Romanenko and Yanev (Child support)
[2021] AATA 2907
•24 June 2021
Romanenko and Yanev (Child support) [2021] AATA 2907 (24 June 2021)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2021/AC020621
APPLICANT: Mr Romanenko
OTHER PARTIES: Child Support Registrar
Ms Yanev
TRIBUNAL:Member Y Webb
DECISION DATE: 24 June 2021
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
from 10 February 2020 to 31 January 2022, the adjusted taxable income of Mr Romanenko is varied to $93,000 per annum; and
from 10 February 2020 to 31 January 2022 the annual rate of child support payable by Mr Romanenko is increased by $1,926 per year in relation to his contribution to additional costs associated with the eldest child’s special needs.
CATCHWORDS
CHILD SUPPORT – departure determination – costs of special needs of child significantly affect the cost of maintaining the child – income, property and financial resources of the liable parent – company director drawing salary – whether other benefits obtained through business – 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
BACKGROUND
This review relates to the issue of child support regarding two of the children of Mr Romanenko and Ms Yanev. The children are now aged 14 and 13. Services Australia (“Child Support Agency”) records the children are in the 100% care of Ms Yanev.
The child support case was first registered by the Child Support Agency on 5 December 1996 and has been collectable by the Agency since 10 December 2019.
On 10 February 2020, Ms Yanev applied to the Child Support Agency for a change to the administrative assessment originally on the basis of Reasons 2,3, 8A and 8B. However, subsequently Ms Yanev confirmed that she was no longer pursuing Reasons 3 and 8B and the review has proceeded on the basis that only Reasons 2 and 8A are in issue.
At the time of Ms Yanev’s application for a change to the assessment (and in the period 29 September 2019 to 31 October 2020) the child support payable by Mr Romanenko was $6,628 per annum. This liability was based on Mr Romanenko’s 2018/2019 taxable income (as determined by the Australian Taxation Office) of $50,088 and Ms Yanev’s 2018/2019 taxable income of $40,515 (also as determined by the Australian Taxation Office).
On 16 April 2020 a delegate of the Registrar decided that Reasons 2 and 8A had been established. The delegate decided that for the period 10 February 2020 until 31 October 2022 Mr Romanenko’s adjusted taxable income should be varied to $91,628 and, for the same period that the annual rate of child support payable by Mr Romanenko should be increased by $1,898 in relation to the costs of elder child’s special needs.
On 15 September 2020 Mr Romanenko objected to that decision. He was granted an extension of time to object.
On 17 December 2020 his objection was disallowed and the objections officer affirmed the decision of the original decision-maker.
On 14 January 2021 Mr Romanenko requested a review by the Administrative Appeals Tribunal (“the Tribunal”). A telephone directions hearing was conducted with both parents on 27 April 2021.
Mr Romanenko and Ms Yanev attended the hearing by way of a telephone conference on 24 June 2021 and both gave sworn evidence.
ISSUES
The central issues for the Tribunal to determine in this case are:
· Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (the Assessment Act) exists; and if so,
· Whether it would be:
(a) just and equitable as regards the children, the liable parent, and the carer entitled to child support; and
(b) otherwise proper
to make a particular determination to depart from the administrative assessment of child support.
DOCUMENTARY EVIDENCE
The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule. The Tribunal had regard to all of this evidence, and refers specifically to particular items in this Statement of Reasons.
CONSIDERATION
The child support law
The legislation relevant to this review is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by the 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.
A parent may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process as described in paragraph 10 above.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground 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” in the case. If satisfied that there are “special circumstances” and that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.
The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (Gyselman),[1] the Full Court of the Family Court of Australia held that:
Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.
Whilst it is not possible to define with precision the meaning of that term, as a generality 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.
[1] (1992) FLC 92-279
Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to 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.
Does a ground or grounds exist to depart from the administrative formula assessment?
In considering whether a ground or grounds exist which justify departing from the administrative formula assessment, the Tribunal considered the evidence and submissions provided by the parents at the hearing in addition to the extensive information contained within the documentation provided by the Child Support Agency as well as the documentation provided by the parents prior to the hearing.
Reason 2
In relation to Ms Yanev’s claim that the costs of maintaining the eldest child were significantly affected by the child’s special needs, the legislative test is detailed in subparagraph 117(2)(b)(ia). The test is whether:
in the special circumstances of the case, the costs of maintaining the child are significantly affected because of special needs of the child;
This reason is informally referred to as Reason 2. The child support assessment in its usual form is intended to cover the “normal” costs of raising a child. However, it does not cover costs which are out of the ordinary or “special” which may be the case where the child has a particular medical or dental need. Lightfoot and Hampson[2] established the principle that if these costs are necessary or desirable for the child’s welfare and they impact significantly on the costs of raising the child, a change to the formula assessment may be required.
