Noakes and Noakes (Child support)

[2022] AATA 3685

Noakes and Noakes (Child support) [2022] AATA 3685 (31 August 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/AC023052

APPLICANT:  Mr Noakes

OTHER PARTIES:  Child Support Registrar

Ms Noakes

TRIBUNAL:Senior Member K Dordevic

DECISION DATE:  31 August 2022

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that Mr Noakes’ adjusted taxable income is varied to:

·     $262,000 per annum for the period 11 November 2020 to 30 June 2021;

·     $326,000 per annum for the period 1 July 2021 to 30 June 2022; and

·     $150,000 per annum for the period 1 July 2022 to 30 June 2024.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – earning capacity – 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. Ms Noakes (the mother) and Mr Noakes (the father) are the parents of three children.  This case was registered with Services Australia – Child Support (the Agency) on 28 September 2020 and was collectable from that date. The older child is recorded as being in the mother’s sole care and the middle child is recorded as being in the father’s primary care (reflecting the Agency’s determination that, as the father paid for the child to attend boarding school he should be awarded primary care) and the younger child is in the parents’ shared care. The eldest child ceased to be an eligible child of the assessment from 3 October 2021.

3. The mother lodged a departure application on 22 January 2021. On 31 June 2021 a senior case officer determined that from 11 November 2020 to 10 November 2022 the father’s adjusted taxable income is varied to $107,055.

4. On 1 July 2021 the father lodged an objection to that decision. On 3 December 2021 an objections officer partly allowed the objection, varying the father’s adjusted taxable income to $130,000 per annum for the period 11 November 2020 to 30 November 2022.

5. On 4 January 2022 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal). A directions hearing was held on 3 June 2022. Directions were issued on the same day requiring compliance by 22 June 2022.

6. The hearing was scheduled to take place on 7 July 2022 but was rescheduled at the direction of the tribunal. The father and mother appeared by MS Teams audio on the date of hearing, being 31 August 2022. The tribunal considered the documentation provided by the Agency (folios 1 to 864), the father (folios A1 to A294) and the mother (folios B1 to B23), noting that neither the mother or father received the other’s first Statement of Financial Circumstances (marked folios A1 to A11 and B1 to B11). At hearing both parents indicated that they were willing to proceed with the hearing without having the benefit of these documents.

7. The tribunal reached its decision on 31 August 2022. The father was advised, after providing further documents to the tribunal on 1 September 2022, that the documents were not taken into evidence as the tribunal had made its determination.

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (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 …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And if so,

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act provide grounds for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property, financial resources or earning capacity.

2. At the time the mother lodged the departure application under review the father was liable to pay an annual rate of child support of $892 for the period 11 November 2020 to 2 October 2021 based on his 2021 income tax declaration of $55,000 and the mother’s 2020 adjusted taxable income of $75,177.

3. The tribunal finds that the father is the sole director and shareholder of [Company] (the business). He is [an Occupation 1] by profession and worked as one from about [Year] to just prior to separation. He completed his [Subject] studies in about 2019 and completed his practical [training] in early 2022. It is not in dispute that he secured [an Occupation 2] position, commencing 7 March 2022, with a salary of $72,938 (at folio 738). His employment was terminated about three months later as he had failed to disclose a conflict of interest. He has sought a career in the [Occupation 2 work sector], as he is of the view that it is more conducive to being a single parent. At hearing the father stated that he is unclear which career path he will now follow; he is finding it difficult to secure any work at all. He has applied for work in many roles but has always been unsuccessful; he thought he had provided evidence of this. In any event, his “primary focus” in 2022 is to improve his health and that “perhaps next year” he will look for work. He is meeting his living expenses from savings.

