Nickens and Nickens (Child support)

[2022] AATA 3683

Nickens and Nickens (Child support) [2022] AATA 3683 (6 September 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC023642

APPLICANT:  Mr Nickens

OTHER PARTIES:  Child Support Registrar

Ms Nickens

TRIBUNAL:Member R Anderson

DECISION DATE:  06 September 2022

DECISION:

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

• The child support liability is to be calculated on the basis of the administrative assessment, based on the most recently lodged tax returns of the parties and/or accepted estimates, until 6 September 2022;
• The adjusted taxable income of Mr Nickens in respect of the period 7 September 2022 to 31 December 2023 is varied to $102,400 and
• The annual self-support amount used in the administrative assessment in respect of Mr Nickens is to be reduced to $21,800 for the period 7 September 2022 to 31 December 2023.

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 set aside and substituted

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

REASONS FOR DECISION

BACKGROUND

1. Mr Nickens and Ms Nickens are the separated parents of [Child 1]. According to records of Services Australia – Child Support (the Agency), the child support assessment was registered on 15 April 2019. The Agency has been responsible for the collection of child support from Mr Nickens since 21 May 2019.

2. The child support liability is generally calculated in accordance with the administrative assessment, as provided in the Child Support (Assessment) Act 1989 (the Act). The calculation is based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO), or the most recent estimate accepted by the Agency. It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent.

3. Following a succession of estimates accepted by the Agency in respect of Mr Nickens’s adjusted taxable income (ATI) for the 2020/21 year, an objections officer of the Agency disallowed Ms Nickens’s objection to the acceptance of Mr Nickens’s estimates on 1 July 2021.  Subsequently, Ms Nickens lodged a departure application (change of assessment) on 8 August 2021 on the basis that the administrative assessment produced an unfair outcome due to the earning capacity, income, property and financial resources available to Mr Nickens (Reasons 8A and 8B). At that time, the administrative assessment to 30 June 2021, based on Mr Nickens’s most recent ATI estimate ($60,123) resulted in an annual rate of child support payable by Mr Nickens to Ms Nickens in respect of [Child 1] in the amount of $5,873. 

4. From 1 July 2021, Mr Nickens’s ATI reverted to being based on his most recently lodged tax return, being $183,658 (2019/20).  The corresponding annual rate of child support payable by Mr Nickens was $21,040.

5. On 29 September 2021, a delegate of the child support registrar found that a ground was established to warrant a departure from the administrative assessment and decided to vary the ATI of Mr Nickens to $91,000 in respect of the period 8 August 2021 to 7 August 2023. On 20 October 2021, Mr Nickens lodged an objection to the decision of 29 September 2021 and on 9 March 2022, an objections officer decided to allow Mr Nickens’s objection. However, the decision was not favourable to Mr Nickens, varying his ATI for the period 8 August 2021 to 7 August 2023 to $150,000.  This decision resulted in child support payable by Mr Nickens in the amount of $17,530.

6. Mr Nickens then lodged an application to this tribunal on 6 April 2022 for an independent review of the Agency’s decision. The matter was heard on 6 September 2022. Both parties participated by conference telephone and gave oral evidence on affirmation.

7. The tribunal considered information in the documents provided by the Agency in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 428, documents lodged by Mr Nickens numbered A1 to A168, documents lodged by Ms Nickens numbered B1 to B140 and information from Centrelink numbered C1 to C7. In addition, Mr Nickens’s recent payslips were discussed at hearing and provided by Mr Nickens after the hearing, numbered A169 to A171.  As the information on the payslips was consistent with the discussion at hearing, they were provided to all parties for information only.

ISSUES

1. When calculation of the rate of child support is based on the usual administrative formula as discussed above, it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. Section 98C of the Act allows for a decision-maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:

   ·whether a ground exists to depart from the administrative assessment; and if so

   ·whether any proposed departure is fair to Mr Nickens, Ms Nickens and [Child 1]; and if so

   ·whether any proposed departure is fair to the public.