[2] (1996) FLC 92-663
In this case there was no dispute that the child has special needs. Both parents were agreed on this point. Ms Yanev provided a letter from [Therapy services provider] signed by the child’s speech pathologist and occupational therapist advising that the child has right unilateral (hemiplegic) cerebral palsy affecting his right upper and lower limbs. He also has a severe language disorder, vision impairment, auditory processing disorder and a dysfluency of speech[3]. The Tribunal finds that the child has significant special needs,
[3] C1-page 45
The child is supported financially by the National Disability Insurance Scheme (NDIS). The letter from [Therapy services provider] explains that the NDIS funding (approximately covering the 2020 year) of $8,225 will cover the child’s therapy services with $44.28 remaining. However, in addition to these costs are travel costs to enable the speech therapist and occupational therapist supports to take place at the school as recommended. [Therapy services provider] advised that travel costs for a year would be $3,840 ($96 per week)[4]. Ms Yanev explained that she has paid these out of pocket costs and the Tribunal accepts that was the case.
[4] C1-page 45
Ms Yanev also provided documentation verifying the costs associated with the child’s special needs in the 2021 year. The documentation confirmed that the NDIS funding for the child for a 12-month period would be $10,001.38[5]. How those funds would be disbursed was described in the child’s support plan[6]. The support plan also showed that travel would not be covered by the NDIS funding and therefore there would be out of pocket costs of $3,864 for the 2021 year[7].
[5] B48
[6] B52-B53
[7] B53
Mr Romanenko suggested that the required therapies could be conducted other than at the child’s school and that he could drive the child to these appointments on some occasions thus avoiding the travel costs. However, Ms Yanev explained that [Therapy services provider] had advised that in the transition to high school it was recommended that the child not be withdrawn from the learning environment. Ms Yanev stated that unless the child has most of the therapies at school he will miss a lot of school because travel to appointments and back to school take up a very significant portion of the school day and if that is occurring on a regular basis it will have a detrimental effect on the child’s transition to secondary school. The Tribunal accepts Ms Yanev’s statements regarding the need for the travel costs of the therapists to be met. Ms Yanev advised that there are also other regular appointments that the child needs to attend outside of school hours and she transports the child to those.
Ms Yanev stated that she had requested that Mr Romanenko contribute to these travel costs but he did not respond. She stated that she is finding it very difficult to afford these costs and has had to borrow money from her mother on occasions to fund the travel costs.
The tribunal is satisfied that the child has special needs; these needs are out of the ordinary; there are significant costs associated with the child’s special needs and in particular the out of pocket cost of his therapists’ travel being $3,840 in the 2020 year and $3,864 in the 2021 year. The Tribunal is satisfied that Ms Yanev has being paying these out of pocket costs and that they significantly affect the overall costs of maintaining the child.
Hence, the Tribunal finds that Reason 2 has been established.
In relation to the claim that Reason 8A is also relevant in this case the approach of the Federal Circuit Court of Australia in these cases has been to limit the analysis about particular grounds once it was evident that one had been established, and to thereafter focus on the “just and equitable” considerations. The Tribunal adopts that approach in its reasoning in this matter.
Would it be just and equitable to depart from the administrative assessment?
Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain. The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must be taken into account.
Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment. The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act. This requires an assessment of the duty of the parents towards the children; the needs of the children; any income, earning capacity and financial resources of the children; the income, earning capacity and financial resources of the parents, self-support commitments and an evaluation of hardship on the parties (and/or the children) if the Tribunal increased or decreased the amount of child support payable.
In considering these issues, the Full Family Court, in the case of Gyselman, stated that:
However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section [117] (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).
Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act:
The proper needs of the children
In determining the proper needs of the children, subsection 117(6) of the Assessment Act requires the Tribunal to have regard to the manner in which the parents expected the children to be cared for, educated or trained as well as a consideration of any special needs of the children.
The Tribunal has found that Reason 2 has been established in relation to the eldest child and that the out of pocket costs associated with his therapies in 2020 were $3,840 and in 2021 were $3,864.
Mr Romanenko contended, as part of the objection process, that he had been informed by NDIS management that if the child’s needs are not met by the funded amount a review will be arranged by his provider to request higher funding[8]. However, Ms Yanev explained that NDIS does not cover travel costs and that the funding from NDIS is compartmentalised and has to be spent on particular therapies and services.
[8] C1-page 118
The Tribunal accepts Ms Yanev’s statements about the NDIS funding and how it must be dispersed. It also accepts her statements that the NDIS funding cannot be used for the therapists’ travel costs.
