Reddy and Sharma (Child support)

[2020] AATA 5827

Reddy and Sharma (Child support) [2020] AATA 5827 (30 November 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC019579

APPLICANT:  Ms Reddy

OTHER PARTIES:  Child Support Registrar

Mr Sharma

TRIBUNAL:Member S Letch

DECISION DATE:  30 November 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – income, property and financial resources of paying parent – paying parent already assessed to pay fixed annual rate – no ground for departure – application to depart was properly refused – decision under review affirmed

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 Reddy and Mr Sharma are the parents of [Child 1], born August 2016. Ms Reddy seeks a review of a decision by the Child Support Agency (CSA) to disallow Ms Reddy’s objection to a “change of assessment” decision of 24 April 2020 in which it was concluded there was no ground to depart from the child support formula.

2. It is convenient to set out some extracts from the objections officer’s decision dated 22 July 2020 by way of background:

   …

   BACKGROUND

   The children:
   As at the date of Objection lodgement, Mr Sharma and Ms Reddy are the noted parents of one eligible 2016).
   Primary Care of Ms Reddy. Mr Sharma is the party required to provide child support liability via the Agency, since inception.

   The assessment:

   - For the period 16 January 2020 to 15 April 2021, Mr Sharma is assessed to pay an annual rate
   for child support of $1,467.

   This assessment is based on the Adjusted Taxable Income (ATI) for Mr Sharma of $16,691 (2018/19) and an ATI of $26,023 (2018/19) for Ms Reddy.
   …
   On 24 April 2020, DM A. Daly refused the CoA application lodged by Ms Reddy as no Reason was established.

   GROUNDS FOR REVIEW:

   On 08 May 2020, Ms Reddy objected to the determination of DM A. Daly with the summary of her
   information as follows:
   - [Mr Sharma] has received cash regularly, after a very short period of time.
   - [Mr Sharma] mentioned that he lost his [Occupation 1] job on 28 Jan 2020, but purchased a car with cash and made
   a payment of $10,100 on 16 January 2020.
   - [Mr Sharma] also upgraded his phone plan.
   - Further, [Mr Sharma] noted that he started [Occupation 2] from 02 February 2020 to pay his bills.
   - [Mr Sharma] then stated that his [Occupation 2] job was impacted by the COVID-19 pandemic and was now surviving on his credit card.
   - Yet, [Mr Sharma]`s bank statement suggests otherwise, with deposits of $16,539 for cash into his account from 15 January 2020 to 28 March 2020.

   …

   Information available/obtained by the agency, regarding Mr Sharma’s employment and financial status were confirmed as follows:

   - Employment ceased with [Company 1] to you on 28 January 2020.
   - Confirmation via correspondence (dated; 02 April 2020) received from employer – [Company 2], stating Mr Sharma had ceased employment as a [Occupation 2].

   - Qualification for JobSeeker payments from 30 March 2020 at $1,213.16 per fortnight.

   Whilst Ms Reddy put forward a claim related to the purchase of a second hand vehicle, this occurred
   at a time when Mr Sharma held full time employment and the child support case was only at a stage
   of being initiated. The purchase/ownership of this vehicle does not impact the ongoing rate of

   income for Mr Sharma.

   Further, whilst Mr Sharma has had various forms of employment prior to and subsequent to the
   inception of the child support case, this does not take away from the fact that Mr Sharma`s periods of employment and income received, have been minimal. Additionally, Mr Sharma has qualified for and been in receipt of JobSeeker payments since the end of March 2020. This is supported via deposits made into Mr Sharma`s bank account, with the only significant payments being for JobSeeker since March 2020.
   As a result, should Mr Sharma`s income be adjusted to reflect the JobSeeker payment (approximately $31,524 per annum) this would result in a contrary outcome for Ms Reddy ($1,105 per annum), as The current assessment is based on the Fixed Annual Rate of $1467 per annum (Where a liable parent has a low adjusted taxable income or estimated income, but did not receive income support payments during the last relevant year of income, a fixed annual rate assessment will be made.)

   Subsequently, given Mr Sharma`s unknown period of low income or unemployment, along with the uncertainty of any extended period for JobSeeker payments (currently until 27 September 2020), I find it appropriate to leave the current assessment in place, based on the Fixed Annual Rate at $1,467 per annum. Further, as the child support assessment will be reconciled accordingly following lodgement of tax returns by both parents, I do not find the current assessment unjust and inequitable.