CONSIDERATION

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

1. The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act. However, the tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are “out of the ordinary” and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC 90-433).

Reasons 8A and 8B – the earning capacity, income, property and financial resources of each parent

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by Mr Nickens because of the available income, property and financial resources available to either parent. The Act goes on to state in subsection 117(7A) that the decision-maker must have regard to “the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of the parent that do not produce, but are capable of producing, income” and disregard “the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child”.

2. The tribunal considered the circumstances of Ms Nickens and examined her 2020/21 and 2021/22 tax returns.  Ms Nickens gave oral evidence that she has worked on a casual part-time basis throughout the relevant period, firstly in [one role], then as [an occupation 1] and since February 2022 as [an occupation 2].  Prior to 2022, she was studying her [occupation 1 qualification] part-time.  However, due to constraints on the completion date, she is studying full-time this year, including intensive courses during semester breaks to ensure completion by the end of 2022.  Ms Nickens told the tribunal that her placement will be completed by mid-2023, at which time she will have the ability to apply for a full-time [occupation 1] position. 

3. According to her tax returns, no deductions have been claimed.  Her gross wages in 2020/21 and 2021/22 were $8,223 and $29,045 respectively.  In addition, she has been in receipt of parenting payment (single) (PPS) and pension education supplement payments in 2020/21 and 2021/22 in the combined amounts of $26,805 and $13,908 respectively.   Ms Nickens’s entitlement to PPS varies in accordance with her fortnightly reported earnings.

4. It was evident from her [superannuation] statement that Ms Nickens had accessed her superannuation on hardship grounds in September 2021 in the amount of $10,000.

5. With the exception of the additional $10,000 financial resource from her superannuation account in 2021/22, there is no evidence before the tribunal to indicate that the tax returns lodged by Ms Nickens do not provide an accurate reflection of her available income and financial resources and the tribunal finds accordingly.

6. According to Centrelink records, Ms Nickens is currently in receipt of FTB Part A and Part B in the amount of $181 per fortnight. Pursuant to subparagraph 117(7)(b)(ii) of the Act, for child support purposes FTB is not considered to be a part of Ms Nickens’s ATI. FTB is an income-tested benefit. FTB is not defined as a tax-free benefit under section 5 of the Act to be included in adjusted taxable income (paragraph 43(1)(e) of the Act). Therefore, as FTB is not required to be included in her ATI, it is to be disregarded, as clarified at 2.6.17 of the Child Support Guide.

7. The tribunal considered the assets and liabilities of Ms Nickens, who shares her residence with [Child 1].  According to her Statement of Financial Circumstances, Ms Nickens’s residence is valued at $520,000 with a corresponding mortgage balance of $427,485. Her other assets are limited to a bank balance ($1,900), vehicle ($6,000) and household contents ($500). Ms Nickens provided written evidence of outstanding legal fees in the amount of $45,000 and utilities, rates and body corporate bills exceeding $3,000. Given her level of income, Ms Nickens has had no obligation to pay any part of her higher education loan. Therefore, the tribunal calculates the net asset base of Ms Nickens to approximate $53,000 and finds accordingly.

8. In respect of Ms Nickens’s expenses, she told the tribunal that she is struggling to meet the weekly costs of the household and is reliant on vouchers and assistance from various community groups. Her own weekly costs are estimated at $653, or $33,956 per annum.  It is noteworthy that this exceeds the annual costs of self-support used in the administrative assessment for 2022 of $27,063. 

9. The tribunal then considered the circumstances of Mr Nickens.  Ms Nickens told the tribunal that in her view the objections officer’s decision was fair.  She further stated that she considers Mr Nickens’s earning capacity to far exceed the taxable income recorded on his most recently lodged tax return in 2020/21 of $64,938.

10. Mr Nickens told the tribunal that he is a qualified [occupation 3], who in the 2018/19 year was working full-time as [an occupation 3] with a special interest in the [specialty 1] area in a [business 1].  According to Agency records, his ATI in 2018/19 was $219,586.

