Rasnick and Netter (Child support)

[2022] AATA 2059

Rasnick and Netter (Child support) [2022] AATA 2059 (18 May 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022757

APPLICANT:  Ms Rasnick

OTHER PARTIES:  Child Support Registrar

Mr Netter

TRIBUNAL:Member E Kidston, Member S Letch

DECISION DATE:  18 May 2022

DECISION:

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

(a)for the period 27 April 2021 to 31 October 2023, Ms Rasnick’s adjusted taxable income is varied to $250,000;

(b)for the period 27 April 2021 to 2 February 2022, Mr Netter’s adjusted taxable income is varied to $120,000;

(c)for the period 3 February 2022 to 31 October 2023, Mr Netter’s adjusted taxable income is varied to $100,000;

(d)for the period 27 April 2021 to 31 December 2024, Mr Netter’s annual child support liability is increased by $5,600 (for [Child 1]’s school fees).

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – costs of education – manner expected by both parents – a ground for departure established – 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. Ms Rasnick and Mr Netter are the parents of [Child 1], born 2013, and [Child 2], born 2019. Mr Netter has been assessed by the Child Support Agency (CSA) as liable to pay child support to Ms Rasnick. Ms Rasnick seeks a review of an objection decision by the CSA which allowed “in part” her objection to a “change of assessment” decision of 16 July 2021. 

2. By way of background, it is convenient to set out some extracts from the objections officer decision dated 5 November 2021:

