Pateman and Carell (Child support)

[2022] AATA 1565

Pateman and Carell (Child support) [2022] AATA 1565 (24 February 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC022468

APPLICANT:  Ms Pateman

OTHER PARTIES:  Child Support Registrar

Mr Carell

TRIBUNAL:Member J Leonard

DECISION DATE:  24 February 2022

DECISION:

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

·the rate of child support payable by Mr Carell is to be increased by:

o$2,025 per annum for the period 25 January 2021 to 31 July 2021; and

o$1,693 per annum for the period 1 August 2021 to 28 January 2022; and

·Mr Carell’s adjusted taxable income is varied to $67,525 per annum from 25 January 2021 to 31 October 2023.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of child care significantly affect the cost of maintaining the child – 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 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 application for a change to a child support assessment made by Ms Pateman on 25 January 2021.  

2. Ms Pateman and Mr Carell are the parents of [Child 1] (born 2017). There has been a child support assessment in place, made by Services Australia (Child Support) since 2017.

3. Mr Carell is the parent liable to pay child support. The child support assessments for [Child 1] have been based on Mr Carell having a care percentage of 0% and Ms Pateman having a care percentage of 100%.

Child support assessments

1. The Child Support (Assessment) Act 1989 (the Assessment Act) provides a formula to determine the annual rate of child support payable for a child. The variables in the formula (called “particulars”) include adjusted taxable incomes and care percentages for each parent.

2. For the period 1 August 2020 to 31 July 2021 Mr Carell was assessed to pay child support of $1,242 a year. The assessment was based on Mr Carell’s 2019-20 adjusted taxable income of $35,921 and Ms Pateman’s 2019-20 adjusted taxable income of $22,581.

3. For the period 1 August 2021 to 31 October 2022 Mr Carell was assessed to pay child support of $1,990 per year. The assessment was based upon Mr Carell’s 2020-21 adjusted taxable income of $42,903 and Ms Pateman's 2020-21 adjusted taxable income of $38,853.

Change of assessment decision

1. The Act provides for a departure from the administrative assessment in certain circumstances. On 25 January 2021 Ms Pateman applied to Child Support for a departure from the assessment on the ground that the costs of child care for the [Child 1] were high and Mr Carell’s income, financial resources and earning capacity were not correctly reflected in the assessment.

2. On 10 March 2021 a decision was made to depart from the assessment and to vary the adjusted taxable income for Mr Carell to $70,000 from 1 February 2021 to 31 October 2023 and to increase the annual rate of child support by $2,652 for the period 1 February 2021 to 31 January 2022.

3. Mr Carell objected to that decision. His objection was partly allowed on 29 September 2021. The objections officer decided to depart from the child support assessment by:

   ·     varying Mr Carell’s adjusted taxable income to $55,808 from 1 February 2021 to 31 October 2022; and

   ·     increasing the annual rate of child support payable by Mr Carell by $2,652 from
   1 February 2021 to 31 January 2022.

Application for review

1. On 5 October 2021 Ms Pateman lodged an application for a review of that decision with the Tribunal.

2. The Tribunal had access to the statement and documents provided by Child Support (folios 1 to 324). Ms Pateman provided the Tribunal with documents (folios A1 to A143). Mr Carell provided the Tribunal with documents (folios B1 to B27). Copies of those documents were sent to the parties. Immediately after the hearing the parties provided additional documents which were accepted into evidence. A copy is attached to this decision.

3. The matter was heard on 24 February 2022. Mr Carell and Ms Pateman both attended the hearing by telephone. The Child Support Registrar was not represented at the hearing.

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 Annabel, 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

1. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Assessment Act. If satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations in section 98S of the Assessment Act. That section permits a range of determinations, including varying the annual rate of child support payable or a parent’s adjusted taxable income.

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

1. Ms Pateman sought a departure from the administrative assessment on the grounds that the costs of child care are high.

2. The grounds for departure are set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(b)(ib) provides as grounds for departure:

   (b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …

   (ib) because of high child care costs in relation to the child; or

   …

3. Subsection 117(3A) of the Assessment Act requires that the child or children to whom the costs relate are under 12 years of age at the start of the child support period, as in the case in this matter. Subsection 117(3B) of the Assessment Act states that child care costs can only be “high” for the purposes of subparagraph 117(2)(b)(ib) if they are more than 5% of a parent’s adjusted taxable income for the child support period.

4. The term “special circumstances” is not defined in the Assessment Act. In Gyselman v Gyselman [1992] FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

Are the costs of child care “high”?

