Rearick and Strudwick (Child support)

Rearick and Strudwick (Child support) [2021] AATA 4784 (6 October 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/PC020890
APPLICANT:  Mr Rearick
OTHER PARTIES:  Child Support Registrar
Ms Strudwick

TRIBUNAL:Member W Budiselik
DECISION DATE: 6 October 2021
DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that the mother’s adjusted taxable income is varied to $100,000 for the period 20 August 2020 to 9 November 2025.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the carer entitled to receive child support – earning capacity – failure to comply with directions – adverse inferences – decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

Mr Rearick (the father/applicant) and Ms Strudwick (the mother) are the parents of two children (born [in] November 2004 and [November] 2007, respectively) who are the subjects of administrative assessments of child support. A child support case has been registered in respect of the children since 7 July 2010.
On 9 August 2020, the father applied to Services Australia (the Agency) for a change of assessment determination because he believed the administrative assessment of child support was unfair because of the mother’s income, property and/or financial resources. The father asked that a changed determination be backdated to 1 November 2019.
The relevant administrative assessments in place at the time the father requested the change of assessment were:
·For the period 1 November 2019 to 31 October 2020, the father was assessed to pay an annual rate of child support of $22,482. This assessment was based upon his 2018-19 adjusted taxable income (ATI) of $216,792 and the mother’s 2018-19 ATI of $37,262.
·For the period 10 November 2020 to 31 December 2020, the father was assessed to pay an annual rate of child support of $24,940. This assessment was based upon the above-mentioned incomes for both parents. The change in the assessment was due to the younger child turning 13 years of age.
On 6 October 2020, an officer from the Agency decided to vary the mother’s ATI to $52,000 for the period 1 July 2020 to 31 October 2021.
The father objected to the Agency’s decision. On 29 January 2021, an objections officer from the Agency reviewed the officer’s decision and set it aside because the objections officer found no ground had been established to change the administrative assessment. That is, the administrative assessments as set out in paragraph 3 of these Reasons for Decision remained in place.

On 26 February 2021, the father lodged an application for a review of the Agency’s decision with the tribunal.
On 3 June 2021, the tribunal [conducted] a telephone-directions hearing with the parents and then issued directions for the parents to provide specified documents by 30 July 2021. The directions issued to the mother carried with it the rider:
Failure to comply with these Directions could result in the AAT drawing adverse inferences against you in its decision on the review.
That the tribunal might draw adverse inferences in various circumstances has been established in the Courts. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409, Slack FM made it clear that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the tribunal. Furthermore, it was reiterated that a tribunal should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made.
It was further noted that the extent to which the tribunal should exercise its powers of information gathering and testing of evidence in each case will depend on the circumstances of the matter. The exercise of such power or the failure to exercise such power does not in any way derogate from the immutable obligation and duty of both parties throughout the proceedings before the tribunal to make full, frank and cogent disclosure of all relevant information pertaining to their financial affairs in order that the tribunal can make a proper assessment of their respective capacities to provide for the needs of their children.
Documents specified in the tribunal’s directions were not provided to the tribunal by the mother by 30 July 2021. On 9 August 2021, the tribunal issued a show cause notice to the mother seeking an explanation of why she had not complied with the tribunal’s directions. On 8 September 2021, the mother provided various documents that partially complied with the tribunal’s directions.
On 20 September 2021, the tribunal conducted a hearing into the father’s application. The parents participated in the hearing via telephone conference. Prior to the hearing the Agency provided a bundle of documents to the tribunal and the parents (folios 1–394). The father provided a bundle of documents (folios A1–A80). The mother provided a bundle of documents (folios B1–B37). The documents provided by the parents were paginated and exchanged so each parent had a complete set of paginated documents.
The tribunal commenced the hearing by satisfying itself the parents had received paginated submissions. That the parents have paginated submissions is important for the conduct of a hearing and parents are advised about this in correspondence sent to them by officers of the tribunal, which sets out:
What will I need in the hearing?
You will need the documents sent to you by Services Australia. You will also need your copy of any evidence which you or the other party has given us. We will have put page numbers on the documents before copying them to you and you will need to be able to refer to them by page number during the hearing.
The parents said they had received the Agency’s papers.
The mother said she had not received the paginated submissions. The father said he received the paginated submissions.
The tribunal reviewed records kept by its officers. The tribunal satisfied itself in the hearing by referring to its electronic record that the mother had been sent paginated submissions by post and email on 7 September 2021 and 8 September 2021. The mother searched her email and located the tribunal’s correspondence.
The tribunal attempted to understand why the mother had failed to comply with the tribunal’s directions; in particular, that she provide by 30 July 2021:
·personal tax return for 2019–20, including any schedules
·company tax return for [Company 1] for 2019–20, including any schedules
·trust tax return for the Strudwick Family Trust for 2019–20, including any schedules
The mother said she had provided the documents by the due date but that the tribunal’s case manager had been unable to open the attachment.
The tribunal noted the tribunal’s case manager had emailed the mother on 5 August 2021, asking her to resend the documents the mother had provided because the attachment provided by her was password protected. The mother provided an email with attachments that could be opened on 7 September 2021.
The tribunal advised the mother that folios in the bundle of documents that she provided which related to the financial affairs of herself and the associated entities were at folios B12, and folios B34–B37, and that these documents did not comply with the relevant directions.
The mother said if the documents she provided did not comply it was the tribunal’s obligation to have reviewed them and to have advised her what had been omitted prior to the hearing.
The mother became distressed during this conversation and said she felt she was the subject of an aggressive attack by the tribunal member. She hung up. After several minutes, the tribunal rang the mother. The mother reiterated that she felt the process was unfair. She hung up the phone and refused to participate in the hearing.
Prior to hanging up on the tribunal the mother expressed her view that she was being unwillingly dragged into the tribunal’s processes because of the father’s reluctance to pay child support and that he had sought reviews previously.
The father is entitled to have the Agency’s decision reviewed within the Agency and by the tribunal. In previous matters reviewed decisions have resulted in changes to the mother’s adjusted taxable income. There is nothing to indicate the father’s review request is vexatious or frivolous.
The tribunal continued the hearing in the mother’s absence. The mother’s decision to withdraw from the hearing process meant the father’s testimony was not contradicted by her and the tribunal was denied an opportunity to put questions to her during the hearing.
The mother provided a bundle of documents to the tribunal’s registry via email while the hearing was in progress (folios B38–B102). The documents provided were those requested in the direction and which should have been provided by 30 July 2021.
Following the hearing the tribunal adjourned the matter, so the father had an opportunity to comment on the documents provided by the mother during the hearing.
The mother’s late compliance with the issued direction, her failure to deal with correspondence sent to her by the tribunal and her failure to make herself available at the hearing to discuss issues that needed clarification led the tribunal to draw adverse inferences against her and to be not unduly cautious in making findings favourable to the father (see paragraph 8 of these Reasons for Decision).

