Ousey and Haines (Child support)

[2023] AATA 4464

Ousey and Haines (Child support) [2023] AATA 4464 (13 December 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/PC026062

APPLICANT:  Mr Ousey

OTHER PARTIES:  Child Support Registrar

Ms Haines

TRIBUNAL:Member S Hoffman

DECISION DATE:  13 December 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides as follows:

• For the period from 1 January 2023 to 15 December 2023 the following applies:

  oMr Ousey’s adjusted taxable income is varied to $78,713.

  oThe annual rate of child support otherwise payable is increased by $1,200, being Mr Ousey’s contribution to the costs of [Child 1’s] special needs.

• For the period from 16 December 2023 to 30 November 2025 the following applies:

  oMr Ousey’s adjusted taxable income is varied to $57,200.

oThe annual rate of child support otherwise payable is increased by $1,200, being Mr Ousey’s contribution to the costs of [Child 1’s] special needs.

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. The child support case relevant to this review was registered with Services Australia – Child Support (Child Support) on 30 April 2020. Child Support has been involved with the collection of child support for [Child 1] and [Child 2], aged 16 and 13 years old respectively, since then. According to Child Support’s records, the mother has provided 100% of the children’s care. 

2. According to assessment notices issued by Child Support during 2022, from 1 January 2023 the father would have been required to pay an annual rate of child support of $3,042 to the mother, based on his 2021–22 taxable income of $16,925 and the mother’s taxable income for the same year of $76,418.  

3. Prior to 1 January 2023, the father had been assessed to pay child support of $17,752 a year based on a previous change of assessment (COA) decision, made on 3 August 2020. That decision varied the father’s adjusted taxable income to $78,713 a year and increased the rate of child support payable by him by $4,676.[1]

   [1] To be clear, the figure of $17,752 included the additional amount of $4,676.

4. On 12 September 2022, the mother applied for a COA from 1 January 2023.

1. An original decision following the COA application was made on 6 January 2023. It varied the father’s adjusted taxable income to $55,000 for the period 1 January 2023 to 31 December 2024. In addition, the annual rate of child support payable by the father was increased by $1,200 as his contribution to the cost of [Child 1’s] special needs (the original decision).

2. On 24 January 2023, the mother objected to the original decision. On 6 April 2023, an objections officer from Child Support decided as follows:

   ·     For the period 1 January 2023 to 31 December 2026, the father’s adjusted taxable income was varied to $78,713.

   ·     For the period 1 January 2023 to 31 December 2026, the annual rate of child support payable by the father was increased by $1,200 as his contribution to the cost of [Child 1’s] special needs.

3. The Tribunal observes that [Child 1] will turn 18 during April 2025. There was no evidence before the Tribunal suggesting that child support will be payable for her during 2026. 

4. On 4 May 2023, the father lodged an application for review of the objection decision with this Tribunal.

5. A directions hearing was held on 4 October 2023 via MS Teams audio (equivalent to conference telephone) and attended by both parents. The substantive hearing was held on 22 November 2023. The father attended via conference telephone and the mother attended in person. Both parents gave sworn evidence.

6. Child Support had provided documents in two bundles numbered 1 to 389 and 390 to 415. The father submitted documents numbered A1 to A32 and the mother submitted documents numbered B1 to B31. These were provided to the parents before the main hearing.

7. The Tribunal deferred making its decision for the father to make a further submission in the form of bank statements, as requested by the mother. These were numbered A33 to A34 and sent to the mother for comment, if she so chose, by close of business on 5 December 2023.

8. The mother duly responded, pointing out that the father had not provided bank statements for the period as discussed at the hearing. The Tribunal directed the father to provide further bank statements.

9. There was discussion around bank statements during the hearing, the mother had opportunity to comment specifically on one set of bank statements and there was nothing of particular note in the second set of bank statements submitted by the father. After receiving the second set of bank statements, the Tribunal proceeded to make its decision, on 13 December 2023.