1. For this ground to depart from the administrative assessment to be established, Ms Pateman’s child care costs would need to be more than 5% of her income over a child support period. The time period for consideration here involves two child support periods – the child support period from 1 August 2020 to 31 July 2021, and then the child support period from 1 August 2021 to 31 October 2022.

2. In 2020 [Child 1] was attending a community preschool three days per week with an out-of-pocket expense of $15 per day. Ms Pateman was studying during this time. Towards the end of 2020 [Child 1] commenced in a long day care centre with higher fees however Ms Pateman received a reduction due to the effect of child care subsidy. Ms Pateman commenced casual work five days per week and [Child 1] attended child care five days per week. Although the centre waived fees for some parents during the COVID-19 lockdown, this did not apply to Ms Pateman as [Child 1] continued to attend child care.

3. In the child support period extending from 1 August 2020 to 31 July 2021 (a period of 364 days) Ms Pateman’s income and costs are measured to determine whether the out-of-pocket childcare costs exceed 5% of her adjusted taxable income. Income of $22,581 was applied to the assessment for Ms Pateman in this child support period. To be considered high, her costs would need to exceed 5% of her income; $1,129.

4. The Tribunal determines that for the period 1 August 2020 to 2 January 2021 Ms Pateman’s out- of-pocket expenses was $990 ($45 per week x 22 weeks). A statement for the period 15 February 2021 to 7 March 2021 shows out-of-pocket expenses of $102 per week. The Tribunal is satisfied this is indicative of the out-of-pocket expenses incurred each week in the period 3 January 2021 to 31 July 2021 and totals $3,060 ($102 per week x 30 weeks). The Tribunal is satisfied that the costs of child care ($4,050 in the child support period) are more than 5% of the adjusted taxable income used for Ms Pateman in the assessment.

5. In the child support period 1 August 2021 to 31 October 2022 (a period of 457 days) income of $38,853 was applied to the assessment in respect of Ms Pateman. Over a period of 457 days this results in income of $48,646. To be considered high, Ms Pateman’s costs would need to exceed 5% of her income; $2,432.

6. Ms Pateman provided evidence of the out-of-pocket expenses of $26.06 per day in respect of care from 6 September 2021 ($130.30 per week). The Tribunal is satisfied this is indicative of the out-of-pocket expenses incurred by Ms Pateman until [Child 1] commenced school in 2022. Between 1 August 2021 and 28 January 2022, Ms Pateman’s out-of-pocket expenses totalled approximately $3,387 ($130.30 per week x 26 weeks).

7. The Tribunal is satisfied that the reasonable and necessary costs of child care are more than 5% of the adjusted taxable incomes used for Ms Pateman in the assessments until 28 January 2022. The out-of-pocket costs for child care significantly affect the overall costs to care for [Child 1] until he commenced school.

8. The amount of child support Mr Carell is assessed to pay is reduced because Ms Pateman’s income from employment is taken into account in the assessment. The Tribunal is satisfied that without access to child care she would not be able to earn the same level of income. It finds that the high child care costs provide special circumstances from which to depart from the assessment. The Tribunal finds that a ground is established to depart from the assessment under subparagraph 117(2)(b)(ib) of the Assessment Act.

Issue Two – Would a departure from the administrative assessment be just and equitable?

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment having regard to the matters set out in subsection 117(4) of the Assessment Act.

2. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. In accordance with the objects set out in section 4 of the Assessment [Child 1] should receive a proper amount of financial support from his parents in accordance with their capacity to contribute.

The child’s needs

1. Apart from the cost of child care, the Tribunal finds that Ms Pateman and Mr Carell appear to have the usual costs for [Child 1] as others in their financial circumstances would have for children of his age.

The children’s income, property, financial resources and earning capacities

1. There is no suggestion that [Child 1] has any income, property or financial resources or any unused earning capacity that needs to be taken into account in the child support assessment.

The income, property, financial resources and earning capacity of Mr Carell

1. Mr Carell is employed full time in a business owned by his father, [Mr A], that manufactures [product] predominantly for [purpose]. [Mr A] submitted a letter to the effect that he provides his son with a vehicle and phone. He stated he also provides him with meat for his family “to minimise grocery bills” and home-grown vegetables. Mr Carell has stated the benefit he receives from the motor vehicle and mobile phone is $136.63 and $13.85 per week respectively. The Tribunal notes Mr Carell’s calculation is in keeping with the findings made by Child Support regarding the running costs associated with a small car (page 119).