   DECISION UNDER REVIEW
   On 27 April 2021, Mr Netter applied for a change to the assessment under Reason 8A. Ms Rasnick responded and lodged a cross-application under Reasons 3, 6 and 9.
   On 16 July 2021, Decision Maker (DM) [found] Reason 8A established by Mr Netter and Reasons 3 and 6 established by Ms Rasnick, changing the assessment as follows:
   1. From 27 April 2021 to 14 March 2022, Ms Rasnick`s Adjusted Taxable Income is set at $100,000;
   2. From 27 April 2021 to 30 April 2022, the annual rate payable by Mr Netter is increased by $3,000;
   3. From 1 May 2022 to 31 December 2023, the annual rate payable by Mr Netter is increased by $3,250. This amount is to be increased by the child support inflation factor on 1 January 2023;
   4. The intent of Paragraphs 2 and 3 are to account for special circumstances involving the costs of [Child 2]`s child care. This part of the decision will end in the event that this special circumstance ceases to apply.
   5. The variation to the annual rate will not apply at any time when Ms Rasnick is not the carer entitled to child support for all of the children of the child support case
   …
   Her 2019/2020 taxable income shows a taxable income of $23,693. Ms Rasnick explains this was so low due to being on maternity leave during that financial year,
   It is not in dispute that Ms Rasnick operates a business, [Business 1].
   When considering this reason it is open to me to look beyond Ms Rasnick` declared taxable income and consider other resources or benefits that her self-employment may provide. This does not mean Ms Rasnick has not accurately declared her income to the ATO.
   Since Mr Netter lodged his application, Ms Rasnick has lodged her 2020/2021 adjusted taxable income of $120,591. This is comprised of $99,999 in salary from [Business 1], with approximately $19,000 derived from franking credits/dividends, $4,541 from trusts and a minimal amount of interest, minus $3,540 in deductions.
   [Business 1]`s 2020/2021 company tax return shows income of $463,170 and expenses of $442,618, with a net profit of $20,552. I am satisfied this net profit is a financial resource which Ms Rasnick has available to her and should be reflected in the child support assessment.
   I am satisfied Ms Rasnick is provided with a car and phone which she can utilise for personal benefit, to which I will attribute a conservative amount of $10,000.
   Further, Ms Rasnick`s bank statements show that she is also accessing funds from the business with which she uses to meet personal expenses.
   Of note, Ms Rasnick drew approximately $31,000 from [Business 1] in early 2021 to pay school fees and legal costs. Given the intermittent and varied nature of these drawings, and Ms Rasnick`s apparent ability to draw down as required, I will conservatively attribute an additional $50,000 to reflect the financial resources Ms Rasnick is able to access via her directorship of [Business 1] which should be considered when determining the income used for her in the child support assessment.
   Therefore I find Ms Rasnick`s 2020/2021 income as follows:
   $120,591 taxable income
   $20,552 net profit
   $10,000 car/phone benefit
   $50,000 drawings
   $201,143 Total
   Accordingly, I am satisfied that Ms Rasnick`s 2019/2020 taxable income did render the child support assessment based on an income of $23,693 unfair to Mr Netter, as her actual earnings from July 2020 onwards were significantly higher.
   However, I also note and accept the evidence Ms Rasnick has provided regarding recent medical issues rendering her unable to work more than two or three days per week. Average gross weekly income of $1,538 annualises to $79,976. Adding the net profit, $10,000 for a car and phone and the $50,000 drawings as above results in an income of $139,976
   I am satisfied special circumstances exist and Ms Rasnick`s income and financial resources renders the child support assessment unfair. Reason 8A is established.
   …
   Ms Rasnick submits:
   - [Child 1] attends private school and she pays all of the fees herself;
   - [Child 1] originally went to [School 1], but moved to [School 2] in 2020;
   - Mr Netter signed the enrolment forms for [School 2];
   - The child support assessment should be changed to reflect the cost of [Child 1]`s schooling.
   Ms Rasnick provided the following evidence:
   - [School 2] enrolment form for [Child 1], 8 April 2020. Signed by both parents;
   - Account statements from [School 2], 19 April 2021 showing $13,834, $18,082 and $17,291 paid for [Child 1] and [fees] on 19, 20 and 26 January 2021.
   - Personal bank statements which align with the payments made for the fees.
   In response, Mr Netter submits:
   - He agreed for [Child 1] to attend [School 2], however Ms Rasnick advised him he would not need to pay for any fees;
   - Ms Rasnick pays for the fees from funds from the Trust.
   In response, Ms Rasnick submits:
   - She previously did utilise Trust funds for the school fees, however since 2021 she has paid the cost herself;
   Ms Rasnick provided the following evidence:
   - Personal bank statement which shows the payments made to [School 2] outlined in the invoice above in January 2021.
   …
   Based on the available evidence, I am satisfied there is a mutual intention for [Child 1] to attend [School 2]; the first threshold requirement is met. The school`s website shows the tuition for a Reception-Year 3 in 2021 is $14,046 per year. The cost of child` amount for [Child 1] in the current assessment is $9,055. [Child 1]`s annual tuition fee is significantly higher than this amount. Accordingly, I am satisfied the cost does significantly affect the cost of maintaining [Child 1] overall; the second threshold requirement is met. I am satisfied special circumstances exist. Reason 3 is established.
   …
   The income used in the assessment for Mr Netter is his 2020/2021 ATI of $105,857. This is comprised of wages and reportable fringe benefits from his work in the [Employer 1]. Ms Rasnick provided evidence of a declaration made by Mr Netter in the Family Court in July 2021, in which he declared he receives a non-taxable allowance $85 per week as part of his employment with the [Employer 1]. I note the payslip provided by Mr Netter shows his gross annual income to be approximately $101,000.
   Mr Netter confirms he operated a business for a short while during the height of the COVID pandemic on account of extra work available due to his medical training, but after expenses he only realised a profit of around $80 for the financial year. On balance, I will not attribute any additional income to Mr Netter on account of his short term additional work, as I am satisfied the net amount was negligible.
   However, I find Mr Netter received $4,420 in additional income by way of an allowance, this is not included in Mr Netter`s tax return. Adding this to Mr Netter`s income only increases the annual rate of child support payable by $9.58 per week which I do not consider significant. Accordingly, I am satisfied Mr Netter`s income does not result in an unfair assessment to Ms Rasnick.
   I have found Reason 8A established with regard to Ms Rasnick`s income. I find her income to be $201,193, with a temporary reduction due to her inability to work full-time in the later part of 2021 reducing this to $139,976. I consider it fair to apply Ms Rasnick`s income to the assessment to reflect her capacity to support [Child 1] and [Child 2].
   I find it reasonable to apply Ms Rasnick`s lower income until the end of 2021, however I have no evidence which suggests she will be unable to return to her usual full-time working pattern in 2022 and intend to set her incomes accordingly.
   I have found Reason 3 established and am satisfied it is fair Mr Netter contribute towards this cost moving forward, as I am satisfied it is mutually intended for [Child 1] to attend [School 2]. I note Ms Rasnick has paid the costs for [Child 1] in full for 2021 already. I am not satisfied doing so placed her in any financial hardship or rendered her unable to ensure the children`s proper needs are being met.
   Furthermore, I am satisfied Ms Rasnick had the benefit of a lower income used in the child support assessment for some time prior to Mr Netter`s application, noting she has been assessed on an income of $23,693 since December 2020.
   I also note that if I changed Ms Rasnick`s income from the date Mr Netter applied for a change to the assessment, 27 April 2021, she would owe Mr Netter around $3,900 after the child support was recalculated.
   On balance, I find the fairest outcome would be to commence Mr Netter`s contribution towards [Child 1]`s fees in 2022 and not apply the higher income I have found for Ms Netter under Reason 8A until the same date.
   I will set Ms Rasnick`s income at $139,576 from the date of her objection, 6 August 2021. This dating is intended to reflect the fact [Child 1]`s fees have been paid for 2021 and also that Ms Netter`s capacity to work full-time has been affected in the back half of 2021.
   The school website shows [Child 1]`s fees will be the same in 2022 as they are in 2021 ($14,067) but I will apply a 3% increase, which is usual for schools to increase fees year on year ($14,489).
   I have no information which suggests Mr Netter would be unable to contribute to [Child 1]`s costs or that doing so would place him in undue financial hardship. I find Mr Netter should be liable for 50% of [Child 1]`s schooling costs in 2022, ($7,245). My decision is as follows:
   - From 6 August 2021 to 31 December 2021, the adjusted taxable income for Ms Rasnick is set to $139,576
   - From 1 January 2022 to 31 December 2022, the adjusted taxable income for Ms Rasnick is set to $201,143;
   - From 1 January 2022 to 31 December 2022, the annual rate of child support is increased by $7,245.
   Given the nature of the claims made by each parent and the circumstances of the case, outlined above, I encourage the parents to consider making a binding child support agreement for 2023 and beyond, encompassing child maintenance payments and the manner in which they will share [Child 1]`s private schooling costs.