10. The post-hearing submissions not already sent to the parents are provided with these Reasons.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act1989 (the Act). The Act provides for an administrative assessment of child support to be paid. Pursuant to section 98C of the Act, a decision to depart from the administrative assessment may be made if the following three requirements are met:

   i.A ground is established; and

   ii.It would be just and equitable as regards the child, the liable parent and the carer entitled to child support to make a particular determination; and

   iii.It would be otherwise proper to make a particular determination.

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

2. If the Tribunal is satisfied that the three requirements are met, it may make one of the determinations prescribed in section 98S of the Act, which 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 – Does a ground exist to depart from the administrative assessment?

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, the administrative assessment of child support would result in an unjust and inequitable determination of the rate of child support because of the income, property and financial resources of either parent.

The father’s income

1. According to Child Support’s records, the father’s taxable income was $4,834 for 2018–19, $20,159 for 2019–20, $28,195 for 2020–21, $16,925 for 2021–22 and $8,624 for 2022–23.

2. The father is self-employed as [an occupation 1]. He is [age] years old. He operates as a sole trader and has done so for many years. His accountants provided Child Support with copies of his tax returns for the years 2020, 2021 and 2022. The father submitted his 2023 tax return to the Tribunal. Relevant figures are recorded in the following table:

2020	2021	2022	2023
Gross Income
Jobkeeper	6,000	27,900	0	0
Bank interest	3	0	0	0
Personal services	33,147	16,915	37,778	19,599
Total gross income	39,150	44,815	37,778	19,599
Expenses
Accounting fees	984	813	1,159	840
Home office	513	561	788	189
Laundry	144	150	144	144
Materials and supplies	8,031	4,648	7,346	5,114
Printing and stationery	251	279	137	24
Protective clothing	451	244	246	103
Replacements (tools etc)	1,229	90	575	396
Telephone	662	715	1,064	243
Hire	240	0	215	22
Advertising	100	0	0	0
Motor vehicle expenses	6,386	6,720	7,979	3,900
Rent expenses	2,400	1,200	0
Total expenses	18,991	16,620	20,853	10,975
Net income/taxable income	20,159	28,195	16,925	8,624

1. Each of the tax returns recorded prior year losses brought forward of $74,352. The father said maybe that was to do with losing work in 2020 due to the pandemic. He did not know. The tax returns suggest that the loss was to do with capital gains. The father referred to selling a property in 2014. This particular entry in the father’s tax returns is unexplained but has not affected the gross or net income figures in the table above.

2. In his Statement of Financial Circumstances (SFC) dated 30 May 2023, the father wrote that his weekly income is between $1,000 and $1,200 a week, equivalent to $52,000 or $62,400 a year. The half-way point which is $57,200 a year.

3. In his application for review lodged with the AAT, the father wrote that he considered the original decision, which varied his adjusted taxable income to $55,000 a year, was fair and that he could only afford to pay $800 a month ($9,600 a year).

4. According to his tax returns for the last four years, the father’s gross incomes, before work-related expenses are taken into account, were less than $45,000 each year, and his taxable incomes were less then $30,000 each year.

5. Generally, the Tribunal will go through work-related expenses and may disregard some for the purpose of arriving at an income figure to be used in the child support formula. The Tribunal does not see any need to do this in this review as the father has put forward an income figure to be used for child support purposes that is higher than both his taxable incomes and his gross business incomes.

6. The mother claimed that the father does cash work but has no proof of this. The father said that he used to do cash work but stopped doing that on his accountant’s advice.

7. The father claimed that he works on a part-time basis, averaging three days a week. He said that he does not do the kind of work he used to do such as working [in given situations], as he has had two hip replacements and is not as flexible as he used to be. He said he does smaller jobs such as [specified duties]. He no longer has the capacity to do [big jobs].

8. The mother said that the father has done that kind of work recently. The father said it was five years ago. The mother told Child Support that there was little information supporting the father’s claim that he works part-time.

9. The Tribunal observes that as the father was agreeable to being assessed on an income far higher than his taxable income has been for many years, this would cover him doing some work for cash and/or working more hours than is suggested by his taxable income, if that is what occurs. As the mother acknowledged, if a person works for cash, it is difficult to substantiate.