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The tribunal also referred to the Agency’s online Child Support Guide (the Guide). The tribunal is not bound by law to apply the Agency’s policy as set out in the Guide, but provided the policy is consistent with the legislation, it must have regard to it and in the ordinary course, to follow it (Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) unless there is a cogent reason not to do so (Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634).
The three issues to be determined by the tribunal are:
a)   whether a ground is established to depart from the administrative assessment of child support; and if so,
b)   whether it is just and equitable to make a particular departure determination; and if so,
c)   whether it is otherwise proper to make a particular departure determination.

CONSIDERATION

The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula which takes account of factors such as the ATI of each parent, the number of children and the level of care provided. A parent’s ATI for a given year is calculated according to a formula that includes a parent’s previous year’s taxable income (see section 43 of the Act).
Part 6A of the Act allows for a departure from an administrative assessment. The liable parent or a carer entitled to child support may apply to the Child Support Registrar (the Registrar) for a determination to depart from the child support administrative assessment under Part 6A of the Act.
Section 98C of the Act provides that the Registrar (and the tribunal in the Registrar’s place) may make a determination to depart from the administrative assessment 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 set out in section 98S of the Act.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each ground for departure is prefaced by the words, ‘in the special circumstances of the case’. Therefore, when considering whether a ground exists, the tribunal must be satisfied that there are ‘special circumstances’ in the case. The phrase ‘special circumstances’ is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279, held that:
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 court will not interfere with the administrative formula result in the ordinary run of cases.

Issue 1: Is there a ground for departure?

35.A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property or financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
36.Paragraphs 117(7A)(a) and (b) of the Act provide:
In having regard to the income, property and financial resources of a parent of the child, the court must:
(a) have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and
(b) disregard:
(i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and
…

The tribunal’s analysis about the parents’ capacity to pay child support is shaped by cases dealt with in the Family Court, including Carey and Carey [1994] FamCA 74; (1994) FLC 92-489 where it was noted at paragraph 17:
The aim of the legislation is to avoid the necessity of litigation and to make the amount to be paid predictable and readily assessable. The legislation however realises that, whilst the simplest method of calculating child support is to use existing taxation records, the use of taxable income as the sole basis for child support could lead to some inequities and injustices. For a start, the financial position of many members of the community is not accurately reflected in their taxable income; either they manage to evade or avoid their taxation liabilities or they can so structure their affairs so that they are capital rich and income poor.

