the public purse. The tribunal is satisfied that a departure from the assessment will better reflect the financial resources that are available to both parents and ensure that the level of financial support provided by the parties for their son is determined according to their capacity to provide that support. It is therefore otherwise proper to depart from the administrative assessment in this matter. 

DECISION

The decision under review is varied such that:

a)Ms Caetano's adjusted taxable income is set at $45,000 from 16 June 2020 until 30 September 2020; and

b)Ms Caetano’s adjusted taxable income is set at $85,709 from 1 October 2020 until 31 May 2021.

All other aspects of the decision under review remain unchanged.