10. The Tribunal observes that as a result of an objection decision made 10 December 2020, the father was assessed on an income of $78,713 for the latter part of 2022. The decision maker at that time arrived at that figure based in part on an analysis of the father’s bank statements for the period 28 January 2020 to 30 June 2020 which recorded deposits totalling $23,778 made in that period. The annualised equivalent was $57,067. The objections officer stated that these were net amounts and should be grossed up for child support purposes. He recorded that a gross income of around $73,000 would be required for a parent to have net funds available to them of $57,067.

11. That reasoning is incorrect. When someone operates a business as a sole trader, the monies deposited into their bank account represent gross trading income from which work-related costs, such as the cost of materials, should be deducted to arrive at a gross personal income figure (taxable income). They pay tax on their gross personal income. That is the figure which is used for child support.

12. This contrasts with people who work for an employer. The money that goes into their bank accounts from their employer is of course net income (after tax) and it is appropriate in such cases to gross up income if relying on deposits into bank accounts. It is a very different situation for sole traders.

13. That objections officer also recorded that at that time, based on the resource book “What Jobs Pay”, the likely annual income for a qualified [occupation 1] of the father’s age would be approximately $77,116. That is for someone working full-time. The BAS returns provided to Child Support and the father’s tax returns are more reflective of someone who does not work full-time.

14. The father said he has the one bank account which he used for work and personal income and expenses. The mother was very keen for the Tribunal to obtain the father’s bank statements, noting that he had not provided them in relation to the objection decision made on 6 April 2023. The mother also indicated that asking the father to provide bank statements for a period within 2023 might not be the best approach as he may have changed how he banked after she lodged her COA application in September 2022.

15. The Tribunal did not, and does not, agree with the mother that bank statements would be particularly useful, given tax and BAS returns were available and if the father had been working for cash, it is unlikely that he would have deposited the cash into his bank accounts. In addition, the Tribunal has observed how the 2020 bank statements were misinterpreted.

16. In any event, the Tribunal asked the father to provide four months of bank statements from March 2023.

17. After the hearing the father submitted three months of [Bank 1] bank statements from 17 July 2023 to 17 November 2023 for bank account number xxx994-1. It is apparent from the earliest entries that this was a new account as the opening balance was nil on 17 July 2023 and the entry for 27 July 2023 was described as “new account” against a deposit of $4,921.51. Child support and rent were paid from this account, along with various other payments. Deposits into this account were as follows:

    14 August 2023          $2,850

    18 August 2023          $75                 [ISP] refund

    21 August 2023          $792               [specified job]

    30 August 2023          $3,190            [specified job]

    30 October 2023        $1,500

    7 November 2023      $100               for [Child 2’s] birthday

18. It appears that the work-related deposits totalled $8,332 over a four-month period, equivalent to $24,996 a year, less than the father’s 2022 gross trading income but more than his 2023 gross trading income.  

19. The Tribunal sent a copy of the bank statements to the mother for her comments. She observed that the father had agreed to provide bank statements for a four-month period from March 2023 but had not done so, and that the bank statements he did provide were for a new bank account.

20. The Tribunal directed the father to provide additional bank statements, an explanation as to why he had opened the new bank account, and why he had not sent in bank statements from March 2023 as discussed at the hearing.

21. The father responded that he provided bank statements from July 2023 as they were the ones he had readily available; he had intended to obtain earlier ones and submit them separately. With his response, the father did submit statements from a [Bank 1] account number xxx866-5 which recorded an opening balance at 1 March 2023 of $12,603 and a final balance at 27 July 2023 of $4,921.51.

22. The father also submitted a letter dated 15 June 2023 from [Bank 1] which reminded him that his business deposit account(s) would close on or after 24 July 2023 as the bank would no longer be maintaining them. The father stated, and the Tribunal accepts, that this was why he closed one bank account and opened another. It notes that the closing balance of account xxx866-5 is the same as the opening balance of account xxx994-1.