38.The Guide at chapter 2.6 deals with changing assessments in special circumstances and subchapter 2.6.14 deals with parents’ income, property and financial resources. In part, the subchapter sets out:
Although a parent’s most recent taxable income is used in the child support formula, the Registrar can look beyond the parent’s taxable income when considering an application for a change of assessment. Income, earning capacity, property and financial resources which do not necessarily form part of a parent’s taxable income can be added to or excluded from a child support assessment (Carey and Carey (1994) FLC 92-489).

The mother’s income, property and financial resources

The tribunal identified the issues the father raised which led him to assert the administrative assessment of child support was unfair. These issues were identified by the tribunal as:

Previous determinations
Changed value of assets from the time of settlement to the time of sale
The mother’s income, property and financial resources

Previous determinations

The father said the mother’s income had previously been set further to tribunal and change of assessment decisions. The father wrote the mother had not objected to these past decisions.
The tribunal noted:

The tribunal (differently constituted) had on 4 August 2014, further to a review application by the father, set the mother’s ATI at $117,076 per annum and $128,486 per annum, respectively, for the periods 1 December 2013 to 30 June 2014 and 1 July 2014 to 30 September 2015, respectively
Further to a change of assessment application, an officer from the Agency set the mother’s ATI at $131,282, for the period 1 January 2016 to 31 October 2019.

In these decisions the mother’s ATI was estimated by the decision makers taking account of income the mother earned from employment and income she derived from rental income. In the Agency’s decision dated 15 January 2016, which set the mother’s ATI at $131,282, for the period 1 January 2016 to 31 October 2019, the rental component of the income set was $30,290.
At the time the father lodged his application for a change of assessment (in August 2020) he wrote:
I think the child support assessment in this case should be reviewed for the following reasons:
Ms Strudwick works for herself and her ATI as determined by the administrative assessment does not reflect what she actually earns and does not reflect the financial resources available to her
…
The tribunal finds the mother did not earn income from self-employment at the time the father lodged his change of assessment application (her sole trader Australian Business Number was cancelled with effect from 5 June 2019).
While the tribunal is aware of previous Agency and tribunal determinations it is not bound by past determinations or the facts found by decision makers when they made these decisions.

Changed value of assets from the time of settlement to the time of sale

The father provided a document dated 13 March 2013 entitled ‘Agreed table of Assets Liabilities and Financial Resources’ that set out the parents’ property settlement. The tribunal noted that the mother had asked the Agency to obtain this detail from the father because the father kept ‘extremely well organised records’.
The settlement document set out that the father received $744,975 and the mother received $2,636,801 in their agreed settlement.
The father said at settlement in March 2013, the mother received three rental properties and these had been valued at less at the time of the settlement than they sold for, three years later.

49.The tribunal notes both parents’ real estate assets subject to their property settlement increased in value in the years after settlement.
50.The tribunal finds the way the assets were distributed at the time of settlement is not a relevant consideration for the tribunal. The tribunal also notes the father did not assert the property settlement was unfair. The tribunal appreciates the mother is a successful businesswoman who brought assets into her partnership with the father.

The mother’s income, financial resources and/or property

51.The mother’s husband is the secretary and director of a family business [that] is owned ultimately by the mother’s husband’s mother.
52.The mother’s Statement of Financial Circumstances dated 17 March 2021 set out her wealth in the following way:
Total average weekly income                 $511
Value of property owned   $489,298
Total gross value of superannuation      $1,472,307
Total liabilities   $97,990
53.The father’s submissions set out that in 2016, the mother sold three rental properties (proceeds of approximately $1.6 million). He then set out that she paid off her and her husband’s debt (approx. $600,000) and a joint overdraft (approx. $246,000). He set out that after these debts were paid the mother retained about $740,000. The father said the $740,000 was effectively shifted to her husband’s family’s business. That is, the father argued, as the tribunal understands it, whereas the assets had previously produced rental income (which was taken into account for child support purposes), those assets had been turned into cash which was used to pay the mother’s husband’s debt and to support the mother’s husband’s family business. The father’s argument was that a notional income should still be attributed to the mother’s wealth.