4. The father asserts that his income tax returns are indicative of the financial resources available to him to support the children. He spoke to the errors that he perceives in the decision under review, namely that his mother is a joint trustee of the Noakes Family Trust (the trust), the beneficiary loan liabilities were ignored and about a misunderstanding about the repayment from the trust to the business. The father also made reference to significant damage to a rental property and the necessity to undertake repairs. He went on to state that the Agency failed to take into account that the legal fees of $200,000, paid from the trust, in respect of the Family Court property and care proceedings, were not of a personal benefit to him. Furthermore, the father stressed that his mother and her husband have retired and rely significantly on the funds from the trust to maintain their “lifestyle”. And finally, his loan liability to the trust has been ignored. He is a joint trustee with his mother. He continues to consider the option of resigning as trustee given the demands of being a single parent.

5. The tribunal finds that the father’s adjusted taxable income in 2019 was $108,330 and that for the 2020 and 2021 years he lodged income tax declarations of $55,000 and $57,780 with the Agency. For the 2020 year he declared a salary of $35,000 and $20,000 in gross investment income. In 2021 he declared a salary of $38,200 and reportable superannuation contributions of $21,580. The tribunal finds that his actual 2020 and 2021 adjusted taxable incomes were $65,291 and $72,471 respectively.

6. The father provided an unaudited financial statement for the business for the 2019, 2020 and 2021 financial years. This indicates that its 2019 to 2021 net equity decreased from $341,808 to $89,164 and that the employee loan of $100,000 was repaid in the 2021 financial year. The profit and loss statements for the period indicate that profits decreased from $109,697 to $73,364 and then $33,001 during that same period, and that in each of these financial years a dividend of $100,000 was paid to the trust.

7. 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 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 can 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.

8. The trust’s unaudited financial statement for the 2019, 2020 and 2021 financial years indicate net profit of $127,100, $128,693 and $118,351. The assets of the trust are made up of shares, property and cash.

9. The tribunal did not have the benefit of the trust loan account ledger for the 2021 financial year. In the absence of this evidence, the tribunal accepts the father’s written submissions dated 6 May 2021 (at folios 215 to 217) which declare that payments totalling $66,969 were made from the trust account for the father’s legal costs up until 31 March 2021. Of course, this may underestimate the true financial resources available to the father, given that his statement was made only in respect of legal fees up to 6 May 2021. At hearing the father confirmed that the trust met his middle child’s private school and boarding fees ($46,776) in addition to the $200,000 in legal costs. However, he stressed that he did not have an unfettered discretion to use these funds as he saw fit; he had a fiduciary duty. However, as these expenses were not “frivolous”, there was no breach of his obligations as trustee. The father submits that these funds do not represent a financial resource available to him, as they are not for “day to day living”. The father disagreed with the characterisation of these funds as a financial resource available to him. He stated that the funds were withdrawn from his trust loan account, and so it is at his discretion, unlike the loan accounts for the other beneficiaries of the trust. He later clarified this by stating that he and his mother jointly make any decisions regarding distributions from the trust. Whilst the tribunal understands that the father’s evidence is that he must repay the beneficiary loans, this is not strictly correct; it is possible that the trustees (being the father and his mother) may forgive the beneficiary loans. In any event, the tribunal is satisfied that the funds from the trust used for the father’s benefit represent a financial resource available to him for the support of the children.

10. Nevertheless, these funds are a financial resource available to the father to support the children. Furthermore, the tribunal is satisfied that the 2021 net profit from the business is also a financial resource available to the father for the benefit of the children, being $118,351. A PAYG income earner would need to earn about $264,000 to have access to such a financial resource. These resources, in addition to his declared salary of $35,000, suggests that the father’s 2021 financial year income and financial resources were about $299,000. The tribunal’s calculation is somewhat consistent with the father’s declaration of expenses dated 20 September 2021 of $183,578 per annum (at folio 490), which a PAYG income earner could only fund if in receipt of gross income of $262,000 per annum.