23. The bank statements for the period from 1 March to 27 July 2023 (roughly five months) recorded the following deposits:

    1 March 2023             $4,081           [Client 1]

    6 March 2023             $11                Refund from [Supplier 1]

    15 March 2023           $1,925           [Client 1]

    16 March 2023           $9                 ATO

    4 April 2023                $1,000           [Client 2]

    8 May 2023                $920              [Client 3]

    8 May 2023                $1,000           [Client 2]

    19 May 2023              $1,500           [Client 2]

    21 June 2023             $1,000           [Client 2]

    21 June 2023             $3,446           [Client 4]

    26 June 2023             $30                [Supplier 1] refund

    17 July 2023               $50                Cheque deposit

24. The total amount deposited over the five-month period was $14,972, an average of $2,994 a month, equivalent to $35,928 a year. This was similar to the father’s gross trading income for the 2022 tax year and more than his gross trading income for the 2023 tax year. However, being gross trading incomes, they do not reflect expenses that may have been incurred to earn that gross income.  

25. The mother had also requested the Tribunal obtain a transaction history for the father’s [Supplier 1] account. The father said that he did not have an account as such with [Supplier 1], but he had a [supplier] card which meant he received a discount on purchases.

26. The mother’s argument was that checking his transaction history might show that the father was understating what he spent on materials, and that he would do this to obscure his income from sales.

27. The Tribunal has recorded above how much the father claimed through his tax returns for materials and supplies, which was generally around 25% of gross sales. It does not make sense for the father to understate these costs in his tax returns as that would lead to a higher taxable income and an increase in the tax he would be required to pay. If anything, a sole trader would be more likely to inflate the cost of materials, to reduce their income and tax.

28. The father said his customers usually bought materials he worked with as he could not afford the outlay.

29. The Tribunal declined to obtain information from [Supplier 1] for a combination of reasons. It would not, in the Tribunal’s view, assist in determining the father’s income for child support purposes. Also, the role of the Tribunal is to conduct an administrative review not a forensic examination of a party’s finances. Further, as already set out, an income figure for the father of $57,200 is significantly higher than his taxable incomes for 2022 and 2023 and therefore takes account of any income not captured in the father’s tax return, if the father did work for cash, which he denies.

30. The mother also requested that the Tribunal obtain tax invoices for work performed by the father over the last two years to indicate the hourly rate he charged for certain types of work, and evidence of which bank account is used to deposit income from his business.

31. Tax invoices are source documents used by accountants to prepare tax returns. There is nothing to be gained by obtaining copies of invoices as suggested by the mother, in that they will not assist the Tribunal in conducting this review.

32. The mother referred to a [social media] page for the father’s business. The Tribunal checked it at the hearing. The last posting was made in April 2020 apart from a post in December 2021 advising that the business was now on [a messaging service]. The [social media] page therefore has not been active for about two years. The father said he got work by word of mouth rather than advertising. The Tribunal notes that the cost of advertising was claimed in his 2020 tax return but not in later years.

33. The mother referred to the father wearing work clothes with the logo “[a family business name]” in May 2020 and more recently. The father said that was his brother’s business. His brother lives in Melbourne and operates his business there. The father said that when the parents separated in February 2020, he had to leave the house without any possessions including clothing. His brother sent him a package of clothes, including that work gear. The Tribunal accepts that explanation.

1. As recorded above, the Tribunal notes that the father stated in his application for review that he agreed with the original decision that used an adjusted taxable income for him of $55,000 a year.

2. The Tribunal considers that it is reasonable to use an income of $57,200 a year for the father, which is within the range the father suggested in his SFC and allows for a couple of weeks where he does not work. An income of $57,200 is more than double his taxable incomes over the last four years and therefore allows for work the father might do on a cash basis, if that is occurring. It is also more than his gross income based on over eight months of the father’s bank statements from 1 March 2023 to 17 November 2023.

3. In light of the foregoing, the Tribunal considers that $57,200 adequately reflects the father’s income, property and financial resources for the period from 1 January 2023.

The mother’s income

1. The mother’s taxable incomes were $94,160 for 2016–17, $82,405 for 2017–18, $81,233 for 2018–19, $83,455 for 2019–20, $75,710 for 2020–21, $76,418 for 2021–22 and $78,589 for 2022–23. 

2. The mother works on a permanent, part-time basis as [an occupation 2].

3. Neither parent suggested that anything other than the mother’s taxable income should be used in the calculation of the rate of child support. The Tribunal agrees.