54.The father’s analysis of the mother’s income from the sale of the properties is consistent with information the mother provided to an officer of the Agency on 28 September 2020, when the officer recorded:
I asked her about what she did with the money from the sale of the properties. She said that she did not make any capital gain on them and it ended up being around the $900,000 he noted but she put most of it towards closing the mortgage on her home (the 3rd property). She said she and the children live in that property with her husband. She said they do not live on her mother in laws [property].
She said she has been living off the $200,000 and declared the interest in her taxation return. She said she only has about $90,000 left and once that's gone that’s it.
55.The father’s contention is fundamentally that the mother’s wealth for child support purposes at the time the properties were sold (in 2016) should be in the vicinity of $1,160,000 ($740,000 plus $300,000 plus $123,000 – the latter two amounts being the amount of the debt paid off that was the mother’s husband’s debt).
56.In January 2021, the mother provided a submission to the Agency which in part set out:
I do not have substantial assets and property. All my assets including my car have been liquidated to reduce our household debt. The only asset I own is my house with my husband I have a substantial shared debt against that asset. See attached [bank] statement…
57.The mother’s Statement of Financial Circumstances set out her husband’s annual income is approximately $72,000 per annum.
58.The father provided a submission to the tribunal which supported his contention that the mother was benefitting from supporting her husband’s family’s business. This submission set out, among other things, a [social media] entry from a [car] dealer showing the delivery of a birthday surprise new [vehicle] to the mother and her husband. The father said the date of the post was proximate to the mother’s birthday and he believed it was a present to her. The father asserted the vehicle was made available to the mother for her use. In the post it appears the mother is being presented with the vehicle.
59.The father did not assert the mother owned the vehicle. He did say he believed the mother had exclusive use of the vehicle valued at more than $100,000 and that her use of the vehicle should be treated as derived income from her support of her husband’s family business. He believes the provision of this vehicle for her use should be regarded as evidence she is a ‘silent’ partner in her husband’s family business.
60.The father also included in his submissions a review about the mother’s husband’s mother’s business in which the mother’s husband states:
This is a family business. We could not be as successful as we are without the incredible hard work of … and my wife (Strudwick)
61.Given its consideration of the evidence before it the tribunal decided in the special circumstance of this case to not disregard the income, earning capacity, property and financial resources of the mother’s husband’s family business, and to take these into account in its decision.
62.The mother withdrew $20,000 from her self-managed superannuation fund in 2020. The father said he was confused because it seemed different Agency officers treated the mother’s superannuation withdrawals differently.

At chapter 2.6.14 of the Guide the following information is provided about the way superannuation withdrawals are to be treated:
Superannuation
Where a parent has drawn money as a lump sum from their superannuation fund, the Registrar will consider whether that superannuation entitlement was taken into account in any property settlement between the parents. It may be unjust for a parent to have their child support assessment based on a taxable income which includes a lump sum payment having regard to the earlier distribution of superannuation and property between the parents (Carey and Carey (1994) FLC 92-489).
However, if the parent has a low current income and is making an inadequate contribution to child support the Registrar may still consider any superannuation received by the parent in deciding that parent's capacity to contribute to the financial support of the child. The Registrar will also take into account whether the superannuation has been drawn prior to retirement because of severe financial hardship.

64.According to the father’s submission, at the time of settlement the mother received $870,617 in superannuation. The mother’s Statement of Financial Circumstances dated 17 March 2021, set out she held $1,472,307 in superannuation. In the Agency’s decision dated 15 January 2016, the officer noted:
Ms Strudwick has a significant superannuation fund balance of $950,000. Whilst Ms Strudwick is unable to access these funds until her retirement; given her age and historical taxable incomes, it indicates that she has voluntarily contributed additional significant funds to her superannuation account.