   …

3. Ms Rasnick and Mr Netter participated in the Tribunal’s hearing by conference telephone.  Ms Rasnick was assisted by Ms [A]. In making its decision, the Tribunal took into account the sworn evidence of both parties, the CSA materials, and additional materials submitted by both parties. Mr Netter submitted additional materials after the hearing; in fairness to Ms Rasnick, those materials were not accepted into evidence and not taken into account by the Tribunal.

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

4. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the CSA as reasons 8A and 8B, provide as grounds for departure:

   (c)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; or

   (ib)       because of the earning capacity of either parent

2. The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:

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

   (a)  one or more of the following applies:

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

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

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

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

   (i)  the parent's caring responsibilities; or
      (ii)  the parent's state of health; and

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

10.Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

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

…    

(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents …

11.The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

12.Ms Rasnick concedes that from the date of Mr Netter’s application for a change of assessment on 27 April 2021, and until the end of 2021, her income should be reflected as some $139,000, and then some $190,000 from 1 January 2022. These sums exceed the amounts applied under the child support formula regime (Ms Rasnick’s 2019/20 adjusted taxable income amounted to $23,693), and Ms Rasnick’s significantly higher financial capacity renders the child support assessment unfair. In the special circumstances of the case, there is a ground to depart from the administrative formula. 

Issue 2 – Is it just and equitable to depart from the administrative assessment?

13.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

14.The Tribunal observes that section 2A of the Administrative Appeals Tribunal Act 1975 requires the Tribunal to be fair, just, economical, informal and quick.