How does the administrative assessment compare with an assessment of child support using the Tribunal’s income figures for the parents?

1. The figures that follow should be regarded as estimates, due to the complexity of the child support formula.

2. On 12 September 2022, the mother applied for a COA from 1 January 2023 as from then the father would be required to pay an annual rate of child support of $3,042 to the mother, based on his 2021–22 taxable income of $16,925 and the mother’s taxable income for the same year of $76,418. 

3. Using the Tribunal’s income figure for the father of $57,200 and $76,418 for the mother, the father’s annual child support liability was about $7,838.[2] This figure is before adding on any additional amounts, such as $1,200 for [Child 1’s] special needs.

   [2] When a child turns 13 years old, the child support assessment increases. [Child 2] turned 13 in October 2023 but assuming she turned 13 in September 2022, the rate would have been $8,592 rather than $7,838. 

4. Given the difference between the father having an annual child support liability from 1 January 2023 of about $7,838 rather than $3,042, the Tribunal is satisfied that in the special circumstances of this case, the administrative assessment does result in an unjust and inequitable rate of child support, and that a ground for departure from the administrative assessment has been established pursuant to subparagraph 117(2)(c)(ia) of the Act.

Issue 2 – Is it just and equitable to make a particular departure determination?

1. As the Tribunal is satisfied that there is a ground to depart from an administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the father and the mother 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 consider a variety of factors, as set out in subsection 117(4) of the Act.[3]

   [3] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi and Meares (SSAT Appeal) [2008] FMCAfam 886.

2. Section 3 of the Act makes it clear that parents have the primary duty to maintain their children, 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. In this case the father and the mother have the primary duty to financially support the children of this case. 

Income, property and financial resources – the father

1. In addition to what has already been discussed, the father’s SFC recorded a bank balance of $10,478 as at 30 May 2023. The father said the balance was now down to about $1,400. These figures are consistent with the bank statements submitted by the father.

2. The father is up to date with his child support payments. He said that he owes about $2,000 to his lawyers and about $2,000 to [Child 2’s] school. The Tribunal discusses school fees below. The father said that both the school and his lawyers have given him time to pay what he owes. The father claimed that he is assisted financially by his partner and his mother.

3. In his SFC, the father did not complete the section of the form which asks if there was another income earner in the household.

4. The father confirmed that he lives with his partner. He said she works in [industry 1]. Through her job, she had access to [products] that he would not otherwise be able to afford. She used to work at [a venue] and they could go in for free, including the children.

5. The mother said the father had been able to go to [Country 1] for a holiday. The father said that his partner had a business meeting in [Country 1], and he went with her for a holiday. Some of the costs associated with that trip were paid by his partner’s employer.

6. The father stated on his form that he had a 2009 [Vehicle 1] worth about $9,000. This was recorded in his 2022 and 2023 tax returns as being purchased on 7 May 2022 for $8,448. His 2022 tax return recorded that business usage was 100% for that vehicle and also for his previous vehicle, a [Vehicle 2]. The father’s 2023 tax return recorded that his business usage of the [Vehicle 1] was 40%.

7. The father recorded $4,000 as the value of household contents and $18,000 for the value of his boat. He has $30,000 in superannuation. He does not own a property. The father said that he paid for the boat from the $84,000 paid to him by the mother as a property settlement. The mother agreed that she paid that amount to the father for that purpose.

8. The SFC includes a form for weekly household expenses, with space for each type of expense to be allocated to the parent, to other adults in the household and to the children. The form was not properly filled in.

9. The father lives in rental accommodation which costs $600 a week, shared between him and his partner. He recorded $295 a week for electricity which is more likely the monthly or bi-monthly amount.

10. The father recorded spending $250 a week for food, of which $125 was for him and $50 for the children. That leaves $75, presumably the cost of food for his partner.

11. The father said that he used to rent a property from a friend and in exchange for doing some [work], at that time he only had to pay $1,000 a month in rent. That is consistent with information he provided to Child Support during the COA process in 2020. The father said he has moved on from there. The father recorded $166 a week in education expenses to which the Tribunal will return below.

