Park and Addinson (Child support)

[2020] AATA 4919

Park and Addinson (Child support) [2020] AATA 4919 (7 September 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC018895

APPLICANT:  Ms Park

OTHER PARTIES:  Child Support Registrar

Mr Addinson

TRIBUNAL:Member M Douglas

DECISION DATE:  7 September 2020

DECISION:

The Tribunal sets aside the decision under review and in substitution decides that the annual rate of child support payable by Mr Addinson be varied to $4,712 for the period 1 March 2020 to 31 December 2021. 

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – a ground for departure established based on the incomes of both parents – 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 removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. This review concerns an objection decision Services Australia (the Agency) made on 11 April 2020 departing from provisions of the Child Support (Assessment) Act 1989 (the Act) relating to an assessment of child support for Ms Park and Mr Addinson’s children, [Child 1] and [Child 2].

2. The Agency is the government instrumentality through which the Child Support Registrar acts. It was previously known as the Department of Human Services (the Department)  In order to understand the decision the Tribunal is reviewing it is appropriate to provide briefly some context about how an assessment is made and also provide some background about an earlier objection decision the Department made that was also reviewed by the Tribunal.

3. An assessment of child support is made in accordance with the provisions of Part 5 of the Child Support (Assessment) Act 1989 (the Act). Broadly speaking, those provisions prescribe a formula that applies to several variables to work out what child support one parent is to pay the other. Those variables include such things as the parents’ incomes for the financial year preceding the child support period to which the assessment relates, the level of care the parents provide for their children, the cost of the children and the parents’ responsibility to support any children they have from other relationships. If a parent believes there are special circumstances in their case, the parent may apply to the Registrar under section 98B of the Act for a determination to depart from those provisions of the Act relating to the assessment of child support. The Registrar describes such an application as a “change of assessment application”.

4. Ms Park made such an application on 23 November 2017 to the Department.  The decision the Department made with respect to her application was the subject of objections from both her and Mr Addinson. The Department made a decision on 11 June 2018 in response to both their objections, and that objection decision was reviewed by the Tribunal on 18 October 2018, which set aside the Department’s objection decision and substituted a decision that Mr Addinson’s self-support amount be varied to $8,935 for the period 1 December 2017 to 31 December 2020.  The member constituting the Tribunal on that occasion found that Mr Addinson was being provided accommodation at less than market value and that this amounted to a financial resource to Mr Addinson that enhanced his capacity to pay child support.  The member found that constituted a special circumstance that established a ground for departure. The member was also satisfied that it was just and equitable and otherwise proper to vary Mr Addinson’s self-support amount to $8,935 for the period 1 December 2017 to 31 December 2020.

5. Subsequent to that, Mr Addinson applied on 17 November 2019 to the Department for a “change of assessment”.  He asserted in support of his application that he was paying $300 a week rent, which was more than he was paying at the time the Tribunal reviewed the Department’s objection decision of 11 June 2018.  The assessment in force at the time he made this application obligated him to pay child support to Ms Park for the children at an annual rate of $6,146. That assessment of course incorporated the departure the Tribunal had determined, by its decision of 18 October 2018, was to be made to the assessment.  That assessment was calculated on adjusted taxable incomes of $49,065 for Mr Addinson and $19,504 for Ms Park.  

6. On 20 January 2020 the Department, having considered Mr Addinson’s application, refused to make a departure determination.  This was because it was not satisfied that a ground for departure had been established. 

7. Mr Addinson objected to that decision and on 11 April 2020 the Agency “part allowed” Mr Addinson’s objection and determined that Mr Addinson’s self-support amount be varied to $18,287 for the period 1 March 2020 to 31 December 2021.

8. Ms Park has now applied to the Tribunal for a review of that objection decision.

THE HEARING AND THE EVIDENCE

1. The Tribunal heard Ms Park’s application on 1 September 2020.  She and Mr Addinson both participated in the hearing by telephone.  They both gave affirmed oral evidence. 