The hearing

15.Ms [A], on Ms Rasnick’s behalf, submitted to the Tribunal that Ms Rasnick’s income should be assessed as $139,000 from August 2021; Ms Rasnick also seeks a 50% contribution for [Child 1]’s tuition fees from the beginning of 2021. She submits an income in the order of $190,000 (including a salary of $100,000 this year) would be appropriate from the beginning of 2022, and suggests the sum of $50,000 for drawings made from [Business 1] Pty Ltd, as assessed by the CSA, was excessive. Ms Rasnick contends that business expenses are legitimate – she has a separate phone for work, and the car is applied in the order of 80% for business reasons. Ms Rasnick also suggests there are unresolved issues surrounding Mr Netter’s income from the [Employer 1], and his work as a [Occupation 1] ([OCCUPATION 1]).

16.Mr Netter submitted that an income of $190,000 for Ms Rasnick would be “insulting”. Representations in family law proceedings suggested Ms Rasnick was earning a salary of $150,000 (which Ms Rasnick suggested was the case when she was working more days, reduced in 2021 as a result of her health), and the healthy profits made by [Business 1] . Mr Netter pointed to the very significant drawings for personal expenses made by Ms Rasnick – some $50,000 over a four-month period. Ms Rasnick explained that sums drawn for personal use constituted Division 7A loans required to keep her “afloat” – she submitted she will be obliged to repay those loans. Mr Netter questioned whether Ms Rasnick’s car was used for personal purposes only 20% of the time, observing her office to be only two kilometres from her home. Mr Netter said Ms Rasnick uses the vehicle to transport the children to school, and for other activities. Mr Netter raised a number of matters during the hearing concerning asset disclosures made by Ms Rasnick, which the Tribunal regarded as relevant to the separate family law property matters presently on foot. 

17.Mr Netter told the Tribunal that he disagrees with the CSA that it would be unjust to backdate Ms Rasnick’s much higher income prior to the date he made his departure application on 27 April 2021. He pointed to a net profit being made by [Business 1] Pty Ltd in the 2019/20 financial year of some $200,000. He pointed to higher profits in the recent financial statements, and around $100,000 or more per annum in private expenses (including legal fees). He suggested a salary of $200,000 (on the basis of a salary of $150,000 for “0.6 FTE”) or more would be representative of Ms Rasnick’s financial capacity. Mr Netter raised questions about the legitimacy of Ms Rasnick’s claimed expenses of some $1,151 per week for education expenses (folio A9 refers); Ms Rasnick indicated that sum included considerable child care costs for [Child 2], as well as [Child 1]’s school fees.

18.Mr Netter confirmed that from December 2021, his income has been assessed by the CSA on the basis of a reduced estimated income (under the formula regime) for the 2021/22 financial year. Mr Netter clarified that the Medicare information pointed to by Ms Rasnick whilst he was engaged by the [Employer 1] were not payments received by him; he was on “secondment” [working] as a [OCCUPATION 1], and received only his usual [pay], and no additional sums. 

19.Ms Rasnick observed that the payslips provided by Mr Netter reveal he is paid by the [Company 1], which is associated with Mr Netter’s brother, who is [an occupation] in New South Wales. Mr Netter told the Tribunal his only source of income from April 2021 until February 2022 was his [Employer 1] pay (approaching $120,000 per annum as of December 2021: folio B3), and that his income from February 2022 was constituted only by his superannuation pension (which is not a permanent pension, and is subject to regular reviews every three years or so), and his work as a [OCCUPATION 1], evidenced by his payslips. Mr Netter told the Tribunal that he works as a [OCCUPATION 1] two days per week and earns $865 (before tax) per week. Ms Rasnick pointed to banking records she received recently in family law proceedings recording several payments in January 2022 of $1,500 per week. Mr Netter initially told the Tribunal he “did not know that was being referred to”; upon checking his banking records, he recalled that he had, in fact, started working as a [OCCUPATION 1] in December 2021 and that he was working four days a week. When asked by the Tribunal why he could not continue to work four days a week, Mr Netter attributed the decline in his health, and resulting capacity, to his discharge in February 2022. Mr Netter also disputed any suggestion his gross superannuation pension (of some $78,000 per annum) should be assessed, pointing to the Child Support Guide which he said supported his submission. He said there was a “big case” which settled the issue. He contends his total income should be assessed as some $83,000 per annum from February 2022.