11. The 2022 trust loan account ledger indicates that the father had the benefit of $228,820 in funds from the trust (at A21) during the 2022 financial year. In reaching this calculation, the tribunal excluded all withdrawals made in relation to the property portfolio that was subject to the property settlement; in the tribunal’s view it is appropriate to exclude the payments associated with maintaining marital assets prior to the settlement. To do otherwise, would artificially inflate the assessment of the father’s financial resources. Instead, the tribunal only had regard to listed loans associated with the father’s personal expenditure, including the middle child’s school fees, legal fees, child support payments, purchase of a [motorbike] and general living expenses. A PAYG income earner would need to earn about $326,000 to have access to such an income.

12. The tribunal is of the view that its 2021 and 2022 calculations in respect of the father’s income and financial resources are conservative estimates of the father’s financial resources. It is not in dispute that the father receives other benefits from the business, including the provision of a motor vehicle and telephone.

13. The tribunal concludes that the father’s income and financial resources in the 2021 and 2022 financial years were about $262,000 and $326,000.

14. At the time the mother lodged her departure application the father was liable to contribute $892 per annum towards the costs of the children. Application of the father’s 2021 and 2022 income and financial resources to the administrative assessment would result in his liability increasing to about $24,789 (when the middle child was in the parents’ shared care), reducing to $16,979 (when the middle child was in the father’s primary care) and then to $2,719 when the older child was no longer an eligible child of the assessment.

15. As the father’s income and financial resources are not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.

2. The tribunal finds that the mother’s 2020 and 2021 adjusted taxable incomes are $75,177 and $77,189 respectively. The tribunal is also satisfied that the mother’s 2022 adjusted taxable income is likely to be consistent with her 2021 adjusted taxable income. The mother first provided a Statement of Financial Circumstances dated 25 January 2022. She declared that she works on a permanent full-time basis in [industry], earning $1,767 gross per week ($91,897 per annum). The tribunal notes that this declaration is consistent with the payslips in evidence. She listed her assets as including her half share of the former marital home valued at $342,050, another property valued at $160,000 and a half share in the trust valued at $420,000. She reports savings of $14,364, a motor vehicle valued at $25,000, household contents valued at $5,000 and superannuation of $818,594. She lists as unknown her half share interest in [Company] and liabilities including her half share of the former marital home mortgage of $135,000 and credit card debt of $8,000. She reports her personal expenses are $1,204 per week and household expenses are $1,271 per week. It is not apparent whether these household expenses include those of the other adults in the home, which the mother stated were her adult child and her parents.

3. In an updated Statement of Financial Circumstances dated 20 June 2022 the mother reported that the only other adult in the home is her adult daughter, that her savings had reduced to $7,866, that she had no interest in the trust or [Company] and that her personal expenditure had increased to $1,354 per week and her household expenses to $1,498 per week. She confirmed that her real estate assets are unencumbered and are made up of a rental property adjacent to the property that she inhabits, as well as a vacant piece of land. She reports savings of $3,200. The change to the mother’s financial circumstances is primarily the result of the property settlement being finalised. The tribunal accepts the mother’s evidence that she is in good health.

4. The father asks that payments made in respect to the investment properties prior to the property settlement be taken into account when determining whether it is just or equitable to depart from the administrative assessment. As noted above (in paragraph 20) the tribunal excluded all payments made from the trust in respect of the property assets that formed part of the property pool. Thus, the tribunal is satisfied that it would not be just and equitable to depart from the assessment on the basis of the funds expended in respect of the marital assets prior to settlement. The tribunal reached this conclusion taking into account the property orders dated 22 February 2022 which state the settlement was “In full and final satisfaction of any claim either party may have or hereafter have against the other for settlement of property, alteration of property interests, and costs”.

5. The father asserts that the mother’s earning capacity is not accurately reflected in the administrative assessment. He correctly states that at the time the departure application was lodged the mother was working as a [Profession 1]. The payslip (at folio 112) indicates that a person with the mother’s experience could earn an annual salary of $89,787. However, it is not in dispute that at this time the mother was working on a casual basis and there is no evidence to suggest that she was offered a full-time [role]. The tribunal accepts that the mother then secured a part-time [role in another work area], earning $50,057 from July 2021. At hearing the mother explained that she was having difficulties in securing full-time [work] and so took a full-time [role in another type of work] offered to her. She was then offered a full-time [Profession 1] role in 2022; upon being advised of this her employer was willing to match her [Profession 1] income. Thus, she is currently in receipt of an annual salary of $91,897.