   Reason 8A is not established.

   As no reason has been established, the application must be refused under Section 98F of the Child Support (Assessment) Act 1989. As a result, no changes will be made to the child support

   assessment.

   …

3. Ms Reddy applied for further review by the Tribunal on 31 July 2020. Ms Reddy and Mr Sharma participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the CSA materials, additional materials submitted by both parties, and the sworn evidence of both parties during the hearing.

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) of the Act, 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) of the Act, commonly referred to by the CSA as Reason 8A, provides as a ground 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

2. 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 v 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.

3. In summary, Ms Reddy’s case is that Mr Sharma’s bank statements from January to March 2020 reveal unexplained cash deposits. She questions whether any person would purchase his old car. She is sceptical that his friends would support him with the level of cash assistance claimed by Mr Sharma. She questioned whether there were outgoings from the bank account for Mr Sharma’s expenses. She observed that Mr Sharma had made a superannuation withdrawal of almost $9,000, and questions whether Mr Sharma was struggling as much as he claims.

4. Mr Sharma confirmed he lost his job as a [Occupation 1] in January 2020; he started as a [Occupation 2] in February 2020 and stopped in early April 2020 (as a result of COVID-19). He received jobseeker from Centrelink for a period of some weeks before resuming [Occupation 2]; he presently earns around $400 to $500 per week. Business in [City 1] remains very slow as a result of border closures; he is hopeful in the lead up to Christmas and beyond that the [Occupation 2] business will improve somewhat. From 1 October 2020, the child support assessment has moved to Mr Sharma’s 2019/20 adjusted taxable income of $42,407 (increasing the monthly rate to $238); whilst Mr Sharma suggested this amount was too high, he was prepared to leave that assessment in place given his desire to provide child support.

5. Although Mr Sharma was vague at times in his evidence, the Tribunal understood his evidence to be that he sold his old car for $10,000 and purchased a new vehicle for around the same amount. He said the cash deposits arose from the transaction with the car, his [Occupation 2] income, and from some assistance from his friends.

6. The Tribunal observes that under the formula arrangements prior to October 2020, Mr Sharma has been assessed to pay the fixed annual rate of some $1,467 per annum. For formula purposes, Mr Sharma’s adjusted taxable income would need to be around $35,000 or more for a higher amount to be payable.

7. The documentary evidence reveals that at various times Mr Sharma was unemployed, working as a [Occupation 2] for around $700 per week, and in receipt of jobseeker payment of roughly the same amount. There is no compelling evidence which suggests Mr Sharma’s income would materially exceed around $35,000 per annum. The Tribunal accepts it likely his present income is likely to be only around $500 per week given the very depressed conditions in the [Occupation 2] industry – a sum significantly less than his 2019/20 taxable income (which included employment income prior to the loss of his job in early 2020) of some $42,000, which Mr Sharma has advised he has accepted in the ongoing child support assessment.

8. The Tribunal observes that at times, Mr Sharma was vague and evasive in explaining the sale of the car and the nature of the cash deposits evident in the first three months of 2020. It seems to the Tribunal there are some amounts that have not been adequately explained by Mr Sharma; nevertheless, speculation about any amounts that may be in excess of the sale of his car, his income following termination of his employment and his [Occupation 2] income, and assistance from friends does not, in the Tribunal’s assessment, provide a credible basis to conclude that Mr Sharma’s income would have been likely to exceed $35,000 per annum in the first three months of 2020.

9. Ultimately, on the credible evidence available to the Tribunal, the Tribunal is not satisfied that Mr Sharma’s income exceeded a point where he would be required to make a materially greater contribution than the fixed annual rate of child support. Special circumstances do not exist which make the formula assessment unfair. The Tribunal observes that since 1 October 2020, under the formula arrangements, Mr Sharma is being assessed at a level of income which likely exceeds his current financial capacity – although he remains hopeful going forward of a likely increase as the fog of COVID-19 begins to lift.

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

17.Given the Tribunal has found there is no ground to depart from the formula, it is not required to consider whether a departure would be just and equitable and otherwise proper.

18.As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decision under review is affirmed.