12. The father wrote that he paid $50 a week for the children’s expenses. He gave the example of [Child 1] having a barbecue and that he bought food and drink for her and her friends, and the cost built up. The mother said that was a one-off. The Tribunal considers this figure may be overstated as a weekly average but that has no bearing on the Tribunal’s overall determination. Many people make mistakes in filling in these forms. The father wrote that the total of the weekly household expenditure was $1,201. His partner contributes to some of those costs.

13. There was nothing else of particular note in the father’s SFC.

Income, property and financial resources – the mother

1. The mother submitted an SFC received by the AAT on 23 May 2023, according to which her gross income as [an occupation 2] is about $1,092 a week, equivalent to $56,784 a year. In addition, she benefits from a salary sacrifice arrangement. According to her 2023 tax return, her gross pay was $55,709 and she received fringe benefits of $21,827. After adjusting for work-related expenses and interest earned of $138, her taxable income for 2023 was $78,589.

2. The mother said that the salary-sacrifice amount went to pay off her car and towards her mortgage. She also receives family tax benefit of about $122 a week. She was receiving carer allowance of $72 a week for [Child 1] but that stopped earlier this year when [Child 1] turned 16.

3. As recorded earlier, the mother and the children live in the family home which the mother valued at about $600,000. The mortgage over it is $314,000. The mother said, in relation to money, that what comes in, goes out. She has no capacity to save. She has drawn on her mortgage to pay for extra expenses such as roof repairs and a recent trip to [Country 2] for three weeks, because her mother was very ill and needed someone to care for her.

4. While the mortgage may be a financial resource available to the mother, of course any increase in borrowings means higher repayments.

5. The mother recorded having $754 in her bank account and a superannuation balance of $254,761. She drives a [Vehicle 3] through a leasing arrangement costing $217.30 a week which is paid via her salary sacrifice arrangement.

6. Turning to her weekly expense schedule, the mother observed that she thought she underestimated some expenses. The most expensive item was the mortgage which costs $335 a week. She recorded $200 a week on food for her and the children. Education costs were $230 a week.

7. The total figure for household expenditure was $1,557 a week. Increasing that by $251 a week, being the mother’s personal expenditure (tax and health insurance premiums), gives a total figure of $1,808, slightly less than $2,000 which was the total weekly income figure. This can be reduced to $1,928 as the carer allowance has stopped.

8. The figures suggest that the mother’s income, including child support of $273.60 a week, cover her outgoings with $120 a week left over. The mother said that she thinks she may have understated some of the expenses.

9. The mother wrote in her SFC that over the last 12 months, she had incurred legal fees of about $4,000.

10. There were some examples of discretionary spending in the mother’s SFC such as $100 a week on children’s activities, $55 a week on entertainment and/or hobbies and/or takeaway and $50 a week on holidays.

11. It is apparent that the mother has to manage her finances carefully. There was nothing else of particular note in the mother’s SFC.

Other issues pertaining to the parents’ incomes, property and financial resources

Should a parent’s earning capacity be taken into account in the child support assessment?

1. Subsection 117(7B) of the Act prescribes the circumstances in which a parent’s earning capacity may be taken into account; certain criteria have to be met.

2. These include that the parent has failed to demonstrate that decisions made about their work arrangements were not substantially motivated by the effect they would have on the rate of child support.

3. The decision maker is required to consider whether, for example, changes to a person’s work arrangements are justified on the basis of their caring responsibilities and/or their state of health. If those do not apply, the decision maker is then required to consider whether the parent has demonstrated that affecting the rate of child support was not a major purpose of decisions the parent made about their work arrangements.

1. The Tribunal will first consider the father. His taxable incomes since 2018–19 have been $4,634, $20,159, $28,195, $16,925 and $8,624. Apart from 2020–21 when his taxable income was $28,195 (which included $27,900 in jobkeeper payments), the father’s taxable income was less than the self-support amount.[4] The parents separated in about February 2020. There is no indication, based on his taxable incomes, that the father changed his work arrangements to affect the rate of child support.

   [4] The self-support amount is a component of the child support formula. Generally, if a person earns less than the self-support amount, variations in their taxable income will not affect the rate of child support.