6. For a person to be assessed in accordance with their earning capacity rather than their actual income, the three tests set out in subsection 117(7B) of the Act must be satisfied:

   In having regard to the earning capacity of a parent of the child, the court may determine that the parent‘s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)the parent‘s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent‘s caring responsibilities; or

   (ii)the parent‘s state of health; and

   (c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

1. By the mother’s own evidence, she has changed her occupation. Subparagraph 117(7B)(a)(i) of the Act is satisfied.

2. The mother does not submit that her decision to change her industry was because of her health or caring responsibilities. Thus, paragraph 117(7B)(b) of the Act is satisfied.

3. The tribunal has already noted that the child support case was registered and collectable from 28 September 2020. The child support record demonstrates that the mother’s 2019 to 2021 adjusted taxable incomes were $64,892, $75,177 and $77,189 respectively. Her payslip ending for the period 15 June 2022 indicates that her year to date income is $67,732. On 6 January 2022 the mother lodged an income estimate of $92,188; the father does not dispute that this income is consistent with the annual salary of a full-time [Profession 1]. In light of the mother’s increasing adjusted taxable incomes from 2019 to 2021 and her current annual salary being equivalent to a full-time [role], the tribunal is not persuaded that a major purpose of the mother’s decision to change her occupation was to affect the administrative assessment. Paragraph 117(7B)(c) of the Act is not satisfied. The tribunal concludes that the mother does not have an unexercised earning capacity for the purposes of the child support assessment.

4. The parents’ consistent testimony is that the middle child was not coping with the shared care arrangements and so was enrolled, with both parents’ consent, into a boarding school with an annual tuition and boarding fees of $46,776 (including discount), which was paid by the father. The father testified that he also met the middle child’s 2022 schooling costs. The father now asks that this entire sum be credited against his child support liability. In response, the mother points out the application for enrolment form clearly states that the father is solely responsible for the payment of the school fees, and it was the father only who signed the acceptance of enrolment form. At hearing the father confirmed that the trust paid for the school fees, stressing that the mother’s older child (not subject to the assessment) also had her private school fees paid for by the trust; therefore, this was “the tradition adopted” in respect of the middle child. He stressed that he signed the acceptance of enrolment not in his capacity as a trustee of the trust, but rather as a father. Therefore, this should be credited to his child support liability.

5. The tribunal finds that the middle child, in attending a private school as a boarder, was being educated in the manner expected by her parents. Further, the tribunal is satisfied that the agreement for the child to be enrolled at the school was on the basis that the father would solely meet the cost. The tribunal is not persuaded that it is either just or equitable that the father be permitted to resile from that agreement and have all or some of this cost credited to his child support liability.

6. The tribunal accepts the mother’s uncontested testimony that the middle child left the private school in early 2022 and is now in her full-time care and is attending a local public school. This change to the care arrangements has apparently been reported to the Agency. The father confirmed that he did receive a refund from the private school for 2022 Terms II to IV, when the child returned to the mother’s sole care. The bank statements in evidence support his testimony: on 3 May 2022 the school refunded $38,525.54 (at folio A53).  

7. Though the father had raised the older child’s earning capacity with the Agency, he did not press this at hearing. It is noted that the older child was a part-time student whilst completing his Year 12 studies and the father had maintained that he should have also worked part-time. The tribunal is not persuaded that the child was having an unexercised earning capacity in a context where he was a part-time student and there is an absence of evidence to suggest that the child was motivated by the effect that this would have on the administrative assessment.

