Rieben and Rieben (Child support)

[2024] AATA 2016

Rieben and Rieben (Child support) [2024] AATA 2016 (8 May 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/SC027141

APPLICANT:  Mr Rieben

OTHER PARTIES:  Child Support Registrar

Ms Rieben

TRIBUNAL:Senior Member K Dordevic

DECISION DATE:  8 May 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS 
CHILD SUPPORT – change of assessment – income, property and financial resources – no ground for departure – just and equitable – adjusted taxable income – 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. Ms Rieben (the mother) and Mr Rieben (the father) are the parents of two children, [Child 1] (born [date] 2009) and [Child 2] (born [date] 2011). This case was registered with Services Australia – Child Support (Child Support) on 1 November 2020 and was collectable from this date. The children are recorded as being in the mother’s 100% care.

3. The father lodged a departure application on 29 August 2023. On 26 September 2023 a senior case officer refused the application on the basis that no ground for departure was found. On 11 October 2023 the father lodged an objection to that decision. On 17 November 2023 an objections officer disallowed the objection.

4. On 4 December 2023 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). A telephone directions hearing was held on 7 March 2024, with directions issued on the same day requiring compliance by 18 April 2024.

5. The hearing took place on 8 May 2024. The mother and father appeared by MS Teams audio. The Tribunal also considered the documentation provided by Child Support (folios 1 to 220), the father (folios A1 to A24) and the mother (folios B1 to B13).

6. The Tribunal reached its decision on the day of hearing.

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part;

2. Therefore, the issues which arise in this case are:

   ·      Does a ground exist for departure from the administrative assessment of child support? And, if so,

   ·      Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property or financial resources. The central issue in this matter is whether the administrative assessment results in an unjust level of child support payable by the father.

2. At the time the father lodged his departure determination, he was liable to contribute $14,662 in child support per annum from 7 December 2022 based on his and the mother’s 2022 adjusted taxable incomes of $85,181 and $73,198 respectively.[1]

   [1] Folio 74

3. Currently, the administrative assessment dictates that the father is to contribute $18,376 towards the children’s costs, based on his 2023 adjusted taxable income of $94,666 and the mother’s 2023 adjusted taxable income of $82,605.[2]

   [2] Folio 93

4. The father submits that the administrative assessment is unfair and requires him to live beyond his means. He went on to explain that he has had to draw on the funds from the property settlement to meet his living expenses, including his child support liability. He stated that he received $235,000 from the property settlement and placed $200,000 of this sum into a bonus saver account. He earned $4,326.21 in interest in the 2023 financial year, which was included in his adjusted taxable income. He is adamant that it is unfair that he must meet his child support liability from the property settlement funds.

5. Furthermore, he firmly believes that he is being penalised by the inclusion of his superannuation into his income. He explained that just because his company looks after him by providing him with additional 2% in superannuation, it does not mean that he has greater capacity to meet the children’s costs. He stressed that this is not an extra fund that he chose to salary sacrifice; it is not income available to him now. Rather, it will only be available to him upon retirement. It is for this reason he does not believe that the 2023 reportable employer superannuation contributions of $2,192 should be included in his 2023 adjusted taxable income.

6. The father testified that he has been trying to get information about the child support system for many years. He is concerned that the self-support amount is not reflective of people’s actual living costs. Additionally, he is concerned that a parent’s capacity to contribute to a child’s costs is based on their adjusted taxable income and not their net income. He has reached out to many people to seek an explanation about the child support system, including a conference registrar at the Tribunal, his local State member of parliament and also his local federal member. None can give him an adequate explanation regarding the rationale of the self-support amount or the application of adjusted taxable income rather than net income to the administrative assessment. He also does not agree that there is a significant difference in a parent’s child support liability depending on whether they have 13% care or less.

7. He drew the Tribunal’s attention to topic 2.4.4.10 of the Child Support Guide, which relevantly states:

   Do I pay child support on tax I have paid?

   Parents are not expected to pay child support on income that is subject to taxation. The child support liability generated by the child support formula is based on costs of children research which identified the expenditure patterns of families with children at different levels of income. These patterns are derived from parents making expenditure decisions based on their post‑tax income.