2. The Child Support Registrar did not attend the hearing.

3. In addition to the oral evidence of Ms Park and Mr Addinson, the Tribunal has had regard to the following documentary evidence:

   ·Documents the Department has provided in accordance with subsections 37(1) and 38AA(1) of the Administrative Appeals Tribunal Act 1975.  These documents are paginated 1-211;

   ·Documents Ms Park provided which are marked A1-123;

   ·Documents Mr Addinson provided which are marked B1-58; and

   ·Mr Addinson’s 2020 tax return.

THE REQUIREMENTS FOR DEPARTURE FROM AN ASSESSMENT

1. As mentioned, a parent may, if there are special circumstances, apply to the Registrar under subsection 98B(1) of the Act for a determination to depart from the provisions of the Act relating to an assessment of child support.  The Department, acting on behalf of the Registrar, or the Tribunal in the Department’s place, if satisfied that the criteria of subsection 98C(1) are met can make one or more of the determinations listed in subsection 98S(1) to depart from the provisions of the Act relating to an administrative assessment of child support. The criteria specified in subsection 98C(1) are that:

   i.A ground for departure exists;

   ii.it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support to make a determination [under subsection 98S(1)]; and

   iii.it would be otherwise proper to make a determination [under subsection 98S(1)].

2. The grounds for departure are listed in subsection 117(2) of the Act.  The matters that are to be considered in deciding whether it is just and equitable to make a determination to depart from the provisions of the Act are listed in subsection 117(4) of the Act.  The matters to be considered in deciding whether it is otherwise proper to make a determination to depart from the provisions of Part 5 are listed in subsection 117(5) of the Act.

CONSIDERATION

Is a ground for departure established?

1. Mr Addinson relied on the ground departure provided in subparagraph 117(2)(c)(ia) in support of his change of assessment application.  That subparagraph reads as follows:

   “that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   (ia) because of the income, property and financial resources of either parent.”

2. As mentioned above, Mr Addinson asserted in support of his change of assessment application that the rent he pays for his accommodation had increased to $300 subsequent to the Tribunal’s decision of 18 October 2018.  In other words, the substance of Mr Addinson’s change of assessment application to the Department was that he no longer had available to him the financial resource the Tribunal found that had in the form of reduced rent.

3. Mr Addinson’s evidence to the Tribunal was that he resides in a house that his parents own.  He said that they had previously allowed him a reduced rent of $100 a week during the course of prior proceedings between him and Ms Park relating to their arrangements for the children.  His evidence was to the effect that his parents had indulged him in this way so that he could afford to pay legal fees consequent upon those proceedings.  Following the conclusion of those proceedings, his parents increased his rent from 1 July 2019 to $300 a week.  His evidence in that regard was supported by copies of his bank statements that disclosed payments of that amount being debited from his account. 

4. The Tribunal accepts that he is now paying $300 a week in rent to ensure accommodation for himself, his partner and their child. Mr Addinson presented evidence in the form of copies of listings with real estate agents, that reveal that the rent payable for a two-bedroom unit in the area in which he resides ranges between $285 to $400 a week.  That evidence indicates therefore that Mr Addinson is now paying a market rent, although at the bottom end of the scale.

5. In order to determine whether the provisions of the Act with respect to the assessment of child support result in an unjust and inequitable determination of the level of financial support to be provided by him for the children, it is necessary also to consider his income and property and whether he has other financial resources and also to consider the income, property and financial resources of Ms Park.

6. Mr Addinson is [an occupation 1] and conducts a business as such as a sole trader.  He produced to the Tribunal a copy of his tax return for the 2020 financial year.  That revealed that his gross receipts in that year from his activities as [an occupation 1] were $78,043.  He also received $6,000 in jobkeeper payments, resulting in his having a total income of $84,043.  Against that he claimed expenditure of $25,327, resulting in his having a taxable income for the year of $58,716.

7. Included in the expenditure Mr Addinson claimed was an amount of $3,000 for “contractors – bookkeeping”.  His evidence to the Tribunal was that this was an amount he paid to his wife.  He said his wife does his bookkeeping because “she is good with the books”, whereas “I am good with the tools”.  He said that his wife otherwise works “a little bit” as [an occupation 2].  He declared in in his 2020 tax return that his wife’s “ATI amount” was $20,000, which amount is essentially her taxable income.