2. Ms Pateman stated the company owns two [company vehicle][vehicles of specified make and model] which are driven by Mr Carell and one of his brothers. They do not bear the company logo. The vehicle Mr Carell drives is the same one he had before they separated in August 2020. It was converted to a [number]-seater to accommodate their family. A second brother drives a [vehicle of different make and model] owned by the company.

3. Mr Carell did not list any expenses for fuel, registration, insurance or maintenance on his Statement of Financial Circumstances. He advised the [company vehicle][company vehicle] could be used by anyone who works in the company and that since he became partnered in August 2021 he makes use of his partner’s car for personal use on weekends. He could not estimate how many kilometres he travels per year for personal use.

4. Ms Pateman stated Mr Carell’s partner drives a [vehicle of specified make and model] which is not big enough to  accommodate Mr Carell and his partner’s family on weekends particularly when Mr Carell has care of his children. She was of the view he consistently uses the [company vehicle] for the majority of his personal use. Mr Carell stated he uses the [company vehicle] when he has [Child 1] and when he goes away.

5. The Tribunal is of the view that Mr Carell predominately utilises a [company vehicle] for personal use and the expense is met by his employer. A [vehicle of a similar type] is estimated to have running costs of approximately $1,600[1] per month (based on travelling 15,000 kilometres per year). If Mr Carell did not have access to this vehicle it is reasonable to assume he would need a similar sized vehicle for weekends and holidays to accommodate his children and his partner’s children. The running costs may be somewhat lower since August 2021 when Mr Carell had access to his partner’s car on weekends. Overall, the Tribunal considers it is reasonable to find that Mr Carell derives a financial benefit of $1,200 per month ($14,400 per annum).

   [1] Car running costs 2021: Victoria’s cheapest and most expensive cars | RACV

6. Mr Carell stated, and the Tribunal finds that he derives a financial benefit of $600 per annum through having his mobile phone costs met by his employer.

7. Ms Pateman is of the view that Mr Carell receives cash in hand when he works overtime and through making [product] with his brothers. Mr Carell denies this claim and stated that he did not work overtime in 2021 and due to the impact of COVID-19 restrictions he was only working three days per week for part of the year. Bank statements show that he was in receipt of jobkeeper payment between August 2021 and October 2021. He stated that when the business improves he may work overtime, but he will not be paid cash in hand.

8. Ms Pateman claimed that Mr Carell has expenses met by his father’s company such as groceries and holidays, and that he has access to the company accounts for personal use.

9. Ms Pateman provided evidence after the hearing (attached) that relates to [Mr A]’s company. This evidence does not support a finding that Mr Carell is a director or shareholder of his father’s company. It does not support a finding that Mr Carell has access to the company accounts or meets personal expenses from those accounts. In response to questions relating to the lack of debits for personal expenses from his bank account, Mr Carell stated his partner meets some of the costs of food and utilities. Currently her net income from employment is approximately $733 per week and she receives parenting payment partnered and family tax benefit of approximately $340 per fortnight.

10. There is no evidence of cash deposits into Mr Carell’s bank account (other than the amounts he claims are from the sale of his push bike and motor bike).

11. [Mr B], accountant for the business, provided a letter that Mr Carell is employed on a full-time permanent basis and received a weekly salary of $807.88 ($42,009 per annum).  Recent payslips show an annual salary of $42,125.

12. Although Mr Carell denied being paid cash in hand at hearing, the Child Support officer who made the original decision of 10 March 2021 spoke to Mr Carell about being paid cash for working on [Task 1]. He noted in part:

    These messages were posed to Mr Carell, as they oppose his initial comments, in which he stated he never received cash (income). Mr Carell stated this cash referred to (in the message) was in relation to the work for [Task 1] only. I confirmed it was his father, who is his main employer, who was paying him cash, whatever the task being completed. Mr Carell stated this is correct.

    Mr Carell stated he may on occasion get cash income, but this is not normal.

13. Nevertheless, the Tribunal is satisfied that Mr Carell has some of his personal expenses met or receives goods in-kind from his father or his father’s business. This benefit is not reflected in Mr Carell’s taxable income, but it improves Mr Carell’s financial position. Given the infrequent debits for food or personal expenses on Mr Carell’s bank statements, (both before and after he was partnered), the Tribunal is of the view that the claimed benefit of $100 per week is understated and instead finds that Mr Carell derives a benefit of $200 per week ($10,400 per annum).