   The father submits that Child Support is incorrectly calculating his child support liability by including his adjusted and not net income.

8. The Tribunal explained that this particular provision of the Guide relates to how the costs of children are calculated, and specifically that the Costs of the Children Table, which is one particular element that is applied to the calculation of a parent’s child support liability, is based on the costs that parents meet from their net income. In short, this section of the Guide intends to provide an explanation about the Costs of the Children Table[3] and does not dictate that a parent’s net income should be applied to the calculation of the administrative assessment.

   [3] >

   In any event, even if the Tribunal was incorrect in its understanding of the Guide, the legislation is clear. Section 41 of the Act states that to work out a parent’s child support income, a parent’s adjusted taxable income is required.

9. Subsection 43(1) of the Act states:

   (1) Subject to this Part, a parent's adjusted taxable income for a child for a day in a child support period is the total of the following components:

   (a) the parent's taxable income for the last relevant year of income in relation to the child support period, disregarding the parent's assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
   (b)  the parent's reportable fringe benefits total for that year of income;
   (c)  the parent's target foreign income for that year of income;
   (d)  the parent's total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
   (e)  the total of the tax free pensions or benefits received by that parent in that year of income;
   (f)  the parent's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997 ) for that year of income.

10. There is no provision in the Act that requires the application of a parent’s post-tax income.

11. The Tribunal finds that the father’s 2023 adjusted taxable income of $94,666 included $2,192[4] in reportable superannuation and $4,326[5] in interest. Further, the father’s adjusted taxable income correctly includes these two sources of income.

    [4] Folio A10

    [5] Folio A10

12. The Tribunal is satisfied that application of the formula to the father’s 2023 adjusted taxable income of $94,666 required the father to contribute $16,696 towards the children’s costs from 1 September 2023.

13. The Tribunal next considered whether this liability of $16,696 results in an unjust and inequitable determination of the level of financial support to be provided by the father given his income, property or financial resources. At hearing, the father stressed that the amount of child support he pays prevents him from being able to purchase a home. He states that the current assessed rate of child support places him in a position of hardship; he simply cannot meet the assessed amount.

14. The mother submits that there is no basis on which to amend the administrative assessment.

15. The father provided a Statement of Financial Circumstances dated 6 December 2023.[6] He reports that he is an [occupation] for [a] company where he has worked on a full-time basis for over three years. He reports average gross weekly income of $1,653. He lives with his girlfriend but did not provide information about her income. His assets include $207,541 ($207,357 + $184) in savings, a motor vehicle valued at about $20,000, household contents of $5,000 and superannuation of $122,911. He reports no liabilities and personal expenditure of $923 per week and household expenses of $1,621, of which $1,144 relates to his costs. His declaration suggests that his weekly expenses exceed his income by $414.

    [6] Folios A1 to A9

16. Inspection of the father’s payslips reveals that his gross weekly income is actually $1,720,[7] his weekly tax liability is $411 (not $388)[8] and he does not make an additional superannuation contribution of $215 from his gross income.[9] This suggests that his weekly expenses exceed his income by $155.

    [7] Folios A21 to A24

    [8] Folio A7

    [9] Folio A7

17. At hearing, he confirmed that some of his declared costs are associated with the care his partner provides her children, including the rent of a four-bedroom home and the sharing of food costs.

18. Section 3 of the Act stipulates that a parent’s duty to maintain a child has priority over all commitments, other than their necessary commitments to support themself. The Tribunal carefully considered the father’s declaration as to his income and expenses and has determined that he has about $70 remaining each week after meeting his necessary weekly expenses, including his current child support liability.

19. The Tribunal calculates that if the interest and reportable superannuation contributions were excluded from the father’s adjusted taxable income, his child support liability would decrease by $1,540 per annum, or $29.61 per week.

20. In such circumstances, the Tribunal is not persuaded that the level of financial support dictated by the administrative assessment would result in an unjust and inequitable determination of child support payable.

21. Thus, after considering the father’s application, the Tribunal is satisfied that there are no grounds for departing from the administrative assessment of child support.

22. His application is refused pursuant to section 98F of the Act.

DECISION

The decision under review is affirmed.