8. Mr Addinson’s evidence to the Tribunal was also that he is not engaged on a full-time basis in his [occupation 1].  He said this is because of limited availability of work, inclement weather and no materials being available at times.  In that circumstance, it seems to the Tribunal that there is no reason, other than convenience, for Mr Addinson to engage his wife to do bookkeeping.  He is not prevented by a lack of time from being able to undertake that task of his business.  For the purpose of determining whether the provisions of the Act result in an unfair assessment of his child support obligation, the Tribunal considers that what he pays his wife for bookkeeping ought to be attributed as his income.

9. The Tribunal observes from a Statement of Financial Circumstances that Mr Addinson signed on 9 May 2020, declaring the contents to be complete and correct, that he listed weekly household expenses of $721 a week. 

10. Ms Park asserted that Mr Addinson receives “cash in hand” income as [an occupation 1], by which she meant income that he did not declare in his tax return to the Australian Taxation Office.  Mr Addinson denied that.  In support of her contention that Mr Addinson receives such income, she referred to Mr Addinson having previously quoted a fee of $400 a day for work he does plus a surcharge on any materials he supplied.  She referred to Mr Addinson having been able to afford an expensive wedding and also being able to afford a trip overseas to [Country 1].  In response to that, Mr Addinson confirmed that he does charge around $400 a day for the work he does, but repeated he does not work every day because of the factors previously mentioned.  He also denied that his wedding to his current wife was expensive and said it cost no more than $5,000 as it was held in a “back yard”.  He said their wedding happened, and the expense for it was incurred in November 2017.  He said the trip to [Country 1] happened in December 2017 and this was a honeymoon for him and his wife.  He said he spent no more than about $2,000.

11. There is no evidence that indicates that Mr Addinson is receiving income that he has not declared to the Australian Taxation Office.  Indeed, were he to do so then he would have committed an offence.  To find that he did so would, in the Tribunal’s view, require clear evidence that he had done so. 

12. In his Statement of Financial Circumstances he disclosed that his assets comprise small balances in bank accounts, his motor vehicle, of which he estimates the value to be $8,000 to $9,000, and household goods of a modest amount.  In other words, he does not have assets that he has that he could readily sell to enhance his capacity to provide financial support for the children. 

13. With respect to Ms Park, her evidence is that her profession is as an [occupation 3] and she conducts a business as such.  She does not work full time because of her caring responsibilities for the children.  She had not lodged her tax return for the 2020 year, but a copy of her return for 2019 year was available to the Tribunal. 

14. Ms Park’s tax return for the 2020 year revealed that she received Australian Government pensions of $19,504, which the Tribunal understands would have been a parenting payment (single).  In a Statement of Financial Circumstances that Ms Park signed on 4 May 2020 declaring the contents to be complete and true, she revealed that she continued to receive parenting payment (single).

15. Ms Park also disclosed in her tax return for 2019 that she received business income from her activities as an [occupation 3] totalling $38,836.  In the absence of any other evidence, the Tribunal infers that in all likelihood she would have received similar income from her business in the 2020 year, and that this is what she is likely to receive in the foreseeable future each year from her business.  Against her income in the 2019 year, she declared expenses totalling $33,427, resulting in her receiving net before tax income from her business of $5,409. 

16. Her expenses in the 2019 year included $29,448 for her motor vehicle.  That amount included $25,403 for depreciation of that vehicle.  She does not have a debt with respect to the vehicle.  In other words, her purchase of that vehicle, which occurred on 20 June 2019, was not subject to finance.  She did not need therefore to defray any part of her income in the 2020 year to her capital cost for the purchase of her vehicle and will also not need to do so from her future income. 

17. In those circumstances, and making some allowance for variation in her business income due to her caring responsibility for the children, the Tribunal considers, that she ought to be treated for the purpose of considering the fairness of the assessment of child support as having an income of around $45,000 a year. 

18. The Tribunal notes that in her Statement of Financial Circumstances Ms Park listed modest expenses for her household.  She also noted that her only assets were balances in her bank accounts, one of which had a balance as at the time she completed her form of $20,000.  She listed her motor vehicle, of which she estimated the value to be $25,000, and she listed household contents of a modest amount.

19. Her evidence to the Tribunal was that she had also received an advance of $100,000 from her mother for the benefit of the children and that she has deposited that money into accounts she has opened for the children.  Her evidence was that she has control over those accounts, in that she is able to withdraw money from them. Her evidence was also to the effect that it was her intention that the money be preserved for the benefit of the children.  The balance of those accounts is, in the Tribunal’s view, to be considered as a financial resource available for her for the support of the children given that the money is under her control.

20. For the sake of providing a point of reference, the Tribunal notes that were Mr Addinson’s child support obligation to be assessed by reference of an income for him of $58,181, which was his taxable income for the 2020 year, and an income for Ms Park of $25,199, which was her taxable income for the 2019 year, and with no variation to Mr Addinson’s self support amount, he would be obligated to pay roughly $5,000 a year in child support.  Were his obligation to be assessed by reference of an income for him of $61,181 and an income amount for Ms Park of $45,000, and were there to be no variation to his self support amount, then his child support obligation would be assessed at around $4,500.

21. There is not a significant difference between the two amounts. 

22. Further, by way of observation, those amounts correlate roughly with the amount he was assessed as liable to pay in child support from 1 March 2020 pursuant to the assessment as amended in accordance with the departure determination the Department made by its objection decision of 11 April 2020.  As mentioned earlier, the assessment of child support in force preceding that amendment, that is the assessment for the period to 29 February 2020, obligated Mr Addinson to pay child support at an annual rate of $6,136. 

23. Having regard to the discussion above, it seems to the Tribunal that the assessment of his child support obligation for the period to 29 February 2020 did result in an unfair level of financial support to be provided by him for the children. 

24. Accordingly, the Tribunal considers that as a consequence of Mr Addinson’s and Ms Park’s income in the 2020 financial year, which the Tribunal infers is likely to be roughly their income in the current financial year, and because Mr Addinson is now paying greater rent than was the case when the Tribunal reviewed the previous objection decision of the Department, the assessment of child support did result in an unfair determination of the level of financial support to be provided by Mr Addinson for the children.

25. In other words, it follows that this ground for departure is established.

Is it just and equitable to make a determination?

1. As already mentioned, the matters the Tribunal must take into account when considering whether it is just and equitable to depart from the provisions of the Act with respect to the assessment of child support are listed in subsection 117(4) of the Act. The Tribunal is not required to go slavishly through each of those matters but must have regard to those that are relevant to the particular circumstances of this case and do so in a practical and flexible way:  In the marriage ofGyselman and Gyselman (1992) FLC 92-279; Ross v McDermott (1998) 23 Fam LR 613; and Lawson and Edney [2017] FCWA 77. Rather than dealing separately with each matter that is relevant, it is convenient for the Tribunal to group the matters and consider them, insofar as the matters have relevance, by a reference to the following headings.

Mr Addinson’s circumstances

1. Mr Addinson’s circumstances in terms of his income, property and financial resources have been discussed above.  The Tribunal takes those matters into account when considering whether it would be just and equitable to make a determination to depart from the provisions of the Act with respect to the assessment of child support.

1. The Tribunal notes that Mr Addinson has a child from his present relationship.  His wife, as mentioned, works on a part-time basis as [an occupation 2], although her income is modest.  Some part of Mr Addinson’s income therefore would need also to be applied towards the cost of their child’s needs.  His obligation to support that child has equal priority with his obligation to support [Child 1] and [Child 2].

2. The Tribunal also notes that Mr Addinson does have discretionary expenditure that he could avoid.  The Tribunal notes from bank statements he provided that in the month of June 2020 he spent around $380 on takeaway meals or at restaurants and cafes and also spent $408 in purchasing liquor.  In May 2020 he spent $310 in takeaway meals or at restaurants and cafes and also $216.92 in purchasing liquor.  Insofar as he experiences any financial difficulty in paying child support, he has the option of reducing those items of his expenditure. 