20.Mr Netter told the Tribunal that it had been intended that [Child 1] would attend private school; however, that was conditional upon his tuition fees being covered by the trust. Mr Netter suggested his signature on the enrolment form (at folio 170 of the CSA materials) is not his signature; Ms Rasnick strenuously denied she had forged his signature, and pointed to CSA documents recording that Mr Netter conceded he had signed the form. Mr Netter told the Tribunal that was a “mistake” which only came to his attention when he reviewed the form carefully. Mr Netter indicated he had been happy for [Child 1] to stay at [School 1]; the annual fees there were around $8,000, not the $14,000 at [SCHOOL 2]. Ms Rasnick contended that if her income was to be assessed at a level greater than the $139,000 assessed by the CSA, she would insist that Mr Netter’s contribution for school fees be backdated. Ms Rasnick told the Tribunal she has a binding child support agreement in respect of a child not in the present child support case which involves school fees; any payments made by the trust have been made in respect of the child in the other case, and not for [Child 1]. Mr Netter disputed that was so.

21.Ms Rasnick contended that an assessment rendering Mr Netter liable for a contribution for school fees should extend to the end of 2024. Mr Netter did not indicate strong opposition to a departure being made further into the future in the interests of promoting some certainty in the assessment. Ms [A] told the Tribunal that she was hopeful the parties would be able to agree to a binding child support agreement going forward.

Consideration

22.It is convenient to set out Mr Netter’s position which is well summarised in his written submission to the Tribunal:

…

6. Pension entitlement Letter.

a. In this letter I note I am being incorrectly taxed, and that the incorrect figures have been published with respect to taxed and tax-free thresholds, and the creation of a term “untaxed component” which is not in accordance with ATO legislation.
b. I have requested amendment to this document from the CSC, however it is being refused, despite their acknowledgment in the email dated 15 March 2022, that my pensions is a lump sum payment type.
c. In accordance with Child Support guide 2.4.4.10 Specific Tax Free Pensions or Benefits, the tax free component of my pension is not to be included in my income as it is not one of the pensions listed for inclusion.
d. Thus, I am seeking the correct taxable component only be included in my ATI in accordance with current legislation, (Income Tax Assessment Act 1997 - SECT 307.145), which is calculated at $1,719.13 per fortnight.

7. My Salary. Based on the above and my regular salary, I am seeking my ATI to be set at $83,697.38.
8. COA Reason 5 consideration

a. Ms Rasnick is currently exclusively residing in the home we jointly own together, and has done so since I was asked to vacate in September 2020. The house was recently valued at $1,650,000 by a jointly appointed valuer. As at today’s date, there is $372,614.11 outstanding on the mortgage.
b. I have requested Ms Rasnick services the mortgage, or provides me with financial compensation given she has exclusive use of this joint asset, however she refuses and has not made any mortgage repayments on the property since April 2021.
c. I have been required to establish a home of sufficient quality and size for the time the children are in my care. Since I was asked to leave the family, my rental costs alone to date, have totaled almost $40,000.
d. This additional expense that I incur unilaterally, whilst Ms Rasnick has exclusive financial benefit of a joint asset to my exclusion is grossly unjust, and I am seeking that a fair rental payment for the joint asset be applied to Ms Rasnick’s ATI. Similar quality homes in the area rent for in excess of $1,600 per week. Accordingly, I am seeking an additional $800 per week ($41,600 per annum) be applied to Ms Rasnick’s ATI to accurately reflect this benefit she is receiving at my expense. I am also seeking this amount be backdated to April 2021, when Ms Rasnick ceased making mortgage repayments.

