Rodgers and Donelan (Child support)

[2023] AATA 2957

Rodgers and Donelan (Child support) [2023] AATA 2957 (19 July 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/MC025629 \ 2023/MC025642

APPLICANTS:  Ms Rodgers \ Mr Donelan

OTHER PARTIES:  Child Support Registrar

Mr Donelan \ Ms Rodgers

TRIBUNAL:Member E Kidston

DECISION DATE:  19 July 2023

DECISION:

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

·for the period 22 August 2022 to 31 December 2022, the annual rate of child support payable by Mr Donelan is decreased by $3,804;

·for the period 1 January 2023 to 31 December 2023, the annual rate of child support payable by Mr Donelan is decreased by $4,536; and

·for the period 1 January 2024 to 31 December 2024 or until a terminating event in relation to [Child 1], the annual rate of child support payable by Mr Donelan is decreased by $4,763.

CATCHWORDS

CHILD SUPPORT – departure determination – school fees – a ground for departure established – decision to depart - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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

1. This review concerns an application made by Ms Rodgers on 20 February 2023 and an application made by Mr Donelan on 21 February 2023 in relation to a change of assessment objection decision made by Services Australia – Child Support (Child Support) on 6 February 2023.  As the applications relate to the same decision under review, it was appropriate and convenient for the Tribunal to hear the matters concurrently.

BACKGROUND

1. Ms Rodgers and Mr Donelan are the separated parents of three children, [Child 1] (born 2006), [Child 2] (born 2009) and [Child 3] (born 2010). A child support case was registered with Child Support on 27 January 2021.  Mr Donelan is the parent liable to pay child support.

2. The Child Support (Assessment) Act 1989 (the Assessment 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 for the children. It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Assessment Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent.

3. Child Support’s records show that for the relevant period Ms Rodgers had 100% care of [Child 1] and 72% of [Child 2] and [Child 3], while Mr Donelan had 28% care of [Child 2] and [Child 3]. It is noted that final court orders were made on 23 June 2023 regarding care of [Child 2] and [Child 3] however, as at the date of the hearing Child Support had not made a determination in regard to the registered care percentages.

4. For the purpose of this review, the administrative assessment of child support relevantly in place was as follows:

   For the period 25 December 2021 to 9 February 2022, Mr Donelan is to pay $51,717 per annum in child support based on his 2020/2021 adjusted taxable income (ATI) of $314,505. Ms Rodgers is assessed on her 2021/2022 estimated income of $24,798.

   For the period 10 February 2022 to 15 February 2022, Mr Donelan is to pay $41,379 per annum in child support based on his 2020/2021 ATI of $314,505. Ms Rodgers is assessed on her 2021/2022 estimated income of $98,316.

   For the period 16 February 2022 to 8 March 2022, Mr Donelan is to pay $33,105 per annum in child support based on his 2020/2021 ATI of $314,505. Ms Rodgers is assessed on her 2021/2022 estimated income of $98,316.

   For the period 9 March 2022 to 30 June 2022, Mr Donelan is to pay $34,723 per annum in child support based on his 2020/2021 ATI of $314,505. Ms Rodgers is assessed on her 2021/2022 estimated income of $84,763.

   For the period 1 July 2022 to 30 September 2022, Mr Donelan is to pay $40,371 per annum in child support based on his 2020/2021 ATI of $314,505. Ms Rodgers is assessed on her 2020/2021 ATI of $44,525.

   For the period 1 October 2022 to 22 March 2023, Mr Donelan is to pay $38,118 per annum in child support based on his 2021/2022 ATI of $322,988. Ms Rodgers is assessed on her 2021/2022 ATI of $68,636.

   For the period 23 March 2023 to 31 December 2023, Mr Donelan is to pay $41,317 per annum in child support based on his 2021/2022 ATI of $322,988. Ms Rodgers is assessed on her 2021/2022 ATI of $68,636.

5. On 22 August 2022, Mr Donelan applied for a change in the administrative assessment of child support.  One of the grounds for departure was based on the three children attending private school. 

6. On 11 November 2022, a delegate of Child Support considered the application and determined reasons were not established to depart from the assessment that was in place.  Mr Donelan objected to the refusal decision and, on 6 February 2023, an objections officer of Child Support considered the costs of educating the children are significant and impacted upon Mr Donelan’ ability to support the children and so allowed the objection. The objection decision changed the assessment as follows:

   For the period 22 August 2022 to 31 December 2022, the annual rate of child support payable by Mr Donelan is decreased by $4,687.