That the mother’s superannuation increased in value by about $600,000 in the period 2013 to 2021, implies in the tribunal’s opinion that the mother was salary sacrificing or making lump sum contributions into her self-managed superannuation account.
Noting the mother’s comment at paragraph 54 of these Reasons for Decision, that the proceeds from the sale of the rental properties and her vehicle (i.e. the vehicle that was part of the property settlement) had been used to reduce household debt, meet living expenses and there in September 2020, was about $90,000 remaining, the tribunal concluded the $600,000 paid into the mother’s self-managed superannuation account reflected income from sources other than the sales of the rental properties.
The tribunal concluded the mother’s decision to increase her superannuation to the level it had reached reflected a foregone capacity to derive accessible income from the capital, as it is set out in paragraph 117(7A)(a) of the Act.
This finding reflects the tribunal’s decision to draw an adverse inference and to make a finding favourable to the father (see paragraph 27 of these Reasons for Decision).
In the absence of contradictory evidence or submission, the tribunal is satisfied the mother has assisted her husband’s family business by meeting expenses that would otherwise be her husband’s expenses or the business’. It is satisfied she had benefitted from her association with her husband’s family business for example by the provision of a vehicle for her and travel and that these benefits should be taken into account for child support purposes.
In the absence of other evidence, it finds the $20,000 withdrawn by the mother from her superannuation account is a financial resource able to be considered for child support purposes.
The tribunal concluded in the special circumstances of this case that if the administrative assessment of child support is determined without taking into account the mother’s income, property and financial resources, an unjust and inequitable determination of child support will result.
Having found the mother’s financial resources are a ground to change the assessment, the tribunal considered whether it is just and equitable to depart from the administrative assessment.

The mother’s earning capacity

When the father lodged his change of assessment application, he understood the mother was working. The tribunal pointed out this was no longer the case. The father raised the issue of the mother’s capacity to work and earn income, and whether this forgone income was relevant to the assessment.
Paragraph 117(2)(c)(ib) of the Act sets out that a ground for departure 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: because of the earning capacity of either parent.
Subsection 117(7B) of the Act provides that the court may determine a parent’s earning capacity is greater than is reflected in their income for the purposes of the Act if 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.

76.The mother’s circumstances satisfy subsection 117(B)(a) of the Act. Given the mother had worked until 2019, it is satisfied she did not cease work because of caring responsibilities.

The tribunal considered the mother’s state of health. The Agency’s papers contained a letter from the mother’s doctor dated 14 June 2021, which set out the mother:
is currently not seeking employment as she is undergoing and receiving treatment for a chronic medical condition that was diagnosed in 2009.
The tribunal notes an Agency file note dated 28 September 2020, set out:
She said she is [age] years old has worked her ass off and now wants to be able to enjoy her children … while they are teenagers as well as support her paraplegic husband. She may need to go back to work but as present she is not able to go back to being an [occupation] as she would have to resit exams and she can’t do it due to her health. She said she has a medical problem … and she cannot work full time anymore.
Given the mother’s statement to the Agency on 28 September 2020, the medical information provided by the mother is insufficient for the tribunal’s purpose to conclude her health justifies her decision to cease employment.
The tribunal is satisfied the mother is an active member of her local community. The father maintains she is actively involved in her husband’s family’s business and actively involved in community affairs as the president of [organisation].
In the absence of an opportunity to discuss these matters with the mother the tribunal was unable to satisfy itself the mother had not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support.
The tribunal decided the mother’s earning capacity is a ground to depart from the administrative assessment of child support.

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

To decide whether it is just and equitable to depart from the administrative assessment, the tribunal must consider the matters required by subsection 117(4) of the Act, plus any other matters raised in the change of assessment application. Factors relevant to the circumstances of this case identified in subsection 117(4) of the Act are now considered in turn.

Duty of a parent to maintain a child

Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain.
The tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children. This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities and some loans. In Mee and Ferguson [1986] FamCA 3 (Mee and Ferguson) the Full Court of the Family Court stated at [128]:
Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one’s cloth to meet that commitment during the years when it applies.

The proper needs of the child

In determining the proper needs of the child(ren) it is necessary to consider the manner in which the parents expected the child(ren) to be cared for, educated or trained, and any special needs of the child(ren).
The father said he is paying 50% of the children’s private school fees, in addition to the child support paid. The papers show the mother says the father is paying only 40% of the children’s private school fees.
School fees were not identified by the father as a ground to depart from the administrative assessment of child support.
The father did not raise the issue of school fees as an issue at hearing.
In earlier discussions with the Agency, the papers recorded neither parent wanted the children’s school fees taken into account when determining their respective child support liabilities.
In the absence of further information about the children’s school fees the tribunal decided to not consider the children’s school fees further in making a change of assessment determination.

Income, earning capacity, property and financial resources of the father

92.The father provided the tribunal with a Statement of Financial Circumstances dated 16 March 2021. This set out:

The father’s average weekly income is $4,822
The value of property owned by the father is $1,328,000
The value of the father’s superannuation is $745,204
The value of the father’s liabilities is $498,000

The father received $301,880 in superannuation at the time of the parents’ property settlement in 2013. His superannuation has increased by about $444,000 in the period 2013–2021.
The father is employed as [an occupation] and his 2019/2020 ATI is $221,483.
The tribunal is satisfied the father’s child support liability is reasonably determined by utilising his Australian Taxation Office determined ATI.
The tribunal concluded the father’s income, property and financial resources are not a ground to depart from the administrative assessment.