9. Ms Rasnick’s Salary

a. It is requested that the decision made to not backdate Ms Rasnick’s ATI before April 2021 be reviewed to include FYE 2020, where Ms Rasnick only declared a taxable income of $23,693, despite her company publishing a net profit in excess of $200,000 that same year. Evidence for this is shown in the attached [Business 1] Report for period ending 30 June 2021.
b. The existing COA decision which provided Ms Rasnick’s ATI as $201,143 is requested to be amended to $460,000 (plus an additional $41,600 noted above), based on the following:
i. The attached account transaction list for [Business 1] which shows moneys Ms Rasnick has drawn down against her business for the period 30 September 2021 to 31 January 2022 for personal expenses. Over this 4 month period, some $58,241.53 in personal expenses are listed. I am suggesting a conservative estimate of an additional $150,000 be added to Ms Rasnick’s ATI, to accurately reflect funds at her disposal.
ii. Also attached is an email Ms Rasnick sent on 21 March 2021, to the jointly appointed valuer who is valuing her business. In it she lists her annual salary as $150,000. She notes she is only working 3 days a week. It is my view she has a capacity to work at least 4 days a week, given she has [Child 2] in daycare 4 days a week, routinely drops her off at between 0800 and 0830, and collects at 1630 – 1730). Accordingly I believe her salary should be assessed at $200,000 per annum.
iii. Net profit for her company [Business 1] was disclosed by Ms Rasnick in the profit/loss statement 01 July 2021 to 26 February 2022 as $67,729, which is attached. Projecting this for the financial year would provide a conservative estimated net profit of $100,000, funds unilaterally available for Ms Rasnick to withdraw and utilize.
iv. $10,000 car/phone benefit as previously assessed.

10. [Child 1]’s School Tuition Fees

a. As previously advised, the agreement was that Ms Rasnick would meet the cost of these through funds available in her discretionary [trust]. I did not sign the enrolment form that Ms Rasnick has provided as evidence to CSA.

c. I verbally agreed to [Child 1] attending [SCHOOL 2] on the basis of the funding being provided from this trust.

23.The Tribunal observes updated records provided by the CSA record that the CSA accepted an estimated income from Mr Netter under the formula arrangements of $81,632 (annualised) effective for the period 21 December 2021 to 30 June 2022 (folio 839 refers).

24.The evidence reveals that Mr Netter receives a payment through his superannuation fund on the basis of his invalidity from the [Employer 1] which he says is reviewed every three years. He receives a sum of $78,977 per annum. He argues that the full amount of that payment should not be included as a financial resource. In relation to his present income, he has submitted recent payslips from the “[Company 1]” recording gross weekly wages of $865 per week. Mr Netter’s evidence was that this represents two days a week working as a [Occupation 1].

25.Ms Rasnick raised issues around Medicare records for a period during which Mr Netter says he was “on secondment” from the [Employer 1] and for which he received no additional benefit. The Tribunal accepted Mr Netter’s evidence in that respect, and is not satisfied there is any evidence he received any supplementary financial payments from Medicare. The Tribunal also finds Mr Netter has received no financial benefit [for] the purposes of this assessment.

26.Mr Netter made his application for a change of assessment on 27 April 2021. In the ordinary course, there would need to be compelling circumstances to backdate the effect of any departure. In weighing up the competing factors, the Tribunal is not persuaded it would be appropriate to give effect to any retrospective changes.

27.Ms Rasnick contends that her income in 2021 should be represented by a figure of some $139,000; from the beginning of 2022, she contends a sum of $190,000 should be adopted.

28.Ms Rasnick’s 2020/21 adjusted taxable income was some $120,000; [Business 1] Pty Ltd derived a net profit of some $30,000 which is properly attributable to Ms Rasnick. The CSA objections officer added a total of some $60,000 to reflect personal benefits obtained by Ms Rasnick, and drawings for personal expenses. This, it seems to the Tribunal, was a generally fair approach. However, based on medical evidence presented by Ms Rasnick that she was only able to work two to three days per week, the objections officer proportionately discounted Ms Rasnick’s income for the balance of the calendar year.

29.Ms Rasnick’s evidence about the present financial year is that she is paid a salary of $100,000 (not dissimilar to the 2020/21 financial year). The most up-to-date financial statements for [Business 1] Pty Ltd (folio B24 refers) reveal a net profit of $67,729 (annualised to approximately $100,000). Ms Rasnick continues to enjoy some personal benefits of a motor car, for example), and claims for non-cash expenses (see folio A29 and claimed depreciation expense; in the 2021 financial year, an amount for “instant asset write-off” was claimed). She has continued to meet personal expenses through the business accounts, which she argues should be disregarded on the basis those sums will need to be repaid under a Division 7A loan arrangement.

30.In other words, the Tribunal considers that notwithstanding a period of medical incapacity, there appears to have been no material change to Ms Rasnick’s overall financial position from April 2021 to the present which warrants different sums being applied for her adjusted taxable income.

31.It is not possible in these assessments to account for every single dollar; a fair assessment must be made on available evidence, bearing in mind the overriding objectives of the scheme. Here, the Tribunal considers that a fair starting position would be to include Ms Rasnick’s salary and the anticipated profit as a financial resource available to Ms Rasnick, represented by a sum of $200,000. There are some non-cash expenses claimed, and some (more limited than has been accepted to date, according to Ms Rasnick) personal benefits obtained through business expenses. Furthermore, in the Tribunal’s assessment, the very large extent of personal drawings (or loans, as characterised by Ms Rasnick) cannot be ignored in assessing Ms Rasnick’s financial capacity. At the same time, the Tribunal acknowledges that these sums are claimed to represent loans to Ms Rasnick which will be required to be repaid. In the Tribunal’s assessment, a fair and conservative balance will be struck by adding an additional component of $50,000 to represent personal benefits from business expenses, some “disallowable” (for child support purposes) expenses, and the resources being accessed by Ms Rasnick by withdrawing funds from the business via the mechanism of Division 7A loans. This results in an assessment for Ms Rasnick’s adjusted taxable income of $250,000, which the Tribunal considers ought to apply in the assessment from 27 April 2021.

32.Mr Netter’s adjusted taxable income is best represented by his [Employer 1] income of some $120,000 from April 2021 until his discharge on 2 February 2022. The Tribunal accepted Mr Netter’s evidence about the arrangements associated with his work as a [OCCUPATION 1], and that he received no other financial benefits during the period up to December 2021 when he started working as a [OCCUPATION 1] (initially for four days a week, reducing to two days from February 2022).

33.After he left the service, Mr Netter commenced to receive pension entitlements under [a] Scheme (folio B22 refers). He also works for two days a week as a [OCCUPATION 1]. Mr Netter refers to the Child Support Guide at 2.4.4.10; that section of the Guide makes no specific reference to the treatment of the pension entitlements received by Mr Netter.

34.The general starting position would be that the gross pension (some $79,000) would be regarded as a financial resource available to Mr Netter – in the same way that under the formula arrangements, a person’s gross wage (and not net wage) is maintained as a starting position. Mr Netter contends a sum of $44,700 ($1,719 per fortnight), representing what he says is the “correct taxable component”. Ms Rasnick contends a sum of some $54,800 ought to be assessed (representing the net “in hand” sum received by Mr Netter).  The Tribunal – in the same way it has no cause to doubt the validity of the medical evidence submitted by Ms Rasnick in respect of her diminished work capacity – has no reason to doubt the medical evidence advanced by Mr Netter. The Tribunal accepts that Mr Netter has a diminished work capacity of two days per week from February 2022, and that there is no basis to assess his income at a higher level on the basis of an assumed “earning capacity”.  

35.In the Tribunal’s assessment, a fair balance would be to treat Mr Netter’s “in hand” (after tax) pension as a financial resource (in round terms, $55,000 per annum). His income as a [OCCUPATION 1] of around $45,000 per annum brings Mr Netter to an assessment of $100,000 per annum from 3 February 2022.  

36.Prior to December 2021, Mr Netter had no recorded care of the children. If Mr Netter’s income was assessed as $120,000, and Ms Rasnick’s income as $250,000, from 27 April 2021, on the Tribunal’s broad calculations, Mr Netter’s liability (without any liability for school fees, discussed below) would be some $11,700 per annum.[1] Whilst it appears on the evidence available that Mr Netter may have had a period from December 2021 until his discharge on 2 February 2022 where he received both [Employer 1] income and income working as a [OCCUPATION 1], in balancing competing factors (including that the Tribunal has not determined it appropriate to backdate a higher level of assessed income for Ms Rasnick prior to the date of Mr Netter’s departure application), the Tribunal will not make any adjustment to the sum of $120,000 to be applied to the assessment.

[1] Mr Netterurges a much higher assessment of Ms Rasnick’s income; even if her income were assessed at, for example, $350,000, Mr Netter’s liability would still approach some $9,000 per annum. Conversely, if Ms Rasnick’s income were to be assessed at a much lower sum of $190,000, Mr Netter’s liability would remain at some $14,500 per annum.

37.From December 2021, Mr Netter has been recorded as having regular care (22%) of the children. In 2022, with Mr Netter’s income assessed as $100,000, and Ms Rasnick’s income as $250,000, Mr Netter’s liability (again, without school fees) would reduce to some $900 per annum.

38.Turning to school fees, there appears to be no serious dispute that it was always intended [Child 1] would attend private school. Mr Netter argues this was conditional on the arrangements which existed prior to separation.

39.The Tribunal understood that position. However, it is common for a parent, after separation, to suggest that changes to respective financial positions should relieve a parent from an obligation to meet tuition expenses. If the pre-condition is satisfied – namely, that a child is being educated in a manner expected by the parents – the starting position is that each parent should contribute equally to tuition fees.

40.Mr Netter also suggests [Child 1]’s expenses are being met by a trust fund. Ms Rasnick says that is not so. Even if funds were being directed from a trust from which Ms Rasnick has an association, ultimately, it is the parents who are liable to provide support. Grandparents, or other relatives, will, from time to time provide financial assistance. Any such assistance does not alleviate the primary responsibility of the parent. Mr Netter did not suggest that he had made any direct contribution to the funds which established the trust in question.

41.Accordingly, it would be just and equitable for Mr Netter to make a contribution towards [Child 1]’s tuition fees. Those fees have been identified as some $14,000 per annum.

42.The Tribunal has assessed Ms Rasnick as presently having a much greater financial capacity than Mr Netter. That disparity, in the Tribunal’s assessment, warrants an adjustment to the starting proposition that the tuition fees be equally shared. In reflection of that disparity, the Tribunal considers it would be just and equitable for Mr Netter to be liable for 40% of the fees, or a sum of $5,600 per annum in broad terms. The Tribunal will only increase Mr Netter’s annual liability from 27 April 2021 given the Tribunal does not consider there are compelling grounds to backdate a departure given there is no suggestion that the subject of school fees had been actively agitated by Ms Rasnick before 27 April 2021.

43.In terms of going forward, the Tribunal must weigh the convenience of the parties in giving certainty, and any assessment being reactive to changes (for example, should Mr Netter’s health improve, he may be placed to increase his working days).

44.The Tribunal considers there to be a clear case to extend Mr Netter’s liability for school fees until the end of 2024. Whilst fees are likely to increase, given the income disparity between the parents, the Tribunal will not apply any “CPI uplift”. Mr Netter’s annual child support liability will be increased by $5,600 per annum for the period 27 April 2021 to 31 December 2024.

45.Neither party identified any other particularly unusual expenses for themselves, or for the children, which would warrant any further adjustment. The Tribunal is satisfied that, with careful budgeting, Mr Netter will be able to meet his ongoing child support liability.

46.In terms of varying incomes, an appropriate balance, in the Tribunal’s assessment, is to vary Ms Rasnick’s income to $250,000 from 27 April 2021 to 31 October 2023, and Mr Netter’s income to $120,000 from 27 April 2021 to 2 February 2022, and $100,000 from 3 February 2022 to 31 October 2023. It would be just and equitable to make a departure in those terms.

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

47.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

48.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

49.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.

DECISION

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

(a)for the period 27 April 2021 to 31 October 2023, Ms Rasnick’s adjusted taxable income is varied to $250,000;

(b)for the period 27 April 2021 to 2 February 2022, Mr Netter’s adjusted taxable income is varied to $120,000;

(c)for the period 3 February 2022 to 31 October 2023, Mr Netter’s adjusted taxable income is varied to $100,000;

(d)for the period 27 April 2021 to 31 December 2024, Mr Netter’s annual child support liability is increased by $5,600 (for [Child 1]’s school fees).