   For the period 1 January 2023 to 31 December 2023, the annual rate of child support payable by Mr Donelan is decreased by $5,589.

   For the period 1 January 2024 to 31 December 2024, the annual rate of child support payable by Mr Donelan is decreased by $5,868.

   (The impact of the objection decision on the assessment decreased the annual rate of child support payable by Mr Donelan and created an overpayment of approximately $2,168 to Ms Rodgers. The current annual rate of child support payable by Mr Donelan decreases to approximately $32,529.)

7. On 20 February 2023, Ms Rodgers applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for review of the objection decision dated 6 February 2023.  Mr Donelan also disagreed with the objection decision and on 21 February 2023 brought his application to the Administrative Appeals Tribunal.

8. The Tribunal conducted a directions hearing concerning the substantive matters under review on 20 May 2023, and then a full hearing on 14 July 2023. Ms Rodgers and Mr Donelan participated in the hearings by conference telephone and each gave evidence on affirmation. As is customary in this Division, the Child Support Registrar did not participate in the hearing and did not attend.

10.  In considering the application, the Tribunal took into account the submissions as well as the documentary material in evidence as provided by Child Support in accordance with subsections 37(1) and 38AA of the Administrative Appeals Tribunal Act 1975 comprising folios 1 to 643 and folios 643 to 667 (marked Exhibit 1) as well as the additional documents provided by Ms Rodgers prior to the hearing (marked Exhibit A pages A1 to A26) and additional documents provided by Mr Donelan prior to the hearing (marked Exhibit B pages B1 to B71).

11.  During the hearing, submissions were made regarding certain matters that are not relevant to the issues before the Tribunal and therefore are not mentioned in these Reasons.  As canvassed at the hearing, the Tribunal is required to consider the issues before it based on the relevant facts and application of the law; it is not the role of the Tribunal to adjudicate on other areas of dispute that may exist between the parties. However, in stating that, the Tribunal does not disregard or diminish the importance of other matters in any way, merely that the Tribunal is limited to considering the relevant issues concerning the decision under review.

CONSIDERATION

12.  From Ms Donelan’s submissions and evidence, she challenges Child Support’s decision principally on the grounds that the decrease in the annual rate of child support payable by Mr Donelan is unfair as it leaves her to pay about $2,168 in arrears and a reduced annual amount of approximately $5,000 for 2023.  Ms Rodgers asserted that in calculating the annual decrease in the amount payable in child support by Mr Donelan, Child Support did not take into account the disparity of earnings between the two parents.  Ms Rodgers asserted it was never an expectation that she contribute and she is unable to contribute in any way towards the private school fees for the children on her earnings and especially given her current circumstances where her earnings have recently reduced.

13.  At the hearing Mr Donelan contended that although he ultimately agreed with Child Support’s objection decision to decrease his annual rate of child support due to the special circumstances of private school fees, he disagreed with the objections officer’s apportionment of contribution towards private school costs to about 12% for Ms Rodgers and 82% for him and, argued that the contributions by both parents should be backdated to the maximum 18 months, which would effectively bring it to the start of the child support assessment in January 2021.  Mr Donelan asserted that the contribution percentages ought to be based on their net financial position once tax and child support payments are taken into account.  Mr Donelan also spoke of circumstances following December 2020 when he left the matrimonial home and the ongoing mortgage payments he made which benefited Ms Rodgers and the children, which were not considered by Child Support.  He also spoke of the legal fees he had incurred to date in family court proceedings that required him to borrow money from his elderly parents as well as the additional legal fees in defending criminal proceedings, which have also not been considered by Child Support as relevant factors in assessing his child support payments. 

14.  It is relevant to note that Mr Donelan’ and Ms Rodgers’ final property settlement proceedings occurred in September 2021; however, other family law matters concerning contact and access with the children were ongoing with final court orders made recently on 23 June 2023.

15.  The issue of legal fees incurred by each parent will be addressed in these Reasons when considering their financial circumstances; however, it is appropriate for the Tribunal to address Mr Donelan’ contentions concerning financial contributions prior to the property settlement at the outset.  As an agreement concerning the division of the ex-matrimonial assets and liabilities has been obtained after the registration of a child support case, it is not the role of the Tribunal to review or consider Court ordered property settlements and the Tribunal proceeds on the basis that the Court’s orders are fair and have taken into account the liabilities incurred by each parent (including mortgage payments) to a point in time in assessing the division of assets and, therefore the otherwise appropriate rate of child support payable should not be varied on the basis of property settlement proceedings and resulting orders and any perceived inequity.  

