Nason and Nason (Child support)

[2018] AATA 1719

Nason and Nason (Child support) [2018] AATA 1719 (20 April 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/PC013164

APPLICANT:  Ms Nason

OTHER PARTIES:  Child Support Registrar

Mr Nason

TRIBUNAL:Member S Brakespeare

DECISION DATE:  20 April 2018

DECISION:

The tribunal sets aside the decision under review and, in substitution refuses to make a departure determination.

CATCHWORDS

Child support – Departure determination – Income and financial resources of parents – Ground not established – Refusal to make a departure determination - Decision under review set aside and substituted

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

REASONS FOR DECISION

BACKGROUND

1. This review is about whether there should be a departure from the administrative assessment of child support.

2. Mr Nason is the parent liable to pay child support to Ms Nason in respect of their child [named] (the child) who is 10 years old.

3. On 19 June 2017 Mr Nason applied for a change of assessment (a departure application) citing as a ground Ms Nason’s income, property and financial resources.

4. At the time of the departure application Mr Nason was required to pay an annual child support liability of $16,797 which was based on his 2015/16 adjusted taxable income of $263,240 and Ms Nason’s 2015/16 adjusted taxable income of $350.00. The assessment was also based on percentage of care determinations for the child reflecting Ms Nason had 86% care and Mr Nason had 14% care.

5. On 15 September 2017 an officer of the Department of Human Services, Child Support (the Child Support Agency) refused to make a departure determination (the original decision). Mr Nason objected and the objection was allowed on 7 December 2017, resulting in a departure determination in the following terms (the objection decision):

   ·       For the period 19 June 2017 to 31 October 2019 Ms Nason’s adjusted taxable income is varied to $87,765.

6. Ms Nason lodged an application for review of the objection decision with the tribunal on 20 December 2017.

7. A directions hearing was held on 9 March 2018 and Ms Nason and Mr Nason participated by telephone.

8. A hearing was held on 20 April 2018. Ms Nason, Mr Nason and Mr Nason’s representative, [Mr A], all gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with papers (347 pages) in accordance with sections 37 and 38AAA of the Administrative Appeals Tribunal Act 1975.  The tribunal received extra documents from the parties: Ms Nason provided documents folioed A1 to A32 and Mr Nason provided documents folioed B1 to B11. These documents were exchanged with the parties.

9. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews 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 it 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. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. 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:

   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.

7. Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. 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.

9. The range of determinations which can be made include 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 in relation to the child of the provisions of the Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. From 1 January 2017 Ms Nason’s 2015/16 adjusted taxable income of $350 was being used in the administrative assessment. From 1 September 2017 a provisional 2016/17 income of $356 was being used for Ms Nason in the administrative assessment.

3. Mr Nason contends that Ms Nason’s lifestyle is suggestive of a much higher income. He stated that Ms Nason continues to run the business she was running whilst they were a couple and at that time the business was turning over in excess of $120,000 per annum. [Mr A] said that Ms Nason’s expenses, as listed on her Statement of Financial Circumstances, support the objections officer’s findings that Ms Nason has an income in the vicinity of $87,000 per annum.

4. Ms Nason provided a Statement of Financial Circumstances to the tribunal indicating that her income from self-employment in [industry] was $610 per week ($31,750 per annum). Ms Nason said that her accountant arrived at this figure after preparing the profit and loss statement for both businesses in which she is involved. Ms Nason indicated to the tribunal that whilst her personal expenditure is listed as $1,580 per week this is being met by the use of her overdraft (currently fully drawn down at $78,532), credit card debts (almost $30,000) and a personal loan of $10,609. Ms Nason said that she has hardship arrangements in place with [Bank 1] regarding repayment of the overdraft and credit card debt. She also has a vehicle under finance.

5. The profit and loss statement for [Business 1] for the six month period ending 31 December 2017 shows a turnover of $50,063 and a net profit of $15,852. Ms Nason said that the turnover of this business has reduced, as she is spending more hours on the new business and the work she does is now restricted because of the child’s before and after school care needs. Ms Nason said that she employs no staff at [Business 1]; she contracts a bookkeeper to prepare the BAS statements. She refuted Mr Nason’s claims that she employs a personal assistant.

6. The tribunal notes that the expenses for [Business 1] include an amount for office rent of $8,945 which equates to approximately $342 per week. Ms Nason acknowledged that she uses a home based office and at that time her total rent for the home was $550 per week. She said her accountant attributes an appropriate portion of the rent to the business and does likewise for her [specified] motor vehicle.

7. The profit and loss statement for [Business 2] for the six month period ending 31 December 2017 shows total income of $45,359.25 and a net loss of $19,751.23. Ms Nason said that this business is still in its infancy and therefore employs no staff. She does all the deliveries herself at this stage. Ms Nason said that there are five shareholders altogether, and she holds 53% of the shares.

8. The tribunal is satisfied that Ms Nason derives an income (through cash and non-cash benefits) from [Business 1].  Ms Nason’s accommodation, vehicle and a number of other items (computer, mobile phone etc.) are used for both business and personal use and it is difficult to be satisfied as to Ms Nason’s actual income. The tribunal does not accept that Ms Nason’s income is in the vicinity of $87,000 per annum given that the turnover of both businesses is not significantly more than that amount. It is clear that Ms Nason’s personal and business expenses rely heavily on debt funding.

9. The tribunal finds that the figure calculated by Ms Nason’s accountant of $610 per week ($31,750 per annum) is a more likely reflection of the income available to her for her personal use.  Ms Nason has little in the way of assets and significant debt and therefore the tribunal is satisfied that she does not have other property or financial resources which should be taken into account for the purposes of child support.

10. The tribunal finds that if an income for Ms Nason of $31,750 is applied to the child support calculator in place of her 2015/16 income of $350, Mr Nason’s liability (taking into account his adjusted taxable income of $263,240) would reduce by about $600 per annum, which is not a significant reduction. The reduction would be a similar amount when compared to Mr Nason’s 2016/17 adjusted taxable income of $203,249 which was used in the administrative assessment from 1 September 2017.

11. The tribunal therefore does not find that there are special circumstances in this case, as the administrative assessment of child support would not result in an unjust and inequitable determination of the level of financial support to be provided by Mr Nason for the child.

12. The tribunal notes from Mr Nason’s Statement of Financial Circumstances that he has had a reduction in his own income and that the current assessment takes into account (from March 2018) an estimate of income which he provided. The tribunal finds that it is appropriate to use an administrative option (such as estimates) to make an adjustment to the assessment where possible, rather than a departure determination, and that is the appropriate option for Mr Nason in this case.

13. This means that a ground for departure has not been established.

DECISION

The tribunal sets aside the decision under review and, in substitution, refuses to make a departure determination.