11. Around the same time as the beginning of the COVID-19 pandemic, Mr Nickens ceased his work at the [business 1] due to differences between he and the [occupation 3] who owned the [business 1].  He told the tribunal that he commenced working as [an occupation 3] through [a specialty business 1], [Service 1] in mid-2020 through his sole trader entity for three days per week. According to Agency records, his 2019/20 ATI was $183,658, the reduction from the previous year reflecting his reduced working hours and the impact of COVID-19. 

12. According to his 2020/21 tax return, his income consisted solely of his sole trader business net earnings in the amount of $64,938, after expenses in the amount of $33,217.  The tribunal questioned some of the expenses, such as the general capped claim for motor vehicle costs ($3,400) and [supplies] exceeding $18,000.  Mr Nickens gave oral evidence that he incurred one-off costs due to setting up a [business] in [a specialty business 1].  As discussed below, Mr Nickens meets only the petrol and insurance costs in respect of the motor vehicle he drives. Consequently, he does not meet all of the motor vehicle costs allowed for by the ATO using the cents per kilometre method. In any event, given that his business is based at the [Service 1], the tribunal does not accept that motor vehicle costs should be an allowable deduction for child support purposes.

13. The impact of COVID-19 was also evident, noting his receipt of jobkeeper payment in the amount of $27,900. The tribunal estimates his net income from his sole trader business in 2020/21 to approximate $68,000 and finds accordingly.

14. Mr Nickens is yet to complete his 2021/22 tax return.  However, the business activity statements and invoices from his sole trader entity to [Service 1] for payment throughout 2021/22 were before the tribunal and reflected gross sales in the amounts of $63,577 and $61,645 respectively.  While Mr Nickens maintained that he was obliged to remit GST on the sales, this was not reflected on the business activity statements.  Assuming that the one-off upfront costs were no longer necessary in 2021/22 and ignoring the motor vehicle expenses due to Mr Nickens‘s workplace being at the [business 1], the tribunal estimates his net income in 2021/22 is likely to be around $60,000 and so finds.

15. The arrangement with [Service 1] later developed into a more formalised employment contract between Mr Nickens and [Service 1] for an annual salary of $120,000, inclusive of the superannuation guarantee contribution, on the basis of a 24-hour week. The employment contract was before the tribunal, signed but not dated.  Based on his payslips, provided after the hearing, it is evident that he only worked a 12-hour week in the first two fortnightly pay cycles from 11 July 2022.  He was paid a gross salary of $4,130.77, or $107,400.00 per annum for the fortnight ending 21 August 2022, representing a 24-hour week, noting that the superannuation guarantee is 10.5% from 1 July 2022. There is no provision for receipt of any benefits in relation to the employment contract.

16. In response to a question from the tribunal, Mr Nickens stated that his work-related expenses will now be limited to insurance and membership subscriptions.  Based on the 2020/21 return, the tribunal estimates the work-related expenses to be in the vicinity of $5,000.  Therefore, the tribunal finds that his expected income in 2022/23 will likely approximate $102,400.

17. Mr Nickens submitted that his future is uncertain in respect of how soon he will be in a position to increase his working hours.  He told the tribunal that it is an unknown and something that he wished he had an answer to.  He is hopeful that he will manage to secure his own residence and be in a position to have a normal relationship with [Child 1] without supervision.  He considers that the stability that will provide will assist him in his work also. Based on his current earnings, a full-time gross annual salary would equate to $179,000.

18. A parent’s earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Act. This section requires the tribunal to consider three matters in determining that the parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment. 

    ·Whether the parent is:

    o   not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or

    o   has reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or

    o   has changed their occupation, industry or working pattern (subparagraph117(7B)(a)(iii)); and

    ·If the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii)); and

    ·If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

19. Clearly Mr Nickens has reduced his working hours since commencing at [Service 1] in mid-2020.  Accordingly, the first criterion is met in accordance with paragraph 117(7B)(a) of the Act.

20. Mr Nickens gave oral evidence that his sleep was affected following [specified] surgery in February 2020 and he also developed anxiety.  He maintains that lack of sleep affected his concentration and his ability to work full-time as [an occupation 3].  He provided a medical certificate from his [treating doctor], [Doctor A], dated 12 May 2022.  [Doctor A] certified that Mr Nickens was receiving treatment for post-traumatic stress disorder (PTSD).  In her opinion, Mr Nickens is unable to work more than three days per week at present due to the high degree of precision and concentration required in his work.  In response to a question from the tribunal, Nickens stated that he is not on any prescription medication for his condition.  He further stated that he has seen a psychotherapist in the past and less regularly now.

21. Ms Nickens questioned the accuracy of the medical certificate and did not accept that Mr Nickens’s earning capacity is impacted by any health condition.  The tribunal is cognisant that the certificate falls short of stating from what date Mr Nickens was impacted by PTSD, nor does it indicate for how long he is likely to be impacted.  There is no evidence before the tribunal to indicate that there is any reason why the evidence of [Doctor A] should not be accepted. 

22. In order to establish that the third criterion is met, the tribunal has to be satisfied that the major purpose behind Mr Nickens’s decision in 2020 to reduce his working hours and move to [Service 1] was to impact the child support liability.  According to Agency records, Mr Nickens had met his child support obligations in a timely manner, paying an annual rate of child support of almost $20,000 in May 2020 to July 2020.  He continued to meet his child support obligations in a timely manner until Mach 2021, albeit the liability was significantly reduced based on his lodged and accepted estimates in respect of the 2020/21 year from 15 July 2020.  Since application of the departure decision in September 2021, Mr Nickens‘s arrears have continued to increase.  

23. In response to a question from the tribunal, Mr Nickens submitted that his reduction in working hours was due to a combination of circumstances that created the “perfect storm”.  In addition to his health condition as a result of anxiety and uncertainty surrounding his access to [Child 1] and all of the separation proceedings, his hours of work at [Service 1] were also impacted by limited room availability.  Furthermore, there was a reduction in [work] due to the COVID-19 pandemic.  He further stated that [online work was] not always conducive to [specialty 1 work].  Mr Nickens told the tribunal that the circumstances surrounding his departure from the [business 1] were difficult.  He and the [occupation 3] who owned the [business] were heading down very different moral and ethical paths. 

24. The tribunal considered the written and oral evidence before it and on balance, is not satisfied that the major purpose behind Mr Nickens’s decision in 2020 to reduce his working hours and move to [Service 1] was to impact the child support liability. Therefore, as the third criterion is not met, all of the required criteria cannot be met and it is not open to the tribunal to determine an earning capacity in respect of Mr Nickens, regardless of whether or not the second criterion is met.

25. For the sake of completeness, the tribunal notes that given Ms Nickens has only increased her taxable income since registration of the child support assessment, impacting the child support assessment in favour of Mr Nickens from 2020/21, the third criterion is also unable to be met in respect of Ms Nickens.  Consequently, it is not open to the tribunal to determine an earning capacity in respect of Ms Nickens.

1. The tribunal considered the assets and liabilities of Mr Nickens, who currently boards with his mother.  According to his Statement of Financial Circumstances, Mr Nickens’s assets consist of a bank account ($261) and household contents ($4,000). He told the tribunal that he sold his car to a friend to access funds and now borrows it back from him for use several days a week. His only liability is outstanding legal fees of approximately $45,000. Therefore, the tribunal finds that Mr Nickens has a negative asset base overall.

2. Mr Nickens’s [superannuation] account was closed following the rollover to Ms Nickens in August 2021 in accordance with court orders made in the Federal Circuit Court of Australia at Melbourne [in] June 2021. It was evident from the [superannuation] statements provided that he also accessed $10,000 under the hardship provisions on two occasions – once in April 2020 and again in July 2020.  He told the tribunal that he was in the process of trying to reactivate his account to accept the employer contributions from [Service 1].