The legislative framework

16. The legislation relevant to this review is contained in the child support law, in particular the Assessment Act and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).

1. As noted above, the rate of child support payable by a liable parent is usually based on an administrative formula assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent. Either parent may apply to Child Support for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B) – a process commonly known as a “change of assessment”.

18. Section 98C of the Assessment Act provides that Child Support may make a determination to depart from the formula assessment where the following three elements 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)).

1. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act (subsection 98C(2)).

20.  Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether the ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” present.

21. The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (1992) FLC 92-279, the Full Court of the Family Court of Australia held that the term “special circumstances” is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. Further, the intention of the legislature is that the Court will not interfere with the administrative formula in the ordinary run of cases. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that principle.

22. If satisfied that there are “special circumstances” and that a ground or grounds exist, subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply and the Registrar (and therefore the Tribunal) must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

ISSUES

23.  The issues that must be considered by the Tribunal in this matter are:

1.    Does a ground exist to depart from the administrative assessment? If so,

2.    Is it just and equitable to depart from the administrative assessment? And if so,

3.    Is it otherwise proper to depart from the administrative assessment?

Issue 1 – Is there a ground to depart?

24.  The evidence before the Tribunal shows that Mr Donelan’ liability for child support is decreased on account of an amount representative of 12.32% contribution towards private school fees by Ms Rodgers.  Ms Rodgers disagrees with the annual decrease attributed as her contributions towards school fees (Reason 3).  Mr Donelan also disagrees and considers the contribution towards private school fees based on their respective gross income is unfair and that Ms Rodgers’ earning capacity should be regarded in lieu of actual earnings and, further stated that he has made financial contributions to the children’s benefit since separation (Reason 3 and Reason 5).

25.  Although there are a few grounds put forward as reason for departing from the administrative formula (namely, Reasons 3 and 5), the Tribunal is only required to establish one ground for the application to change an assessment to be considered. Accordingly, for this application, the Tribunal has considered the legislative grounds corresponding to subparagraph 117(2)(b)(ii) of the Assessment Act, commonly referred to by Child Support as Reason 3:

(b) that in the special circumstances of the case the costs of maintaining the child are significantly affected: …

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

26.  Put simply, a Reason 3 departure ground is established if, in the special circumstances of the case, the costs of maintaining the children are significantly affected because they are being educated in the manner that was expected by the parents.

27.  In this matter it is common ground that the children would be educated privately at [School 1]; however, Ms Rodgers contends the arrangement to educate the children in that manner was qualified by Mr Donelan solely meeting the tuition fees.  Although Ms Rodgers raised the issue that Mr Donelan can afford to pay the costs associated with educating the children privately, that in itself, is not a reason for imposing the full liability of school fees to one parent.  It is relevant to note the principle that emerged from the case of Mee v Ferguson[1] where the Full Court of the Family Court found that where a parent agreed to the child attending a private school, that parent is liable to contribute to the fees so long and to the extent that he or she has a reasonable financial capacity to do so. Therefore, the question whether, or to what extent, the parents may be able to contribute towards tuition fees is relevant to a consideration as to whether it is just and equitable to make a departure. This issue is discussed later in these Reasons.

[1] (1986) FLC 91-716

28.  At this juncture, what is important in establishing whether there is a ground to depart under Reason 3 is whether it was expected by the parents the children would be educated privately.  Over time a person may change their expectations for their own lives and their children as a result of the resources available to them. However, for present purposes, the Tribunal must determine whether their respective expectation of private education had changed at the time of the application.  This is a question of fact, and turns on the evidence.  

29.  The evidence in this matter reveals a [School 1] parental agreement signed by both parents on 26 February 2019 prior to their separation. At the hearing Ms Rodgers spoke of the mutual intention for their children to attend [School 1] from preparatory entry, being the school Mr Donelan was educated at, and valuing their continued enrolment and involvement in the same school.  Ms Rodgers stated that she would love it for the children to continue at [School 1] until their youngest ([Child 3]) finishes senior school but stated that if she has to contribute towards school fees, it would not be possible going forward.  Mr Donelan agreed with Ms Rodgers’ statements concerning their mutual intention and the value in their children being educated at [School 1] and further stated that a mutual responsibility for school fees between them would ensure focus on their respective financial circumstances that would ultimately benefit the children.