2. The mother’s position is that the father could work full-time if he chose to. The Tribunal asked her why she thought he did not. She said she did not know.

3. The father said that he picked [Child 2] up from school on Mondays and Thursdays which affected his availability to work on those days. The mother said the school pick-up was at 3.25 pm.

4. The father said he works part-time because of his mental health and that he has pain in his hips following hip replacement surgery. The father said that the marriage breakdown was very stressful for him and he is still taking medication for his mental health. He still experiences depression. He said he spent $18,000 of property settlement money on a boat because being on the boat keeps him calm.

5. The father provided a letter dated 22 February 2023 from his general practitioner (GP), [named], which was sent to [Ms A] at [Health Service 1]. The letter noted that the father was known to [Ms A]. The letter stated that the father was “suffering from depression, anxiety and situational/social problem with ex-partner and child custody”.

6. The mother observed that this was a diagnosis by a GP rather than a mental health professional such as a psychologist or psychiatrist. According to the GP’s letter, the applicant was prescribed 10 mg of escitalopram which is used to treat depression and generalised anxiety disorder and a mental health care plan was commenced. That information was passed on to a counselling service. The Tribunal is satisfied that the father was suffering depression and anxiety. The father was also prescribed meloxicam which helps with pain relief.

7. The mother observed that the medications he took would, if anything, enable the father to work more than he does. She said she also had a mental health care plan. However, the question before the Tribunal is not whether the father could work more hours or earn more money if he chose to do so. The relevant question concerns his motivation for working part-time rather than full-time.

100.The tax returns recorded earlier suggest that the father has been working part-time for a number of years, in which case he has not changed his work arrangements.

101.As noted earlier, the father’s position is that he agrees with the original decision which used an adjusted taxable income of $55,000 for him. This amount is significantly higher than his taxable income has been since at least 2018–19, as set out above. (Details of his taxable income before 2018–19 were not available to the Tribunal.)

102.Taking these factors together with the father’s age and the nature of his job, the Tribunal is not satisfied that there has been a change in the father’s work patterns. There is no corroborating evidence of the father working full-time in recent years, and the documentary evidence that is available, points to him working part-time for at least four years.

103.The father did say that his work patterns have changed in that he no longer takes on larger jobs and is working more [in limited roles]. His main reason for this is a combination of his age and his reduced flexibility associated with his hip replacements. The mother said the father was very fit but acknowledged that a man of his age would have slowed down compared to a younger man working as [an occupation 1].

104.The Tribunal is satisfied that the father has demonstrated that the decision to take on smaller [occupation 1] jobs was not substantially motivated by the effect that would have on the rate of child support.

105.The mother works on a permanent, part-time basis. Her annual income has dropped in recent years. She said that before separation, she could work nights and on Sundays, which paid better, as the father would look after the children at those times. Since separation, she has had to be home at those times. The Tribunal is satisfied that the drop in the mother’s income can be attributed to her caring responsibilities.  

106.The Tribunal is satisfied that there is no basis for adjusting either parent’s income for child support purposes in relation to their earning capacity. The Tribunal concluded that it need not consider the application of subsection 117(7B) of the Act in relation to either parent any further.

Commitments of each parent to support him or herself

107.The Tribunal is required to have regard to the commitments of each parent that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain (paragraph 117(4)(e) of the Act). There was no evidence before the Tribunal of either parent having a legal duty to support another child or person, or that either of them had particular needs that should be taken into account with regard to the amount of child support payable.

108.The Tribunal is satisfied that it need not consider paragraph 117(4)(e) of the Act any further.

Costs related to the children

109.In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs they may have (subsection 117(6) of the Act).

110.The original and objections decisions both stated that the rate of child support was to be increased by $1,200 a year for [Child 1’s] special needs. Based on the Child Support documents, [Child 1] was diagnosed with a language and literacy disorder and, as recommended by a speech therapist, is having weekly tutoring which costs $60 a week. These sessions are held during school terms. The annual cost was estimated to be $2,400 with each parent contributing 50%.

111.At the hearing both parents said they agreed to this continuing. The Tribunal will not disturb this element of the decision under review.

112.[Child 2] attends [School 1] which is an independent school. Both parents are contributing to the attendant costs outside of the child support system. They were both agreeable to this arrangement continuing. The annual fee for 2023 was about $14,500. The father said he paid $7,500 in the last year and owes the school about $2,000. He told Child Support his mother helps him pay his share of the school fees. He said that he would not be able to continue paying that much towards school fees in 2024 if he continued to be assessed for child support on an income of $78,000.

113.As the Tribunal’s decision has the effect of reducing his child support liability, the Tribunal will proceed on the basis that the father will continue contributing to [Child 2’s] school fees outside of the child support system as he currently does.

114.In her SFC, the mother allocated some, but not all, of the average weekly household expenses between her and the children even though some of them, such as utilities, would be incurred on behalf of the children. Therefore, the total costs of the children cannot be determined from the “Household expenses” schedule, or any other schedule, in the SFC. That being the case, the Tribunal considers it appropriate to rely on the Costs of the Children Table available from Child Support’s website.[5] 

[5] For the parents’ information, a Costs of the Children Table is available at the Services Australia website which can be found at

Hardship

115.The Tribunal is required to consider any hardship its determination might cause and is guided by Gyselman and Gyselman[6] in this respect:

[6] [1991] FamCA 93.

This requires the Court to balance the “hardship” which the parents or the children may suffer as a result of either making or refusing to make the order. It is a recognition of the circumstance that in this area there is likely to be hardship both ways and the Court is required to take into account the balance of that hardship and give it the weight which is appropriate to the circumstances of the individual case.

116.According to Child Support records, the father was up to date with his child support payments. He said he relied on assistance from his partner and his mother in meeting his financial commitments.

117.The mother said she does not have any family here in Australia who can assist her that way. It is apparent that she has to manage on a tight budget. She can, as she has done in the past, draw down on her mortgage if she needs extra funds, but then of course her regular mortgage repayments increase.

118.The Tribunal considers that the mother’s situation is more difficult than the father’s at this time. It has decided to leave the objection decision in place until 15 December 2023 to avoid creating an overpayment of child support for the mother. She does not have the capacity to repay an overpayment of child support without increasing other liabilities.

119.As for her capacity to manage her finances going forward, the Tribunal recognises that its decision will reduce the amount of child support paid to the mother. The examples of discretionary spending mentioned earlier indicate there is some capacity to reduce expenses. The Tribunal acknowledges that this will be difficult for the mother.

120.However, the Tribunal is firmly of the view that the father’s income was not correctly assessed in the objection decision and he should not be assessed to pay child support on an income he does not receive, especially as he also contributes about $7,500 a year towards school fees, over and above his child support liability.

Any other relevant matters

121.The Tribunal may take into account any other matters it considers relevant in making a particular departure determination (subsection 117(9) of the Act).

122.The Tribunal has determined that the objection decision remains in place until 15 December 2023 and is replaced from 16 December 2023, for reasons already set out.

123.The end date of this decision is 30 November 2025. That marks the approximate end date of the school year during which [Child 1] turns 18. Information about child support assessments when a child turns 18 can be found in the Child Support Guide.[7]

[7] Child Support Guide (2022) 2.10.3 Terminating events, accessible at

124.It remains open to either parent to apply for a change of assessment between now and 30 November 2025 if their circumstances change.

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

125.The requirement to consider whether a departure determination would be otherwise proper is concerned with what is fair to the community; it is preferable for a child or children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit (FTB), received by the party caring for a child or children, may be affected by the level of child support.

126.The mother recorded in her SFC that she was receiving FTB. The Tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community and would be otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides as follows:

• For the period from 1 January 2023 to 15 December 2023 the following applies:

  oMr Ousey’s adjusted taxable income is varied to $78,713.

  oThe annual rate of child support otherwise payable is increased by $1,200, being Mr Ousey’s contribution to the costs of [Child 1’s] special needs.

• For the period from 16 December 2023 to 30 November 2025 the following applies:

  oMr Ousey’s adjusted taxable income is varied to $57,200.

  oThe annual rate of child support otherwise payable is increased by $1,200, being Mr Ousey’s contribution to the costs of [Child 1’s] special needs.