14. In response to questions about the discrepancy between the net amount of wages deposited in to his account and the net amount on his payslip Mr Carell disclosed he directed his employer to withhold an amount of approximately $80 per week. He intended to open a separate bank account for savings but this has not eventuated. The bookkeeper for his father’s business has been in touch to say that he needs to direct how this amount is to be paid. Mr Carell estimated the arrangement has been in place for about 12 months and he is owed approximately $3,000. The Tribunal calculates the amount is likely to be in the vicinity of at least $4,160 ($80 per week x 52 weeks). Mr Carell did not disclose this as a financial resource on his Statement of Financial Circumstances.

15. Overall, the Tribunal finds that Mr Carell derives income and financial resources amounting to $67,525 per annum ($42,125 + $14,400 + $600 +$10,400). In coming to this figure, the Tribunal has not allowed any tax deductions from his gross income, but neither has it grossed up the value of the benefit derived from personal use of the car or mobile phone.

16. Using this figure in the assessment increases the annual rate of child support from $1,242 to approximately $4,936. This is a significant increase and creates a special circumstance to depart from the administrative assessment.

Mr Carell’s necessary commitments

1. Mr Carell is paying a mortgage of $263 per week and does not have any personal expenses that would be considered out of the ordinary. He estimated his home is valued at $500,000 which Ms Pateman considers is grossly understated.

2. The Tribunal notes that Mr Carell is able to afford discretionary items such as gym membership and Xbox membership. He has contributed to costs for [Child 1] such as medical expenses and private health insurance. On the basis of the evidence he provided, the Tribunal is satisfied that he has the ability to meet his reasonable and necessary expenses and to pay child support for [Child 1].

The income, property, financial resources and earning capacity of Ms Pateman

1. Ms Pateman commenced employment in February 2021 after a period of study. She is employed three days per week in the retail sector. She receives a part rate parenting payment.

1. Ms Pateman’s 2019-20 adjusted taxable income was $22,581 and her 2020-21 taxable income increased to $38,853. The Tribunal is satisfied that her income and financial resources is correctly reflected in her income tax returns. She has no significant assets. Ms Pateman has increased her hours of employment since separating from Mr Carell and there is nothing to suggest that any unused earning capacity could be determined under subsection 117(7B) of the Assessment Act. Ms Pateman has limited savings.

Ms Pateman’s necessary commitments

1. Ms Pateman lives with [Child 1] and her mother and pays $100 for lodgings. She has no unusual expenses associated with her own self-support.

The parents’ duty to support others

1. Mr Carell has a legal duty to support [Child 1] and his daughter from a previous relationship. He does not have a duty to support his partner or her children. Any support he provides to her cannot take priority over his duty to support his children. Ms Pateman does not have a legal duty to support anyone other than [Child 1].

Terms and period of departure

1. Ms Pateman applied for a departure from the assessment on 25 January 2021. The Tribunal finds that Mr Carell should be required to share the out-of-pocket childcare costs with Ms Pateman.

2. On balance, the Tribunal finds that it would be just and equitable for the annual rate of child support payable by Mr Carell to be increased by $2,025 per annum from the date of Ms Pateman’s application, 25 January 2021 until 31 July 2021 and then by $1,693 per annum for the child support period commencing 1 August 2021 and ending on 28 January 2022 after which [Child 1] commenced at school.

3. The Tribunal proposes to vary Mr Carell’s adjusted taxable income to $67,525 from 25 January 2021 to 31 October 2023.

Hardship

1. Mr Carell is not in arrears. The Tribunal’s decision will create arrears for Mr Carell, however in light of his income and financial resources, including the money he is owed by his employer, the Tribunal finds that any arrears will not cause Mr Carell hardship.

2. The Tribunal considers that the payment of child support proposed (currently about $93 a week) will not cause Mr Carell hardship. The decision will not cause Ms Pateman or [Child 1] hardship. The Tribunal finds it is just and equitable to make this change providing it is otherwise proper to do so.

Issue Three – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:

   (a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)   the effect that the making of the order would have on:

   (i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The child support law recognises that each parent has a primary duty to maintain their children. The Tribunal accepts that this decision may slightly reduce the amount of family assistance Ms Pateman receives in respect of [Child 1]. The Tribunal is satisfied that a departure from the assessment will better reflect the financial resources that have been available to both parents and ensure that the level of financial support provided by the parents for their child is determined according to their capacity to provide that support. It is therefore otherwise proper to depart from the administrative assessment in this matter. 

DECISION

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

·the rate of child support payable by Mr Carell is to be increased by:

o$2,025 per annum for the period 25 January 2021 to 31 July 2021; and

o$1,693 per annum for the period 1 August 2021 to 28 January 2022; and

·Mr Carell’s adjusted taxable income is varied to $67,525 per annum from 25 January 2021 to 31 October 2023.