30.  Putting to one side the capacity to meet tuition fees, the Tribunal is satisfied that the actions of both parents are consistent with the conclusion that the children’s attendance at [School 1] is in the manner of education which was expected by the parents both prior to and after separation and that this expectation continues, and so finds.

31.  Documents in evidence establish that the tuition fees and levies for the children totalled about $34,120 for the 2021 school year, $38,042 for the 2022 school year and $45,364 for the 2023 school year. Those figures were not disputed by either parent.  Mr Donelan has paid in full the 2021 and 2022 fees directly to [School 1] and from March 2023, Mr Donelan has entered into an agreement to pay monthly instalments of $500 and has paid approximately $5,000 of the 2023 school fees as at the date of the hearing. Instalment payments to the school for 2023 is evidenced by the bank statements in folios B31 to B40.

32.  At the hearing, Mr Donelan stated he would not be paying any travel (bus) fees and any travel-related expense charged by the school ought to be paid by Ms Rodgers.

33.  Ms Rodgers informed the Tribunal that she recently received an invoice from [School 1] dated June 2023 for payment of about $20,000 which she believes to be half of the 2023 school fees that are outstanding after hearing Mr Donelan’ evidence that he has only paid about $5,000 to date. Ms Rodgers said she is awaiting further information from the school’s administration in regards to that June invoice; however, she suspected it to have been issued to her following Mr Donelan’ direction that the school issue an invoice for half of the remaining 2023 school fees to her.  Ms Rodgers said the June 2023 invoice is the first invoice the school has ever issued to her directly and she was surprised by it and is unable to pay it.

34.  In response to Mr Donelan’ statement regarding school bus fees, Ms Rodgers stated that the school travel costs are her responsibility and she would address that issue directly with the school.

35. The Tribunal accepts Ms Rodgers’ evidence that she did not make any commitment to Mr Donelan to contribute towards the school tuition fees that, however, is not a requirement for this ground of departure. As stated above, what is required is firstly, that there are special circumstances in this case, secondly, that the children are being educated in the manner expected by their parents and, lastly, that the costs of maintaining the children are significantly affected as a consequence of that. By virtue of the fact that the children are being educated at [School 1], where the combined fees for their education is around $38,000 for 2022 and $46,500 for 2023, the Tribunal is satisfied that there are special circumstances in this case. Further, as already determined the Tribunal is satisfied that both parents expected the children to be educated at [School 1] and, it is clear that as a consequence of their being educated at that school, the costs of maintaining the children are significantly affected. Therefore, the Tribunal finds the ground for departure set out in subparagraph 117(2)(b)(ii) of the Assessment Act has been made out.

36. Subparagraph 98C(1)(b)(i) of the Assessment Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found one ground for departure established, it is not necessary to determine whether any of the other grounds relied upon by the parties have been met. As noted above, the issues raised by the parties in respect of the other grounds will be fully considered when determining whether it would be just and equitable to make a departure determination.

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

37.  As the Tribunal is satisfied that the costs of privately educating the children provides a departure ground, the next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the proper needs of the children of the assessment, the parents’ financial circumstances and commitments and any hardship that would be caused if the Tribunal increased or decreased the amount of child support payable by determining a departure from the formula.

38. The Tribunal has had regard to all factors set out in subsection 117(4) of the Assessment Act despite not detailing all particulars below.

39.  The Tribunal first considered what is just and equitable in the circumstances of both parents.

Ms Rodgers

40.  Ms Rodgers first appealed the objection decision stating that it was unaffordable for her to contribute towards the private school fees for the children.

41.  Ms Rodgers is employed as a [Occupation 1] and worked part-time in two jobs, which effectively equated to full-time.  The 2021–22 adjusted taxable income used in the assessment for Ms Rodgers is $68,636. At the time of the application, she is to receive $40,371 in child support from 1 July 2022 to 30 September 2022 and then $38,118 from 1 October 2022 to 22 March 2023. Although Ms Rodgers receives family tax benefit and child support, those amounts are not considered income for the purpose of the assessment process.

42.  Ms Rodgers informed the Tribunal that in April 2023 she lost one of her [jobs] mostly due to the time she had to take off to attend to family court proceedings and, as a result her earnings reduced to about $43,000.  Ms Rodgers notified Child Support of the change in her circumstances.  The Tribunal had regard to the Estimate of Income notice dated 4 May 2023 in the supplementary documents (Exhibit 2 – folio 644) whereby Child Support have accepted income estimate for Ms Rodgers at $42,220.71 for the 2023–24 financial year.

43.  Mr Donelan asserted that Ms Rodgers has made choices regarding her employment and has the ability to work full-time as a [Occupation 1].  Although it is not the role of the Tribunal to determine if a parent could or should be working more than they are, the Tribunal considers that for the relevant period of the assessment under review, Ms Rodgers had been working two [jobs] proximate to full-time employment and although there has been a change in circumstances of her employment in April 2023, there is no evidence to suggest that this was deliberate or that Ms Rodgers has reduced her working hours with the intention to affect the child support assessment.  As Ms Rodgers has lodged her tax returns on time and she does not derive income from any other source, the Tribunal is therefore satisfied that Ms Rodgers’ income is fairly represented in the assessment as $68,636 to 30 June 2023.  Going forward, the Tribunal considers it appropriate to accept the income estimate of $42,220 from 1 July 2023, as there is no basis to doubt that any further changes in Ms Rodgers’ employment will be promptly notified to Child Support. 

44.  The child support assessment under review assumes that Ms Rodgers meets any further needs of the children of the assessment from her own earnings. She must meet those additional needs, together with her own costs of self-support. Ms Rodgers has provided a Statement of Financial Circumstances in which she had identified her regular expenses and had provided evidence of the liabilities for other expenses she has had to incur (such as legal costs). 

45.  Ms Rodgers gave evidence during the hearing that the Statement of Financial Circumstances contained accurate information. She stated her average weekly expenses totalled $1,940 (without inclusion of legal fees) and when discretionary expenditure of entertainment, subscription and gifts are removed, her expenses amount to about $1,780 ($92,560 per annum). The Tribunal considers that the various expenses described in Ms Rodgers’ Statement of Financial Circumstances are modest when taking into account her primary care of the children, with little discretionary expenditure leaving little capacity to rearrange her affairs in order to account for a contribution towards the cost of the children’s private schooling to the extent of her capacity. 

Mr Donelan

46. Mr Donelan is in the employ of [a company] as an [Manager]. His 2021–22 adjusted taxable income of $322,988 per annum is used in the administrative assessment of child support. Mr Donelan asserted that the amount used by Child Support includes his reportable fringe benefit and the assessment should be based on his taxable income amount stated in his 2022 tax return as $304,412 (folio B26 in Exhibit B). As canvassed at the hearing, the child support legislation prescribes factors for working out a parent’s adjusted taxable income for child support purposes (section 43 of the Assessment Act) and includes a person’s reportable fringe benefits and reportable superannuation, among other things. As such, the Tribunal finds it was correct for Mr Donelan to be assessed on an adjusted taxable income of $322,988 (taxable income of $303,275 + fringe benefit $19,713).

47.  Mr Donelan’ Statement of Financial Circumstances records his average weekly expenses totalled $3,535 with inclusion of $865 for private school fees and $808 for legal fees. Putting the legal fees, private school fees and discretionary expenditure (entertainment/hobbies, gifts and holidays) to one side, the various expenses described total about $1,750 per week ($91,104 per annum) and are proximate to those of Ms Rodgers, despite having less care of the children.

48.  It was submitted that Mr Donelan’ financial assistance from his family members should be taken into account as financial resources available to him relevant for the assessment. Mr Donelan informed the Tribunal that the financial support was provided by way of a loan which he is expected to repay.  Notwithstanding the fact that Mr Donelan has received the financial support, the Tribunal notes that it is the parents, not grandparents or others, who are obliged to meet the proper needs of the children.  On this basis, the Tribunal considers no adjustment is required to Mr Donelan’ income for the relevant period under review as his financial resources have been adequately reflected under the child support formula arrangements. Furthermore, although the Tribunal accepts Mr Donelan is expected to repay the family loan, there was no evidence of immediate repayment terms and the Tribunal infers that the family arrangement will accommodate Mr Donelan’ obligations to address other pressing expenses.

Proper needs of the children

49.  As canvassed above, the proper needs of the children must take priority over all other matters other than the parents’ own necessary self-support costs. As the Tribunal has found that as a consequence of the children being educated at [School 1] as expected by the parents, the costs of maintaining them are significantly affected, the Tribunal turns to the issue of the ability of the parents to contribute to the school fees and consider what is just and equitable in the circumstances. 

50.  For the purpose of this review, the Tribunal is satisfied that as Ms Rodgers has 100% care of [Child 1] and about 72% care of [Child 2] and [Child 3], she is reliant on financial support from Mr Donelan to ensure the children’s proper needs are met as she lacks the financial resources to meet her own essential needs and the essential needs of the children. 

51.  Although Mr Donelan disagreed with Child Support’s determination on a percentage contribution proportionate to each parent’s earnings, it was not submitted that he lacked the financial capacity to meet the private school fees, rather it was argued that the burden of the school fees ought to be a mutual responsibility for both parents going forward and a fixed percentage ought to be calculated on their respective financial capacity, after tax and non-discretionary deductions.  At the hearing Mr Donelan asserted that his and Ms Rodgers’ respective financial position is comparatively closer in net dollars, at about $102,071 and $152,452, once tax, child support and family tax benefit are taken into account (as set out in Exhibit 1 at folio 488) and that Ms Rodgers’ contribution towards school fees should be higher than the 12.32% determined by the objections officer. 

52.  Mr Donelan’ assertions is not without regard however, when income tax and administratively assessed child support payable by Mr Donelan to Ms Rodgers are deducted from his adjusted taxable income of $322,988 rendering a net position of $168,223, there is no basis to conclude that Mr Donelan’ net available income does not meet his own self-support needs and other expenses likely to be incurred by him, including ongoing legal fees. As shown in the table below, even on the Tribunal’s rudimentary analysis of their respective financial positions as at 1 July 2022 once non-discretionary expenses are taken into account, it demonstrates that Mr Donelan has significantly greater financial capacity than Ms Rodgers, from which the proper needs of the children, including their private school fees, may be met.

As at 1 July 2022	Mr Donelan	Ms Rodgers
Gross earnings	$322,988	$68,636
Tax payable	($113,460)	($12,773)
Child support payment	($41,317)	$41,317
Family tax benefit	$7,800
Less non-discretionary household expenditure (not including legal fees and school fees)	($91,104)	($92,560)
Available funds	$77,107	$12,420

53.  In considering the financial circumstances for both parents, the Tribunal is satisfied that it is just and equitable to apportion the cost of private school fees between the parents according to their respective capacity based on the average adjusted taxable income and their declared non-discretionary expenses.

54.  Submissions were made regarding extraordinary expenses with legal fees.  Each parent has, to date, incurred similar legal fees concerning their family court proceedings (property settlement and custody), thereby eliminating the need for retrospective and prospective adjustments. In relation to Mr Donelan’ additional legal fees in defending criminal charges with proceedings expected to be heard in a couple of months, the Tribunal also had regard to Ms Rodgers’ reduction in income from 1 July 2023. In the Tribunal’s view, these separate factors cancel out each parent’s need to adjust the percentage.  In light of this, the Tribunal considers the preferred approach is to continue with the same contribution percentages going forward.  Should the circumstances of the parents not improve, it is open to them to submit a new change of assessment application to have their circumstances considered.

55.  The Tribunal had regard to the school fees invoices in evidence that show total 2022 school fees for the three children as $38,042 and $45,364 for 2023.  The Tribunal notes that the increase in school fees from 2022 to 2023 includes where [Child 3] transitioned from junior school to senior school at [School 1].  The Tribunal was informed that an increase in school fees would not likely be as high as it was from 2022 to 2023 and the 2024 school fees would likely be about a 5% increase from the 2023 school fees, however, this is not yet determined and is only expected to be released in or about Term 4 of 2023. The Tribunal accepts this information as a guide to the likely increase in school fees for 2024 of about 5% and on that basis calculates them to be about $47,632. 

56.  Turning to what is just and equitable when calculating a percentage that reflects each parent’s capacity to contribute to their children’s private school fees, the Tribunal considered each parent’s financial circumstances as disclosed and their respective necessary expenses whilst taking into account Ms Rodgers’ reduced earnings and Mr Donelan’ further legal expenses and is of the view that a 10% contribution towards private school fees by Ms Rodgers is fair in the circumstances, and so finds. Therefore, on the basis that Mr Donelan continues to meet the full tuition cost of the private schooling for the children that does not include travel expenses, the annual amount of child support payable by Mr Donelan is decreased by 10% of the annual school fees.