3. The Tribunal takes into account that Mr Addinson incurs costs in supporting [Child 1] and [Child 2] in that he has care of them for 24% of the time. 

Ms Park’s circumstances

1. The Tribunal takes into account Ms Park’s circumstances with respect to her income, financial resources and property as set out above. 

2. The Tribunal also notes that Ms Park bears the greater portion of the cost with respect to the children, as they reside with her for 76% of the time.

3. The Tribunal further takes into account that were there to be a reduction in the amount of child support Mr Addinson is required to pay then there would be some hardship to Ms Park, but that can be alleviated by virtue of the financial resource she has in the form of the bank accounts that she has for each of the children that were funded by monies provided by her mother.

The children’s circumstances

1. The children are of a young age.  They consequently do not have income or any property.  There is no evidence that they have any special needs.

Conclusion

1. In the Tribunal’s view, having regard to the above, it would be just and equitable to make a determination to depart from the provisions of the Act with respect to child support and that the just and equitable determination to make would be to vary the annual rate at which Mr Addinson is to pay child support to that which ensued from the Agency’s objection decision of 11 April 2020.  

2. The Tribunal observes again, that the rate of child support that Mr Addinson is required to pay Ms Park as a consequence of the Agency’s objection decision matches what he would be required to pay were his obligation to be assessed by reference to an income of $61,181 for him and an income amount of $45,000 for Ms Park and were there to be no adjustment to Mr Addinson’s self support amount.  In other words, the annual rate from 1 March 2020 that resulted from the amended assessment consequent upon the Agency’s objection decision reflects, as it turns out, what the Tribunal considers is Mr Addinson’s present level of income and the fact that he is now paying his parents $300 a week in rent.

3. Whilst the determination the Agency made by its objection decision of 11 April 2020 was that there be a variation to Mr Addinson’s self support amount, the effect of that was that an assessment issued obliging Mr Addinson to pay child support at an annual rate of $4,712 from 1 March 2020.  The Tribunal notes too that as a consequence of Mr Addinson recently lodging his tax return with the Australian Taxation Office and having his taxable income assessed for that year, a new child support period will commence in which different adjusted taxable incomes will be used for Mr Addinson, and ultimately for Ms Park when her taxable income for that year becomes known.  That will result in an annual rate of child support being required of Mr Addinson other than $4,712.  Given that the Tribunal considers that the present rate at which he is required to pay child support is the just and equitable rate at which he should be paying child support, based upon the circumstances discussed above, the Tribunal therefore considers that it would be just and equitable to make a determination departing from the provisions of the Act with respect to child support such that the annual rate at which he is required to pay child support is varied to $4,712 for the period the subject of the Department’s objection decision of 11 April 2020.  The Tribunal does not consider commencing the departure from the assessment from an earlier date than 1 March 2020 would be just and equitable as regards Ms Park.

Is it otherwise proper to change the assessment?

1. In deciding whether it is otherwise proper to depart from the administrative assessment, the Tribunal must have regard to the fact that the primary obligation to support the children rests with Ms Park and Mr Addinson, and also have regard to whether, and if so how, any determination it makes would affect the entitlement of Ms Park or the children to an income tested pension, allowance or benefit. 

2. The Tribunal understands that neither child receives an income tested pension, allowance or benefit and, also, that circumstance will not change whatever determination the Tribunal makes. 

3. Ms Park receives a family tax benefit. The Tribunal understands that if Mr Addinson’s child support obligation were to be reduced from an annual rate of $6,136 to $4,712, the result would be a small increase in Ms Park’s family tax benefit that Ms Park wold otherwise receive, but having regard to matters set out above, and notwithstanding that the primary obligation to support the children rests with Ms Park and Mr Addinson, the Tribunal considers that it would be otherwise proper to make a determination to that effect.

DECISION

The Tribunal sets aside the decision under review and in substitution decides that the annual rate of child support payable by Mr Addinson be varied to $4,712 for the period 1 March 2020 to 31 December 2021.