3. In respect of Mr Nickens’s expenses, he told the tribunal that he pays his mother $100 per week in cash and they each purchase their own food.  Mr Nickens incurs no expenses for costs such as rates and utilities and meets only the fuel and insurance costs in respect of the motor vehicle.  However, in the period May 2021 to May 2022, Mr Nickens incurred court ordered costs for supervision and related reports averaging $60 per week. Furthermore, until mid-2022 he also incurred quarterly costs in the amount of $1,650 for court ordered [activities]. In the tribunal’s view this makes up for his reduced household costs so that it remains appropriate for him to be assessed using the self-support amount used in the administrative assessment.  In 2022, this amount is $27,063.

4. Excluding the court ordered costs which have recently ceased and some discretionary spending the average weekly costs, as estimated by Mr Nickens, currently approximate $420, or $21,840. It is noteworthy that this is now significantly less than the annual costs of self-support used in the administrative assessment for 2022 of $27,063.

5. Based on the findings above, it is clear that the available income and financial resources of Mr Nickens have reduced significantly from the 2018/19 and 2019/20 years, which were used in the administrative assessment prior to lodgement and acceptance by the Agency of his first estimate in respect of 2020/21 on 15 July 2020. As discussed at hearing, the administrative assessment provides for a reconciliation process whereby the child support assessment is amended in line with the paying parent’s actual ATI following lodgement of the relevant tax return.  In this case, this has occurred in respect of the 2020/21 year.  Due to the relevant estimates exceeding the actual ATI of Mr Nickens, the reconciliation resulted in no change to the child support assessment.  Regardless, based on the tribunal’s findings, Mr Nickens’s child support liability was under-assessed in 2020/21.

6. Prior to lodgement of his 2020/21 tax return being applied to the administrative assessment on 1 September 2021, the calculation reverted to using the income recorded on his 2019/20 tax return in the amount of $183,658. Based on the tribunal’s findings, this resulted in Mr Nickens’s child support liability being over-assessed. Overall, the tribunal estimates that Mr Nickens has been over-assessed in the period 1 July 2020 to 31 August 2021.

7. Commencing 1 September 2021, Mr Nickens’s ATI was replaced with $64,938, based on his 2020/21 tax return. Based on the tribunal’s findings above in respect of the actual income and financial resources available to Mr Nickens in 2021/22 and accounting for his reduced costs of self-support since no longer incurring supervision costs (February 2022) and [specified] costs (June 2022), it is evident that Mr Nickens’s child support liability has also been over-assessed in the period 1 September 2021 to 30 June 2022.

8. It is also clear that the available income and financial resources of Mr Nickens have increased significantly since July 2022.  Prior to lodgement of his 2021/22 tax return the 2020/21 tax return will form the basis of his adjusted taxable income used in the administrative assessment in 2022/23, being $64,938. Based on the tribunal’s findings above in respect of the actual income and financial resources available to Mr Nickens, in addition to his reduced costs of self-support, the tribunal calculates that in the period 1 July 2022 to 6 September 2022, Mr Nickens has been under-assessed. Overall, the tribunal calculates that Mr Nickens’s child support liability has been over-assessed by around $1,500 ($686 per annum) from 1 July 2020 to 6 September 2022. 

9. Going forward, an under-assessment of child support payable by Mr Nickens is in the vicinity of $6,000 per annum and will likely continue from 7 September 2022 until lodgement of Mr Nickens’s 2022/23 tax return.

10. Accordingly, the tribunal finds that the administrative assessment does not produce an unfair outcome to 6 September 2022.  As such, the tribunal is satisfied that special circumstances do not exist in this case in respect of the period to 6 September 2022.  However, in respect of the future child support assessment, the tribunal finds that special circumstances do exist and as such, the tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.  

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Nickens, Ms Nickens and [Child 1] to make a particular departure determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children 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 have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

1. Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Nickens and Ms Nickens have the primary duty to financially support [Child 1] and contributing to her costs should take priority over all other costs other than their ‘necessary’ costs of self-support. The tribunal is satisfied that neither parent has a legal duty to support any other person.

2. In determining the proper needs of the children, subsection 117(6) of the Act also requires the tribunal to have regard to the manner in which the parents expected the child to be cared for, educated and trained as well as a consideration of any special needs of the child. It was common ground that [Child 1] attends a government school and is currently in [grade] at school.  Ms Nickens gave oral evidence that [Child 1] is in good health and has no special needs.  She estimated her average weekly household expenses to be $625 or $32,500.  However, this included $100 per week of child care costs which as discussed at hearing, are more likely to be in the vicinity of $77 per week and discretionary spending approximated $45. Therefore, based on the estimates of Ms Nickens, the tribunal estimates the necessary costs of [Child 1] to approximate $557 a week, or $29,000 per annum,

3. Based on the estimated current income benefits and resources available to Mr Nickens and Ms Nickens discussed above, the Costs of the Children Table estimates that the average costs of [Child 1] would likely approximate $14,200. This is less than half of the costs estimated by Ms Nickens.

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

1. The tribunal found earlier that Mr Nickens likely had access to income, benefits and financial resources in 2020/21 and 2021/22 of approximately $78,000 ($68,000 + $10,000) and $60,000 respectively. 

2. In addition, Mr Nickens’s costs of self-support at around $21,800 are significantly lower than the amount allowed for in the relevant administrative assessments, impacting the annual rate of child support from mid-2022. 

3. Going forward, there is no reason to expect a change in Mr Nickens’s employment, other than perhaps an increase in hours if and when his health allows.

4. The tribunal found that it is not open to it to determine an earning capacity decision in respect of either party.

5. In respect of Ms Nickens, her income consists largely of government payments and a small amount of casual part-time earnings.  The tribunal found that her tax return provides an accurate reflection of her available income, benefits and financial resources in 2020/21, being $35,028.  In respect of 2021/22, the tribunal finds that Ms Nickens’s income and financial resources consist of the income recorded in her tax return of $42,953 and $10,000 from her superannuation account, totalling $52,953. As her PPS payments decrease in accordance with any increased earnings and given her majority care of [Child 1], it is unlikely that there will be a timing issue that will significantly impact the child support assessment if and when her earnings increase following completion of her [occupation 1] placement in mid-2023.

6. In respect of an asset base, while Ms Nickens has a more favourable asset base, as noted above, the division of assets has been appropriately dealt with in the Federal Circuit Court [in] June 2021.

Conclusion

1. After consideration of the income, resources, benefits and assets together with the commitments and liabilities of the parents and the needs of [Child 1], the tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Act. The tribunal may make one of the determinations set out in section 98S of the Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support.

2. It is clear that Ms Nickens requires the assistance of Mr Nickens to meet the needs of [Child 1]. It is also open to Ms Nickens to prioritise the ‘necessary’ needs of [Child 1], noting that she incurs discretionary expenses of around $45 per week.

3. The tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). In this case, the tribunal is limited to considering any backdating to February 2020.  Ms Nickens expressed that she has no desire for the tribunal to backdate any departure decision beyond her application date of 8 August 2021. 

4. After consideration of all of the circumstances, in the tribunal’s view, the overall administrative assessment from 1 July 2020 to date of hearing on 6 September 2022 of Mr Nickens being over assessed does not produce an unjust or inequitable outcome. In particular, considering that Ms Nickens has been and remains, the sole carer of [Child 1] for child support purposes. 

5. However, going forward, while the administrative assessment will continue to use Mr Nickens’s most recently lodged tax return of approximately $65,000 to calculate the ATI used in the administrative assessment, the tribunal is satisfied that the annual rate of child support payable by Mr Nickens to Ms Nickens in respect of [Child 1] will be significantly under-stated at less than $6,500 per annum.  This is in comparison to the child support assessment using an ATI for Mr Nickens of $102,400 and allowing for reduced costs of self-support, resulting in an annual rate of child support payable by Mr Nickens in excess of $12,500.

6. In relation to an end period, the tribunal is cognisant of the preference of the parties for a degree of certainty going forward. The tribunal is also cognisant of the uncertainty in respect of the health of Mr Nickens and his ability to work increased hours. In contrast, the circumstances in respect of Ms Nickens are reasonably stable until completion of her [occupation 1] placement in mid-2023.  Both parties expressed their preference for the tribunal not to extend the departure decision beyond the end of next year. 

7. Accordingly, the tribunal proposes not to depart from the administrative assessment until 7 September 2022 and to end the departure decision on 31 December 2023. At this time the 2022/23 financial circumstances of the parties will be available for scrutiny and the employment prospects better known in respect of both parties.

8. The tribunal proposes to vary the ATI of Mr Nickens to $102,400 from 7 September 2022 to 31 December 2023. Furthermore, the costs of self-support in respect of Mr Nickens are to be reduced to $21,800 for the period 7 September 2022 to 31 December 2023. This enables the formula to account for any future changes in care of [Child 1]. 

9. According to Agency records, Mr Nickens’s child support arrears at 30 April 2022 were $8,297.  Based on the tribunal’s proposed decision, whereby the administrative assessment will remain in place until 6 September 2022, the tribunal calculates that Mr Nickens’s arrears will reduce by more than $7,000 on 30 April 2022. Furthermore, there is a possibility of a position of overpayment by 6 September 2022 of more than $2,500.  However, this will only be the case if Mr Nickens has complied with his child support obligations on the basis of the objections officer’s decision since 1 May 2022.  Given the straitened financial circumstances of Ms Nickens, the tribunal is cognisant of the possible issue of creating a position of overpayment.  However, in the circumstances, given that both parties were put on notice of a possible change in the child support liability from 8 August 2021, the tribunal considers it appropriate in this case.

10. Subsection 117(4) of the Act requires the tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.

11. Mr Nickens acknowledged that an annual rate of child support in the vicinity of $6,500 is unfair and would cause hardship for Ms Nickens and [Child 1].  He further stated that if the annual rate of child support were in the vicinity of $12,500, Ms Nickens and [Child 1] would be less likely to suffer hardship. Mr Nickens considers an increase in child support payable by him will cause hardship as it will delay his capacity to secure a residence on his own.

12. Ms Nickens submitted that any increase in child support payable by Mr Nickens would not cause him any hardship due to the support he receives from his mother.  It is noteworthy that Mr Nickens’s mother has no legal duty to support him or to contribute to any costs in respect of [Child 1].

13. In the tribunal’s view, based on a weekly net income of more than $1,500, Mr Nickens’s estimated weekly personal expenses of $880 and his average weekly work-related expenses of less than $100, a weekly rate of child support payable by Mr Nickens in the vicinity of $240 will not cause him hardship.  Sufficient surplus remains for him to also meet his private health insurance premiums.

Issue 3 – Is it otherwise proper to make a particular departure 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.

2. Ms Nickens in receipt of FTB Part A and Part B. As a sole parent, a change in the child support payable by Mr Nickens will have no impact on her entitlement to FTB Part B. In respect of FTB Part A, the decrease in child support payable by Mr Nickens may result in an increased entitlement for Ms Nickens and a cost to the public purse. In the circumstances, the tribunal considers that it is otherwise proper to make the particular proposed determination.

3. It is open to either party to lodge a further change of assessment application should the future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

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

• The child support liability is to be calculated on the basis of the administrative assessment, based on the most recently lodged tax returns of the parties and/or accepted estimates, until 6 September 2022;
• The adjusted taxable income of Mr Nickens in respect of the period 7 September 2022 to 31 December 2023 is varied to $102,400 and
• The annual self-support amount used in the administrative assessment in respect of Mr Nickens is to be reduced to $21,800 for the period 7 September 2022 to 31 December 2023.