8. The tribunal finds that the children are generally in good health. The tribunal accepts that the middle child is attending counselling, but that neither parent has any out-of-pocket expenses associated with this therapy. The two younger children now attend a public school. The parents equally share the costs of the middle child attending [Activity], though the father states that any future contribution from him will be dependent on the outcome of this review. There is no evidence to suggest that, apart from the middle child’s private school fees in 2021 and in the first term of 2022, the children have any out of the ordinary expenses. Both parents state that they provide the children with pocket money; without the benefit of documentary evidence to support a finding that this renders the administrative assessment unfair, the tribunal was not persuaded that these costs were out of the ordinary and not already factored into the administrative assessment.

9. In his Statement of Financial Circumstances form dated 4 February 2022 the father reports that he is an “[Occupation 1] transitioning to [Occupation 2]”. He states that he is employed in the business on a part-time basis, earning $1,221 per week. He also declares that he receives $154 per week in distributions from the trust and has the benefit of $192 per week by way of provision of a motor vehicle. He declares property worth $1,375,000 noting that this is subject to the property settlement, superannuation of $1,410,530 and that his liabilities total $236,807. It is noted that the father makes no reference to a personal liability to the trust in respect of the beneficiary loan. He reports weekly personal expenses of $1,207, including monthly credit card repayments of $577, and household expenditure of $594 per week.

10. The father testified that he is unable to work, due to a motor vehicle accident, his poor mental health and ongoing symptoms from COVID-19 (“long COVID”). The father explained, consistent with his written submissions (at folios A267 to A269), that in March 2022 he was involved in a motor vehicle accident, where he injured his neck. He sees a physiotherapist as and when required.  He then contracted COVID-19 in both April and May 2022. He has not sought specialist review for his long COVID; his symptoms are fatigue, brain fog, hot and cold flushes. He also reports that he receives counselling under a Mental Health Treatment Plan but was not willing to provide any further details regarding his mental health. He anticipates that he will be fully recovered by 2023 and intends to focus on his health for the rest of the year. He considers his current work capacity to be 1.5 to 2 hours per day; that is apparently all he can do before becoming exhausted. He attempted to undertake some paid [Occupation 1] work but was too fatigued to complete the assignment. He states that he remains a trustee to the trust, however, he will consider resigning if his health prohibits him from undertaking his duties.

11. The tribunal finds that the father reduced his work hours below the full-time hours prior to separation, changed his industry in early 2022 and now does not work despite ample opportunity to do so. Subparagraphs 117(7B)(a)(i) and (iii) of the Act are satisfied.

12. The father’s uncontested evidence is that some months prior to separation he transitioned from a full-time to part-time role in the business, whilst also resuming his [studies] and taking on more care of the children. This arrangement remained when the parents’ separated. Since that time the business has not been successful in securing contracts and is currently a “one man band”. After further questioning, the father amended his statement to state that he has not tendered for [Occupation 1] contracts since about May 2018.

13. The father submits that in part his decision to transition from [an Occupation 1] to [an Occupation 2] was motivated by his caring responsibilities; he submits that [Occupation 2] work is more compatible to the caring responsibilities of a single parent than [Occupation 1]. Given the care arrangement in place and the age of the youngest child, the tribunal is not satisfied that the father’s caring responsibilities justify his decision to reduce his hours and to change his industry and now not work at all.

14. The father asserts that more recently his health prevents him from working at all. In support of this contention he provided a medical certificate dated 13 May 2022, completed by [Dr A], medical doctor. The certificate states that the father is unfit for work from 9 May to 5 June 2022. In a further medical certificate dated 24 June 2022 [Dr A] stated that the father “is having ongoing regular reviews over the past several weeks for his medical condition. He continues to be unfit for work” from 6 June to 8 July 2022 and will continue to be reviewed on a regular basis. In his written submission (at A263) the father stated that he spent seven days in [Country] visiting his partner, at the recommendation of his doctor, who apparently recommended that he spend time in a warmer climate.