Date of effect

57.  Mr Donelan made his application for a change of assessment on 22 August 2022. The starting position is that any variation should be prospective.  Mr Donelan requested that the application have at least 18 months retrospective effect to the start of their child support assessment in January 2021, on account of his full payment of the children’s private school fees from when they separated in December 2020. 

58.  In evidence, Child Support notified Mr Donelan on 5 February 2021 of the acceptance of the child support application and the amount of child support payable by him per month.  It was open to either Mr Donelan or Ms Rodgers to apply for a change of assessment to take into account the additional costs of educating the children at [School 1]. In the Tribunal’s view, a delay of 16 months from when the assessment was granted and subsequently questioned by Mr Donelan to when an application for change was made is not sufficiently compelling to give effect to retrospective adjustment to the assessment earlier than 22 August 2022. Further, the general expectation to maintain certainty with past child support assessments and restricting retrospective effect for special circumstances is a common thread in the tapestry of the child support legislative scheme.  As Mr Donelan’ delay with his application does not rise to special circumstances, the Tribunal considers it appropriate that the proposed departure assessment commence from 22 August 2022.

59.  In terms of going forward, there are competing advantages and disadvantages in setting an amount as Ms Donelan’s contribution towards the school fees payable by Mr Donelan for an extended period into the future. As the Tribunal is mindful of the impact child support processes with Child Support can have on parents, the Tribunal favours having this set for the remainder 2023 and for the next school year, which will be [Child 1]’s final year of school.  Thereafter a review would be appropriate to consider the costs associated with private schooling for 2025 onwards and Mr Donelan’ and Ms Rodgers’ respective financial capacity.

1. In considering the comparison of the proposed departure annual rates to the assessment, the Tribunal notes that the annual rate for 2022 was assessed as $40,371 per annum payable by Mr Donelan from 1 July 2022 to 30 September 2022 and $38,118 per annum for 1 October 2022 to 22 March 2023. The proposed departure annual rate for 22 August 2022 to 31 December 2022 would be decreased by around $3,804 (which works out to be about $1,365 for the balance of 2022) and $4,536 for 1 January 2023 to 31 December 2023.  Also, from 1 January 2024 to 31 December 2024 the annual rate is decreased by about $4,763.  Although the proposed departure will create arrears for Ms Rodgers of about $1,365, the Tribunal is satisfied that it is reasonable to have the assessment start on the date of application.

61. There is no evidence before the Tribunal to suggest this decision will cause either parent undue financial hardship. The Tribunal is satisfied that hardship may be caused to Ms Rodgers and the children if the administrative assessment of child support is backdated to before Mr Donelan made his application.

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

62.  The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. The rate of child support should reflect the obligation of both parents to take financial responsibility for their children. Parents, rather than the community, have the primary duty to maintain their children. 

63.  Ms Rodgers is receiving family tax benefit in respect of the children. The proposed departure from the administrative assessment of child support will result in a decrease in the child support payable in respect of the children, and a more appropriate apportionment of financial responsibility between the parents and the community. Such a result is otherwise proper.

64.  It follows that as the contribution percentage allocated to Ms Rodgers is different than that determined by Child Support, the decision under review is set aside and a new decision is substituted that decreases the annual rate of child support for 2022 to 2025.

Other matters

65. The Tribunal notes from the material in evidence that Final court orders were made regarding care of the children on 23 June 2023 and that Child Support had been notified of the possible change in care.  As canvassed at the hearing, the child support legislative scheme deals with any subsequent change to the likely pattern of care by requiring notification to be made to Child Support of such changes, and Child Support then is tasked with making care determinations, with review rights as appropriate attached to each further or subsequent decision.  It is open to the parents to follow up with Child Support on the notification of any such changes in care and respective determinations that may impact child support assessments.

DECISION

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

·for the period 22 August 2022 to 31 December 2022, the annual rate of child support payable by Mr Donelan is decreased by $3,804;

·for the period 1 January 2023 to 31 December 2023, the annual rate of child support payable by Mr Donelan is decreased by $4,536; and

·for the period 1 January 2024 to 31 December 2024 or until a terminating event in relation to [Child 1], the annual rate of child support payable by Mr Donelan is decreased by $4,763.