97.The father’s earning capacity has not been raised as an issue in this case and it is not in question.

Income, earning capacity, property and financial resources of the mother

98.The mother’s income, property and financial resources have been dealt with earlier in these Reasons for Decision. The mother’s financial resources and earning capacity have been found to be grounds to change from the administrative assessment of child support.

The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support: (i) themself; or (ii) any other child or another person that the person has a duty to maintain

The father said he did not have any other child or person he had a duty to maintain. The tribunal is not aware the mother has any other child or person she has a duty to maintain.

Hardship resulting from the departure determination

Given the circumstances of the parents the tribunal is satisfied hardship will not be experienced by the parents or children whether or not a departure determination is made
The tribunal is satisfied the parents in this case have sufficient financial resources such that neither will suffer hardship if the tribunal affirms or sets aside the Agency’s decision and makes the decision set out below.

What determination should be made taking into account the above factors?

Having concluded the administrative assessment placed an unfair financial burden on the father, because it did not take into account the mother’s capacity to contribute to the support of the children, the tribunal utilised a child support calculator to decide on a fair determination.
The tribunal noted that on 19 August 2021, a further assessment notice was issued which set out:
· For the period 22 July 2021, the father was assessed to pay an annual rate of child support of $35,956, based on his 2019/2020 ATI of $221,483 and the mother’s 2019/2020 ATI of $10,159 (This assessment is based on the father caring for the younger child for 0% of the time).
Given this latest issued assessment the tribunal used a child support calculator to determine the impact of a decision to attribute the mother with an ATI of $100,000 under various circumstances. The tribunal chose $100,000 as an amount which reflects foregone employment income and income forgone from financial resources (i.e. the resources used to pay her husband’s debts resources used to build her superannuation account).
The tribunal took into account income derived from rental properties is no longer available to the mother.
The tribunal referred to a child support calculator to understand the impact of its decision, noting that the results of the calculations are estimates only. It is not possible to know precisely the impact of the considered decision because the inputs will vary from year to year, and the pattern of care of the children makes a difference to the child support liability. The relevant variables are set out in past assessments provided to parents by the Agency and contained in the Agency’s papers.
The tribunal’s first calculation is based on the father continuing to care for the children for 41% of the time and his income being set at $221,483 and the mother’s income being set at $100,000. In this circumstance the tribunal estimated the father’s child support liability would reduce to about $15,500 (from about $22,300).
The tribunal’s second calculation is based on the mother caring for the younger child for 100% of the time. In this scenario the father’s child support liability would be about $24,500.
The elder child will turn 18 [in] November 2022. If the father cares for the younger child for 50% of the time his child support liability will be about $9,000 and if he cares for her for 0% of the time his liability will be about $24,000.
The tribunal’s decision to set the mother’s ATI at $100,000 is predicated on the father continuing to earn a substantial salary of at least $221,448 from employment. If that income reduces substantially it is open to the parents to seek a further change to the assessment.
The tribunal noted an agency officer recorded the father did not lodge his change of assessment application until 20 August 2020, because of time constraints. The tribunal considers the mother has been on notice from 20 August 2020, that her child support payments might be reduced. It is, in the tribunal’s opinion, not fair to recover part of the payments made to her in the period 1 November 2019 to 19 August 2020, because she has reasonably made commitments in respect of that income.
The tribunal believes it is appropriate to give the parents some certainty about their respective child support obligations for the remainder of the time their case is active.
Noting that it is open to parents to lodge a further change of assessment if there is a changed circumstance resulting in a ground to change the assessment, the tribunal decided to set the mother’s ATI from 20 August 2020 at $100,000 until 9 November 2025.

Issue c: Is it otherwise proper to depart from the administrative assessment?

The tribunal considered the impact of its decision on the balance of support provided by the parents on one hand and the taxpayer on the other. It is necessary to decide whether this is a proper outcome given that parents have the primary responsibility to support their children.
The tribunal understands from the Agency’s papers neither parent receives Centrelink benefits. Consequently, the tribunal’s decision will not have an impact on the taxpayer.
The tribunal was satisfied that this decision is otherwise proper in the circumstances of the case.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that the mother’s adjusted taxable income is varied to $100,000 for the period 20 August 2020 to 9 November 2025.

[2021] AATA 4784

6 October 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness