Ratliff and Ratliff (Child support)
[2025] ARTA 257
•10 February 2025
Ratliff and Ratliff (Child support) [2025] ARTA 257 (10 February 2025)
Applicant: Mr Ratliff
Respondent: Child Support Registrar
Other Parties: Mrs Ratliff
Tribunal Number: 2024/BC028194
Tribunal:General Member Mr J Nalpantidis
Place:Melbourne
Date:10 February 2025
Decision:The Tribunal set aside the decision under review and substituted its decision that:
· For the period 1 January 2024 to 31 December 2024, the rate payable by Mr Ratliff is increased by $16,361.
· For the period 1 January 2025 to 31 December 2025, the rate payable by Mr Ratliff is increased by $21,084 per annum.
· For the period 1 January 2026 to 31 December 2026, the rate payable by Mr Ratliff is increased by $23,193.
CATCHWORDS
CHILD SUPPORT – change of assessment – a change in a parent’s capacity to pay – father has not contributed to the children’s school fees since the separation – a ground for departure established – education costs of the children – income property and financial resources –– earning capacity – father’s rate of child support payable is increased – decision under review set aside and substituted
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.
Statement of Reasons
BACKGROUND
Mr Ratliff and Mrs Ratliff are the separated parents of [Child 1] born [date] November 2012., [Child 2] born[date] June 2014 and [Child 3] born [date] April 2016 (the children). For the purposes of child support, the children are recorded as being in the above primary care (100%) of Mrs Ratliff. A case has been registered with Services Australia – Child Support (Child Support) since 13 July 2022 and child support has been collectable by Child Support since that date. Mr Ratliff is the payer of child support and Mrs Ratliff the payee.
In this case, Mr Ratliff applied for a change of assessment on 16 January 2024 on the basis that Mrs Ratliff’s income, property and financial resources makes the child support assessment unfair (called “Reason 8A” by Child Support) and Mrs Ratliff’s income or earning capacity makes the child support assessment unfair (called “Reason 8B” by Child Support).
Mrs Ratliff disagreed with the proposed change and cross-applied for a change of assessment on 29 January 2024 on the basis that the costs of maintaining the children are significantly affected by the costs of caring for, educating or training the children (called “Reason 3” by Child Support).
At the time of the change of assessment , the following child support assessment was in place:
·For the period 1 October 2023 to 28 January 2024, $17,622 per annum. This assessment is based on a 2022/2023 adjusted taxable income (ATI) of $137,742 for Mr Ratliff and a 2022/2023 ATI of $86,562 for Mrs Ratliff.
·For the period 29 January 2024 to 31 December 2024, $27,906 per annum. This assessment is based on the same incomes above for the parents. The change is due to a change in the care arrangements for the children.
On 30 April 2024, the original decision maker found Reasons 8A and 8B in Mr Ratliff’s application not established, and Reason 3 in Mrs Ratliff’s cross-application established. The assessment was changed as follows:
·For the period 16 January 2024 to 31 December 2024, the adjusted taxable income of Mr Ratliff will be set at $155,000.
·For the period 16 January 2024 to 31 December 2024, the annual rate of child support payable by Mr Ratliff will increase by $16,385.
·For the period 1 January 2025 to 31 December 2025, the annual rate of child support payable by Mr Ratliff will increase by $18,384.
On 17 May 2024, Mr Ratliff objected to this decision and on 13 June 2024, an objections officer allowed the objection in part, and found special circumstances exist in the case and that it would be just and equitable and otherwise proper to make a change. The objections officer set aside the decision of the original decision maker on 30 April 2024 and replaced it with the following:
·For the period 16 January 2024 to 31 December 2024, Mr Ratliff s ATI is set at $155,000.
·For the period 1 January 2024 to 31 December 2024, the rate payable by Mr Ratliff is increased by $16,835.
·For the period 1 January 2025 to 31 December 2025, the rate payable by Mr Ratliff is increased by $19,303 per annum.
Impact on the assessment:
·For the period 1 January 2024 to 15 January 2024, the rate payable by Mr Ratliff will increase to $34,457 per annum.
·For the period 16 January 2024 to 28 January 2024, the rate payable by Mr Ratliff will increase to $37,220 per annum.
·For the period 29 January 2024 to 31 December 2024, the rate payable by Mr Ratliff will increase to $48,248 per annum.
The effect of this decision will result in an increase in the child support payable by Mr Ratliff of $880.80.
As at the date of the objections officer decision, Mr Ratliff has an overdue maintenance balance of $10,095.19.
On 4 July 2024, Mr Ratliff applied to the Administrative Appeals Tribunal (the AAT) for a review of the objections officer’s decision. In the application to the AAT, Mr Ratliff objected to the objections officer’s decision on the basis that:
·There is no mutual intent for the children to be educated at the school.
·Mrs Ratliff’s parents are paying the fees.
Mrs Ratliff responded that:
·She pays the school fees, not her parents.
·There is mutual intention for the children to be educated privately..
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
A directions hearing was conducted by the Tribunal on 29 November 2024, on which date the parties spoke to the Tribunal by MS Teams audio.
The Tribunal hearing was conducted on 28 January 2025 and Mr Ratliff and Mrs Ratliff gave sworn evidence by MS Teams audio. Child Support did not attend the hearing. Mr Ratliff was represented by Mr [A], and Mrs Ratliff was represented by Mr [B] of [a firm]. At the hearing, the Tribunal had before it documents provided by Child Support (pages 1 to 294) and further documents provided by the parties, in response to the Tribunal’s directions: A documents provided by Mr Ratliff (A1 to A65 and A66 to A86) and B documents provided by Mrs Ratliff (B1 to B182). All documents had been exchanged between the parties prior to the hearing and they confirmed receipt of the documents with the Tribunal.
ISSUES
The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in the place of the Registrar, must be satisfied that:
(i) there is a ground to depart from the administrative assessment of child support;
(ii) it is just and equitable to depart; and
(iii) it is otherwise proper to depart.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and 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.
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 Assessment Act.
Issue 1 – Is there a ground established to depart from the administrative assessment of child support?
Section 117 of the Assessment Act provides that the Tribunal may make a departure order if it is satisfied a ground exists under subsection 117(2) of the Assessment Act and it would be just and equitable as regards the child, the carer entitled to child support and the liable parent, and is otherwise proper to make an order. The Tribunal considered the ground relating to the income, property and financial resources of Mr Ratliff and Mrs Ratliff. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, Mr Ratliff’s or Mrs Ratliff’s income, property and financial resources make the child support assessment unfair.
Evidence before the Tribunal
In relation to the reasons for a departure from the administrative assessment, the parties agreed that the focus of the review application was Reason 3.
To establish Reason 3 two threshold requirements must be satisfied. Firstly, that the children are being cared for, educated or trained in a way that both parents intended and secondly that the costs incurred to care for, educate or train the children significantly affect the cost of maintaining the children overall.
Mr Ratliff’s evidence and submissions
In response to the original decision maker’s decision, Mr Ratliff provided a written objection to Child Support dated 3 June 2024, stating:
Our children are 12,10 & 8 years old. The original signing the enrolment forms was on the understanding that the fees were to be paid by Mrs. Ratliff’s parents. The Department states various enrolment forms have been signed, all prior to separation, all under the agreement that these were to be paid for by Mrs. Ratliff’s parents.
Mrs. Ratliff has produced a receipt of $10,377.80 for payment of fees 18 January 2024. There seems that no investigation was made by the Department to see whether Mrs. Ratliff received these funds from her parents. The annual amount of the school fees $32,769 the decision that the department has determined I am able to pay is unaffordable.
Mrs. Ratliff was aware at the time of signing that we could not afford the school fees and after separating even less so. I will not be able to contribute to these fees. Mrs. Ratliff on her income of $86,526 would see herself paying more than half of her net income in school fees. The extracurricular activities and travel costs would also see Mrs. Ratliff bereft but of course this would not happen due to the continual support from her parents. She is not in receipt of any Family Tax Benefits.
We separated in approximately May 2022. At separation we could not afford the mortgage on our house and the bank accommodated a hardship request. We discussed affordability of school fees and after these discussions I contacted the school to confirm that we could not afford the fees and, regrettably, had to un-enroll the children. Mrs. Ratliff was aware of this and at this point the mutual intent for the children to be privately educated was severed. After that date the children were no longer being educated in a manner intended by both parents.
The school acknowledged that the children had been un-enrolled and talked of my rights to access information should Ms Ratliff re-enroll, Presumably, after contact with her parents, she did re-enroll the children at the school. The school acknowledged this with confirmation that your fee responsibility has been waived. See attached emails on both points.
Just and Equitable
The children were enrolled for private education on the understanding that Mrs. Ratliff’s parents would meet these costs. My then wife and I both knew that we could not meet these expenses ourselves.
Despite this, if Reason 3 is found to be established, the Decision Maker then had a responsibility to properly assess the just and equitable requirements of the legislation.
I refer to the decision in Mee V Ferguson [1986} FamCA 3 on intention and affordability.
“It refers to the manner in which the child ” is being,” and which the parties to the marriage “expected” the child to be educated. That provision appears to have direct relevance to the issue of private school education, particularly its reference to the manner in which the parties “expected” the child to be educated. The word “expected” in the past tense presumably relates to some expectation of the parties at a point in time earlier than the hearing” (at 37}
The Court then went on to say:
“Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so.”
The situation is that neither Mrs Ratliff nor myself can afford to contribute to the school fees in the manner found by the Decision Maker. I do not earn an income that would go anywhere near justifying this, and Mrs Ratliff certainly could not without assistance from her parents.
Conclusion
Considering all relevant factors, I submit that the only just and equitable solution is to find that whereas, at an earlier stage, there was mutual intent to have the children privately educated, albeit with the assistance from Mrs. Ratliff’s parents, that mutual intention was severed in June 2022, after which Mrs. Ratliff re-enrolled the children of her own volition
In the application to the Tribunal dated 4 July 2024, Mr Ratliff stated:
I am appealing this decision as I believe CSA have failed to investigate the financial resources available to my ex partner who is receiving additional income from overseas. With regards to the children's schooling, the decision does not seem equitable or fair.
Mr [A] submitted that Mrs Ratliff’s parents contributed to the school fees either directly or indirectly by distributing funds to Mrs Ratliff. He questioned how Mrs Ratliff could afford payment of the school fees ($42,846 per annum as determined by the objections officer) given the income set for her ($86,526) for the purposes of the child support assessment.
Mr [A] submitted that Child Support is unbending in relation to the two limb test that the education was in a manner intended by the parents and that past intention is treated as a finalising factor. He submitted that a parent’s intention can be severed. He stated the most solemn promise parents make to each other is “I do” when they marry, but the law recognises that is not a binding promise and circumstances can change. He submitted that it is unfair to bind people to such a promise or commitment and people can and do change expectations in life.
Mr [A] referred to the decision of Dobbins & Devlin & Anor(SSAT Appeal) [2014] FCCA 1274 (19 June 2014) where Judge Riethmuller says expectations may change as a result of changes in circumstances, for example, as a result of changed financial circumstances it is open for a parent to make adjustments, so long as it is reasonable to do so; this was also reflected in Mee and Ferguson (1986) 84 FLR 179 (1986) 10 FamLR 971.
Mr [A] submitted that there is no dispute about the parties original mutual intent about the children’s private education, however, Mr Ratliff says that this mutual agreement was contingent on Mrs Ratliff’s parents paying the school fees. Mr [A] submitted that at the time, Mrs Ratliff did not work and the family relied on Mr Ratliff’s income alone, and their expenses included mortgage repayments. It was Mr Ratliff’s evidence that Mrs Ratliff’s parents contributed significant amounts of money to the parties at times when school fees were due. Mr Ratliff submits that Mrs Ratliff has not fully disclosed all bank accounts and these may show that she has undisclosed funds or financial assistance such as financial assistance from her parents.
Mr [A] submitted that it is open for Mr Ratliff to change his expectation in relation to the children’s education and his income of $155,000 per annum (as assessed by Child Support) makes a contribution to school fees unaffordable for him. It was also Mr Ratliff’s contention that contrary to what Mrs Ratliff says, it was always an understanding between the parties that Mrs Ratliff’s parents would contribute to the children’s school fees and it was not a cost that the parents would bear themselves.
Mr Ratliff told the Tribunal he contacted the children’s school to advise he could not afford the fees. The school acknowledged his contact and told him they can cancel the children’s enrolment. The school then asked Mrs Ratliff if she would take on the school fees herself and she agreed to do so, and he submitted this reflects a severing of the original mutual intent. Mr Ratliff told the Tribunal he does not have the financial capacity to contribute to the school fees and he does not understand how the school fees could be paid (by Mrs Ratliff) on her stated financial means.
Mr Ratliff gave evidence that the school fees have increased substantially since the agreement of 2018, he estimated the fees were approximately $25,000 to $26,000 in 2018 and he estimated they may now be more than $50,000 per year. This takes into account general increases and higher year level fees that would apply to each child as they advance. Mr Ratliff told the Tribunal the annual school fees in 2021 were $34,880 and in 2024 they were $46,200. Mr Ratliff estimated his annual income at $110,000 to $120,000 in 2018. Mr Ratliff could not recall Mrs Ratliff’s income at the time; they also received distributions from Mrs Ratliff’s family trust which they applied to the school fees as well as trips to [Country 1] to see Mrs Ratliff’s family. Mr Ratliff stated it was possible the funds were loans or distributions to Mrs Ratliff, but either way it was financial assistance which they used for school fees.
Mr Ratliff referred the Tribunal to Mrs Ratliff’s assets as listed in her Statement of Financial Circumstances (property valued at $1,692,289 with liabilities of $1,308,322) and pointed out that he does not have that level of assets. His financial position is straight forward with his current annual income being $173,280 according to his latest tax return. In the Statement of Financial Circumstances provided to the Tribunal, Mr Ratliff listed his property valued at $63,862 with liabilities of $4,075.
Mr Ratliff submitted that Mrs Ratliff’s assets may be greater than what she has disclosed as he believes she has undisclosed bank accounts in [Country 1]. He contends that Mrs Ratliff has undervalued the value of her investment properties.
Mrs Ratliff’s evidence and submissions
In the change of assessment application (Reason 3) dated 29 January 2024, Mrs Ratliff stated:
All three children were enrolled at [School 1][School 1] and this is their intended education until they leave education. Enrolment forms for each child which are signed by both parents are attached.
Since separation, the children’s father has refused to contribute to school fees.
He has also refused to contribute to any extracurricular fees and special education excursions (TOM). The children were doing many of these activities prior to separation. He even happily takes them to the extracurricular activities when they are in his care.
Following conversations with Child Support, I was advised the children’s father should be contributing to the extracurricular activities which take place when the children are in his care.
I have included some extracurricular fee evidence and can get more if necessary.
Mrs Ratliff listed annual education expenses $41,500 and extracurricular activities of $6,000.
Mr [B] told the Tribunal that other than what is contained in the Child Support material, Mrs Ratliff has nothing further to add in relation to evidence about Reason 3. He submitted that the decision of the objections officer was correct. The parents agreed well prior to the separation as to the manner of the children’s education, being a private education at [School 1] and Mrs Ratliff submits there has been no change in that mutual intention, albeit Mrs Ratliff has been paying the school fees without contribution from Mr Ratliff.
Mr [B] submitted that since separation, Mr Ratliff contends he cannot afford to pay private school fees. It was also Mr Ratliff’s contention that part of the agreement was that the grandparents (Mrs Ratliff’s parents) will pay for the education costs. Mr [B] told the Tribunal that Mrs Ratliff disputes that this was the case, and the school fees were never paid for by her parents and Mrs Ratliff has paid the children’s school fees since separation. Mrs [B] submitted that at the time of the original agreement between the parents about the manner of the children’s education, they could afford the school fees and this has not changed. Mrs Ratliff has enrolled the children pursuant to the parents’ agreement and the children are currently attending [School 1] as was decided jointly by the parties.
In relation to Re Mee v Ferguson, Mr [B] submitted that case was concerned with a change in a parent’s capacity to pay, and not the unilateral decision by one parent to change the agreement. There was never a joint decision between the parents to change the manner of children’s education and Mr Ratliff made the decision unilaterally. Mr [B] submitted that if the parties agreed about the manner of the children’s education, that is what should occur, subject to the capacity to contribute to the cost. Mr [B] submitted that the mutual intention is not disputed. In relation to the parties capacity to afford the fees, Child Support has assessed Mr Ratliff as having the capacity to contribute. Mr [B] submitted there is no evidence that the children’s grandparents have paid for the school fees and nor do they have any obligation to do so. He submitted that the intention was that the school fees would be met from the parents’ financial resources, not by the grandparents.
Mr [B] told the Tribunal that Mrs Ratliff has been working in two positions for several years and has income from a family trust. The family trust makes distributions to the beneficiaries of the trust, including Mrs Ratliff, not for the purposes of school fees, it’s a distribution of income and it is a different matter that Mrs Ratliff chooses to apply those distributions to the children’s school fees. Mr [B] told the Tribunal that in 2018 when the parties agreed, he is instructed that the school fees may have been approximately $9,000 per child or $27,000 for the three children. The fees have since increased to approximately $36,000 to $40,000 for the three children. Mr [B] told the Tribunal Mrs Ratliff has instructed that the family income in 2018 was approximately $150,000 per annum, being $110,000 for Mr Ratliff and $40,000 for her. This compares to a combined income of approximately $300,000 per annum based on the latest income tax returns of the parties.
Mr [B] submitted that Mrs Ratliff’s financial resources have been factored into the assessment, including her ownership of property which includes mortgages.
Mrs Ratliff concedes her parents have funded annual trips to [Country 1] for her and the children and occasionally there has also been a mid-year trip; the cost is approximately $10,000 per trips and are for the legitimate purpose of allowing Mrs Ratliff’s parents to maintain family relationships with her and their grandchildren.
In response to Mr Ratliff’s assertions regarding disclosure of her financial position, Mrs Ratliff told the Tribunal that she has fully complied with her obligations and has provided the information requested. She closed her [Country 1] bank account in 2022 and no longer has bank accounts in [Country 1] and as a non-resident cannot open new accounts. She has a half share of the properties at [an address] and has therefore listed her half interest in both the rent and value of the properties. She told the Tribunal the Statement of Financial Circumstances and other documents provided to the Tribunal accurately reflect her financial circumstances.
Conclusions and findings
Mr Ratliff acknowledged that prior to the separation, he signed enrolment forms for the three children to attend [School 1] in 2018 and 2020, and enrolment fees were paid accordingly. The Tribunal has found that enrolment fees of $1,400 were paid for [Child 1] and [Child 2] on 18 October 2018 and $800 for [Child 3] on 9 March 2020.
It was Mr Ratliff’s submission that the parents’ intention was with the understanding that Mrs Ratliff’s parents would fund the education fees for the children, as the parents could not afford to do so, even before the separation. Mrs Ratliff gave evidence that there has never been an agreement for her parents to pay the school fees; she has paid the school fees. Mr Ratliff acknowledged that he has not contributed to the children’s school fees since the separation. Mr Ratliff submitted that Mrs Ratliff could not afford to pay for the school fees on her income and it was his contention that prior to and after the separation, the children’s school fees were paid by Mrs Ratliff’s parents. He was unable to point to evidence that this was the case. Mrs Ratliff disagreed that her parents paid for the children’s school fees, although she acknowledged that she received distributions from a family trust, which were not tied to paying children’s school fees and how she used those funds was a matter for her.
The Tribunal accepts there was a clear mutual intention by the parents in relation to the manner of the children’s education.
It was Mr Ratliff’s submissions that the original mutual intention was subsequently severed (after the separation in May 2022) when he contacted the children’s school and unenrolled the children. Mrs Ratliff gave evidence that Mr Ratliff contacted the children’s school without her knowledge and told the school that he will not pay the school fees. Mrs Ratliff confirmed that she wanted the children to continue their enrolment and that she would make the payments. It was Mrs Ratliff’s evidence that the children were never unenrolled.
The Tribunal notes Mr Ratliff referred to emails between himself and the school; however, the objections officer noted, no emails were provided, and Mr Ratliff provided bank statements showing two deposits into Mrs Ratliff’s account for different amounts, but there is no reference to the amounts deposited being for school fees.
The Tribunal accepts that Mr Ratliff approached the children’s school to advise that he wishes to unenroll the children and would not contribute to the school fees. This was without Mrs Ratliff’s knowledge or agreement. There is no evidence to show that the parents mutually agreed for the children to be unenrolled.
Mr Ratliff further submitted that he is entitled to change his mutual intention and this is what he did on the basis that his financial circumstances changed such that he no longer had capacity to contribute to the children’s school fees. The Tribunal has found that prior to separation the parents had a combined annual income of approximately $150,000, with Mr Ratliff’s annual income being approximately $110,000. The parties gave broadly consistent evidence that the annual school fees for the children at that time were approximately $27,000 for the children ($9,000 per annum each). Mr Ratliff gave evidence that the school fees in 2021 are $34,880 and in 2024 they were $46,200, and that current annual school fees may be more than $50,000. The Tribunal accepts when the parents reached a mutual agreement, they had an understanding that school fees would increase annually, including higher fees depending on the year level of the children. The parents’ current combined annual income is approximately $300,000, with Mr Ratliff’s annual income being approximately $173,000. While the Tribunal accepts that annual school fees have increased, it has also found that Mr Ratliff has also had significant increases in his income and concludes that he continues to have a reasonable financial capacity to contribute to the children’s school fees in line with the original mutual intention of the parents.
On the evidence before it, the Tribunal finds that the children are being educated in a way both parents intended therefore the first requirement under Reason 3 is met.
In relation to the costs of the children’s education, the statement of account by [School 1] for 2024 shows that school fees, excluding the general purpose levy and inclusive of tuition fees, infrastructure levy and siblings’ discounts, in 2024 are $8,193 per term over four terms, equating to $32,770 per year for the children in 2024. Child Support applied a 5% annual increase for 2025, and determined it was fair that the parents contribute equally to the school fees, adding the amounts of $16,835 per annum for the period 1 January 2024 to 31 December 2024, and $19,303 per annum for the period 1 January 2025 to 31 December 2025, to the rate payable by Mr Ratliff.
The Tribunal has been provided with updated information about the children’s 2025 school fees. Excluding the general purpose levy, the school fees in 2025 for the three children amount to $10,542 per term, as follows:
Infrastructure levy $175
Tuition 7 – 12 (per term) [Child 1] $4,035
Tuition 4 – 6 (per term) [Child 3]) $3,135
Tuition 4 – 6 (per term) [Child 2] $3,135
This equates to an annual amount of $42,168 ($10,542 x 4) for 2025. The Tribunal notes that the tuition fees for one child increased from $2,834 per term to $4,035, as that child’s level of schooling changed from Years 4 to 6, to Years 7 to 12), otherwise the tuition fees on a like-for-like basis, for Years 4 to 6, increased by approximately 10% from $2,834 to $3,135 in 2025.
The Tribunal considers it reasonable to apply the 10% increase to the 2025 fees, for the following year (in 2026), which results in annual school fees (excluding the general purpose levy) of $46,385 for 2026. Applying this equally to the parents results in each contributing $23,193 per annum in 2026.
The current cost of the children in the current child support assessment is $42,846. The Tribunal therefore accepts that the costs of educating the children in the manner mutually agreed by the parents, in the amount of $32,722 in 2024, increasing to $42,168 in 2025 and $46,385 in 2026, is significant and impacts Mrs Ratliff’s ability to maintain the children. The Tribunal therefore accepts that the second threshold under Reason 3 is also met in this case.
The Tribunal therefore concluded that special circumstances exist in this case such that the children are being cared for, educated or trained in a way both parents intended and that the associated costs significantly affect the costs of maintaining the children. The Tribunal therefore finds that, the application of the provisions of the Assessment Act relating to the administrative assessment of child support in this case would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Ratliff to Mrs Ratliff for the children of the assessment. This ground for departure (under Reason 3) is established.
Issue 2 – Is it just and equitable to depart from the administrative assessment of child support?
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 as regards the children, the liable parent and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. In addition to the education costs for the children, discussed in detail above, the Tribunal is required to consider:
· the nature of the duty of a parent to maintain the child/ren;
· the proper needs of the child/ren;
· the income, earnings capacity, property and financial resources of the parent and child/ren;
· the necessary self-support commitments of the parents and any other child/ren or person they have a duty to maintain;
· any direct and indirect costs incurred by the carer entitled to child support in providing care for the children;
· any hardship to the parents, carers or the child or any other child or person that the liable parent has a duty to support, by the making of, or the refusal to make a departure determination; and
· any other relevant matter.
Further, child support has priority over all commitments other than those necessary for self-support and parents have the primary duty to maintain their children to the extent of their capacity to do so and that such duty takes priority over all commitments. Children are also entitled to share in the standard of living of both their parents, whether or not they are living with both or either of them.
The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the child
There was no evidence before the Tribunal that the children have access to any other income, property or financial resources from which to support themselves and the Tribunal finds accordingly. The children are entirely reliant on their parents to meet all of their needs.
The proper needs of the child
Subsection 117(6) of the Assessment Act states that in having regard to the proper needs of the child, the court must have regard to the manner in which the child is being, and the manner in which the parents expected the child to be, cared for, educated or trained; and any special needs of the child.
Other than the manner of the children’s education, referred to above, the parties did not raise any particular special needs for the children.
The income, property and financial resources and earning capacity of the parents
The assessment in this case relies upon a 2022/2023 ATI of $86,562 for Mrs Ratliff and a 2022/2023 ATI income of $137,742 for Mr Ratliff.
In the change of assessment application under Reasons 8A and 8B, Mr Ratliff contends Mrs Ratliff had the resources to purchase a house valued between $1.02 million and $1.34 million and to pay annual school fees of more than $44,000. She also has the resources to meet other expenses such as trips for holidays, including annual trips to [Country 1], and to pay for additional activities of more than $5,000 per annum. He submitted that Mrs Ratliff chooses not to work during the school holidays and makes regular trips to [Country 1] with the children which impacts on her capacity to earn a greater income. He submitted it was implausible that Mrs Ratliff’s expenses could be met from a taxable income of $86,526. Mr Ratliff submitted that Mrs Ratliff chooses to work part-time and if she worked as a full-time [occupation], she could earn up to $108,359 per annum. He submitted that a higher income should be applied to Mrs Ratliff.
Mrs Ratliff responded that she is working as a [occupations], and has had no change to her occupation or working pattern. A search by Child Support of the Australian Taxation Office database shows Mrs Ratliff is employed casually with two employers who regularly report her income and this has been the case for some time.
Mrs Ratliff gave evidence that she meets the costs of the children, and acknowledged her parents may assist her with a loan, if needed, although it is not guaranteed. Mrs Ratliff acknowledged she receives regular distributions from a family trust in accordance with the trust deed. Those distributions are not tied to payment of school fees and can be used as Mrs Ratliff sees fit.
Mrs Ratliff lists her 2023/2024 taxable income at $125,459 (after deductions), inclusive of earnings from employment of $35,143, interest of $2,470 and supplementary income of $89,340 (inclusive of investment rental income and distributions), with deductions of $1,494. Child Support listed Mrs Ratliff’s income at $86,526 based on her income tax return for the financial year 2022/2023.
Mrs Ratliff acknowledged that she obtained a loan of approximately $300,000 from her parents which was used to pay for legal fees in relation to the separation. Mrs Ratliff acknowledged owning an investment property which she submitted is included in her ATI for the purposes of the child support assessment.
Mr Ratliff’s contention is that Mrs Ratliff had access to greater financial resources reflected by her property purchases and access to trust distributions and loans from her parents and family trust. The Tribunal has found that Mrs Ratliff receives distributions from a family trust and this is included in her income for taxation purposes, and has been applied to the child support assessment. Mrs Ratliff has also acknowledged she has received a loan from her parents (of approximately $300,000) which she says has been put towards legal fees.
Mr [B] clarified that the loan remains a debt which Mrs Ratliff is required to repay, and if it is not repaid, it will be taken into account as part of her parents’ estate on their passing.
The Tribunal accepts, as does the objections officer, that loans or a family member providing for the children is a financial resource for the purposes of child support. Mrs Ratliff acknowledged that she was not paying rent or a mortgage for a period of time, and this may be seen as increasing her financial resources as it increases her financial capacity in some way. Nevertheless, Mrs Ratliff is bearing significant costs in caring for the three children, including their costs of education, and in the circumstances the Tribunal is not satisfied this renders the child support assessment unfair.
The Tribunal accepts that there is no evidence presented to the objections officer during the change of assessment process or the hearing to indicate that Mrs Ratliff’s ATI should be applied to the assessment. Child Support maintained the income of $86,562 for Mrs Ratliff based on her 2022/2023 ATI. The Tribunal finds that Mrs Ratliff’s ATI for 2023/2024 has increased to $125,459 and should be applied to the assessment.
Mr Ratliff gave evidence that he left his previous occupation [and] has taken on additional responsibilities as a manager in the corporate [field], to increase his earning capacity. He has worked in this capacity for some time. Mr Ratliff’s 2023/2024 income tax return shows an income of $173,280. Mr [B] noted particular expenses listed in Mr Ratliff’s bank statements, including travel and accommodation expenses ($455), payment to [a] Club ($6,000) for [an activity] ($1,674), and other amounts listed in the bank statements provided by Mr Ratliff, which may reflect that Mr Ratliff has more income than stated. Mr Ratliff responded that his employment requires him to attend various marketing and promotional functions and activities. He is entitled to work travel allowances and when he travels, he pays for accommodation and then claims the cost from his employer. Similarly, he buys events for clients and pays for the cost as a business expense. He made a payment of $6,000 to [a] Club and was credited $3,000 in his bank account and claims the balance of $3,000 via his work expenses. Mr Ratliff told the Tribunal that this arrangement does not reflect additional income and is simply a work expense.
Mr [B] referred to Mr Ratliff’s weekly food expenses of $350 which appeared excessive for one adult, when compared to Mrs Ratliff’s expense of $400 for an adult and three children. Mr Ratliff told the Tribunal that this was a best estimate of what he spent weekly based on what he spends when he goes shopping.
The objections officer noted Mr Ratliff’s ATI for 2022/2023 was $137,742; however, his latest payslips submitted to Child Support as part of the change of assessment process listed an income of gross fortnightly pay of $6,136.98 which equates to a annual income of $159,561 rounded ($6,136.98 x 26). To account for some taxable deductions, the objections officer applied an income of $155,000 to Mr Ratliff for the purposes of the child support assessment. Based on Mr Ratliff’s 2023/2024 income tax returns, available to the Tribunal but not the objections officer, the Tribunal has found Mr Ratliff’s 2023/2024 ATI is $173,280 and should be applied to the assessment.
In relation to earning capacity, the Tribunal must consider that the parent is either:
·Not working despite ample opportunity to do so: or
·Has reduced his or her weekly hours of work to below full time work; or
·Has changed his or her occupation, industry or working pattern.
And
(i) The parent’s decision about his or her work arrangements is not justified by either:
·His or her caring responsibilities; or
·His or her state of health.
And
(ii) The parent has failed to show that the decision about his or her work arrangements was not substantially motivated by the effect this would have on the child support assessment.
No information was presented to the Tribunal or previously to the objections officer to indicate that Mrs Ratliff is not working, has changed her hours or type of work, industry or occupation, or that Mrs Ratliff has an unexercised earning capacity. Similarly, there is no evidence that Mr Ratliff has changed his work pattern or has unexercised earning capacity. In this case, the objections officer concluded the first criterion was not established and Reason 8B was not established in relation to Mrs Ratliff.
The parties are both in employment and have not reduced their hours or changed their occupation recently. The Tribunal accepts that it is not appropriate to make an earning capacity determination in respect of Mrs Ratliff’s or Mr Ratliff’s circumstances.
The necessary commitments of the parents
The parties did not submit there were costs associated with their own self-support that are different from the amount allowed for in the assessment which should be taken into account by the Tribunal in the assessment.
The direct and indirect costs incurred by the parents in providing care for the child/ren
The Tribunal noted that the legislation requires the Tribunal to consider any direct and indirect costs incurred by the carer entitled to child support in providing care for the child/ren.
The parties did not submit there were costs associated with providing care for the children which should be taken into account by the Tribunal in the assessment.
Hardship
Paragraph 117(4)(g) of the Assessment Act requires the Tribunal to consider any hardship that would be caused to Mrs Ratliff and Mr Ratliff and to the children or other person that the parties have a duty to support, by the making of, or the refusal to make, a departure determination.
The Tribunal has found that Reason 3 in relation to the education costs of the children is established in this case. The Tribunal has found that the annual school fees for the children in 2024 amount to $32,770, in 2025 they amount to $42,168 and in 2026 they amount to $46,385.
The Tribunal has found Mrs Ratliff has an annual income of $125,459 and Mr Ratliff has an annual income of $173,280. A greater contribution to school fees by Mrs Ratliff would place her in more difficulty, whereas an equal contribution by the parents towards the children’s school fees would allow that burden to be shared more evenly.
The Tribunal finds that Mrs Ratliff would face greater financial hardship if it were to refuse to depart from the administrative assessment of child support, given the current expenses she meets in providing care for the children. The Tribunal further finds that the children may also experience hardship if the Tribunal were to refuse to make a departure determination in this matter, given Mrs Ratliff would experience difficulty in continuing to meet all the current necessary costs of the children.
Given the findings of the Tribunal above regarding Mr Ratliff’s income and financial resources, it accepts he has the capacity to meet a range of expenses, including various discretionary expenses. The Tribunal accepts that Mr Ratliff has the income and financial resources to meet an increased child support liability that results from his equal contribution to the school fees of the children. The Tribunal finds there is no hardship caused to Mr Ratliff from the Tribunal’s decision.
What is the proposed departure determination in this case?
The Tribunal considers it reasonable to make a departure determination that reflects Mr Ratliff contributing half the school fees of the children. The Tribunal has determined it is fair that the parents share the school fees equally and it would be unfair for Mrs Ratliff to pay the school fees alone. Mr Ratliff’s share of these fees will be $16,835 in 2024, $21,084 in 2025 and $23,193 in 2026.
To provide some certainty to the parents, the Tribunal intends on making a change in the assessment allowing the sharing of the school fees until the end of 2026.
The Tribunal considered it appropriate to depart from the administrative assessment from 1 January 2024, being the date currently being applied in the departure from the administrative assessment. The Tribunal considered that ending the departure determination on 31 December 2026 gives the parties certainty for a reasonable period of time going forward, while also allowing for a reassessment of the parents’ and children’s circumstances at that point in time.
In line with its findings, the Tribunal therefore proposes to make the following departure determination:
For the period 1 January 2024 to 31 December 2024, the rate payable by Mr Ratliff is increased by $16,361.
For the period 1 January 2025 to 31 December 2025, the rate payable by Mr Ratliff is increased by $21,084 per annum.
For the period 1 January 2026 to 31 December 2026, the rate payable by Mr Ratliff is increased by $23,193.
Issue 3 – Is it otherwise proper to make a departure determination?
The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. The Tribunal accepted Mrs Ratliff’s evidence that she is not currently in receipt of Centrelink payments, such as family tax benefit. The Tribunal decided that any departure determination made by the Tribunal is not likely to have an impact on the public purse and the Tribunal therefore concluded that it is otherwise proper to make the proposed departure determination.
DECISION
The Tribunal set aside the decision under review and substituted its decision that:
For the period 1 January 2024 to 31 December 2024, the rate payable by Mr Ratliff is increased by $16,361.
For the period 1 January 2025 to 31 December 2025, the rate payable by Mr Ratliff is increased by $21,084 per annum.
For the period 1 January 2026 to 31 December 2026, the rate payable by Mr Ratliff is increased by $23,193.
Date of hearing: | 28 January 2025 |
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