15. After careful consideration, the tribunal is not satisfied that the medical certificates tendered can be relied upon as substantiating the father’s submission that he is unable to work at all. Whilst there may have been a period that he was unable to complete his usual duties whilst suffering from COVID-19, the tribunal is not persuaded that he cannot work at all. Certainly, there are no supporting medical reports that reference the administration of any tests to establish the father’s diagnoses or treatment plan. There is also no explanation about the father’s current work capacity or with respect to a return-to-work plan. Furthermore, the evidence before the tribunal indicates that the father is able to continue to manage the trust’s share portfolio, pursue litigation in the Family Court, instruct his representatives in that jurisdiction, finalise matters pertaining to the parents’ property settlement, initiate an application for merits review and prepare his submissions, travel internationally as well as manage his investment property without a need for a managing agent’s involvement. This suggests that the father’s capacity to undertake close work and engage in rational decision-making is not hindered by his health conditions. The tribunal concludes that the father’s decision not to work at all is not justified by the state of his health.

16. The father has not persuaded the tribunal that it was not a major purpose of his decision to no longer work was to affect the administrative assessment. In a context of ever declining adjusted taxable incomes, where he was terminated from his employment due to his failure to make a frank disclosure of conflict of interest, and where he continues to be able to manage his legal and financial affairs, the tribunal finds that the third criterion in subsection 117(7B) of the Act is met and that the father should be assessed in accordance with his earning capacity.

17. The tribunal next turned its mind to the father’s earning capacity. It is difficult in a factual scenario whereby a parent has a long and lucrative career as [an Occupation 1] and has recently retrained as [an Occupation 2], to determine an earning capacity. In the financial year prior to separation the father’s adjusted taxable income was $85,106. His gross salary and net business profit in the 2021 financial year was $153,351, based on his part-time work. He retrained as [an Occupation 2], and apparently secured a [role] (at folio 740) with an annual income of $72,938 from which he was terminated.

18. The tribunal is satisfied that in the circumstances it is appropriate to determine that the father’s ongoing earning capacity is consistent with his gross salary and net business profit prior to the registration of the administrative assessment, being $150,000. Given the father’s significant [Occupation 1] work history the tribunal is satisfied that he would be able to earn income commensurate with his historical salary and business profit. Of course, this does not take into account any possible trust distributions. However, given the significant reduction in the trust’s assets, the tribunal is satisfied that this strikes the appropriate balance.

19. The tribunal is satisfied that it is appropriate to apply the father’s actual 2021 and 2022 income and financial resources to the administrative assessment in the same period, being $262,000 and $326,000 respectively. In the tribunal’s view varying the father’s adjusted taxable income on this basis reflects the most reasonable conclusion to be drawn on the available evidence. The tribunal considers that it is appropriate to depart from the administrative assessment from 11 November 2020, the date on which the father lodged his income tax declaration. The variation of the father’s adjusted taxable income will create arrears in the vicinity of $12,000. The tribunal is satisfied that this will not place the father in a position of undue hardship given his income and financial resources. To find otherwise would result in a disproportionate amount of the children’s costs being borne by the mother.

20. The tribunal is satisfied that it is appropriate that the father’s earning capacity be reflected in the assessment from 1 July 2022. This aspect of the decision will create modest arrears of about $450. The tribunal is of the view that the father’s income and financial resources will not be accurately reflected by his taxable income into the foreseeable future. The tribunal has determined that it is appropriate that the father’s adjusted taxable income is varied to $150,000 until 30 June 2024.  This determination will provide certainty to the parties and minimise the need for repeat proceedings.

21. The tribunal is satisfied that the administrative assessment is unfair given the father’s income, earning capacity and financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents, rather than the community, have the primary duty to maintain a child. Both the mother and father are in receipt of income-tested benefits. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that Mr Noakes’ adjusted taxable income is varied to:

·     $262,000 per annum for the period 11 November 2020 to 30 June 2021;

·     $326,500 per annum for the period 1 July 2021 to 30 June 2022; and

·     $150,000 per annum for the period 1 July 2022 to 30 June 2024.