Mr Romanenko also asserted that he believed that Ms Yanev was “self-managing” the NDIS funding. However, Ms Yanev provided an email from a delegate of the National Disability Insurance Agency dated 19 February 2021 which confirmed that the NDIS plans for the child had never been managed by Ms Yanev but have always been either “agency managed” or “plan managed”. The delegate explained that when a plan is “agency managed” this means the funding from the plan can only be claimed/drawn down from the plan by an NDIS registered provider and that when a plan is “plan managed” it means the funding from the plan can only be claimed/drawn down from the plan by an NDIS registered plan manager. The delegate confirmed that currently the plan is “agency managed” and in terms of the history of the child’s plans since 2016 all plans had been either “agency managed” or “plan managed”[9]. The Tribunal accepts the information in the detailed email from the National Disability Insurance Agency as accurate.
[9] B40
Hence the Tribunal finds that there are additional out of pocket costs associated with the child’s plan and that to date, Ms Yanev has been meeting those additional costs of $3,840 in relation to the 2020 plan and of $3,864 in relation to the 2021 plan. The Tribunal considers it would be just and equitable for Mr Romanenko to contribute to those costs.
The parents did not raise any other issues in relation to the proper needs of the children.
The income, property and financial resources of the children
Both parents agreed that the children have no significant income, property or financial resources and that they are dependent on their parents for financial support. The Tribunal finds accordingly.
Mr Romanenko’s income, property, financial resources, expenses and earning capacity
Mr Romanenko provided a Statement of Financial Circumstances. The Tribunal issued Directions which requested that he provide his 2019/2020 personal income tax return, a copy of the profit and loss statement for his business: [Company] Pty Ltd for the 2018/2019 and 2019/2020 financial years and a copy of the company tax return for the 2019/2020 year. The Directions also requested that he provide a copy of all personal and business bank statements for a three-month period in 2021. Mr Romanenko advised that none of the financial statements nor his income tax return or company tax return had been prepared or lodged. This made it difficult for the Tribunal to know with any precision the financial state of his business and his personal income.
His taxable income in the 2018/2019 financial year as assessed by the Australian Taxation Office was $50,088. He has not yet lodged his 2019/2020 personal income tax return.
Mr Romanenko confirmed that he is the sole director and sole shareholder of [Company] Pty Ltd (“the business”) and this has been the case for at least eight years. The business is involved in [work sector]. Mr Romanenko advised that his gross weekly income is now $1,432 per week ($74,464 per annum)[10]. He advised that this is the wage amount that the business pays him as an employee. He denied that he has any other income or that he derives any other income from the business other than his gross wage of $74,464 per annum. In the absence of any financial statements regarding the business in recent years the Tribunal considered the 2017/2018 company tax return[11]. In that financial year the company’s total income was $442,242 and its expenses were $421,474; a profit of $20,768. The most recent Business Activity Statement available (which was for the September quarter 2019) showed sales of $110,182 in that quarter[12]. Annualised this would equate to $440,728 which approximately reflects the income in the 2017/2018 financial year. Mr Romanenko did not indicate to the Tribunal that the business’ financial situation had declined and the Tribunal infers that it is a profitable business. At the hearing Mr Romanenko told the Tribunal that the business “had plenty of work” and a “backlog of work” and that he employed three or four employees but that he was very much in need of another [Vehicle 1] which currently were in very short supply. He stated that this was affecting the profit of the business. However, in the absence of any financial statements or company tax returns since the 2017/2018 year it is not possible for the Tribunal to calculate the extent of the business’ profit in recent times.
[10] A2
[11] C1-pages 67-70
[12] C1-page134
The Tribunal therefore considered the bank statements which Mr Romanenko provided. He indicated that the [Bank 1] account was the business account and the [Bank 2] account was his personal account. In relation to the personal account Mr Romanenko provided bank statements for the period 6 March 2021 to 31 May 2021. These transactions showed Mr Romanenko’s net wage of $1,100 per week as deposits. There was a closing balance of $1,304.19. The majority of the transactions related to food purchases and other purchases described as “transport and travel”. Mr Romanenko indicated that these predominantly related to fuel but the Tribunal doubts that is the case for all of these transactions as many of the “transport and travel” transactions were on the same day. There are very few household expenses within his personal account. There does not appear to be any utility bills paid from his personal account. In the three months of March to May 2021 overwhelmingly the debits were for food. There were a handful of personal purchases described as “retail and personal”. There was a payment to DHS (most likely of child support) for $560 on 12 April 2021 but no other payments of child support in that three-month period were evident in the personal bank statements. There was one Ezyreg transaction on 11 May 2021. There was a [Credit card] payment of $250 on 12 March 2021 and a further payment of $500 on 3 May 2021. There was a “car payment” which the Tribunal presumes relates to his personal car loan but which the personal bank statements describe as an “internet withdrawal”. This suggests that Mr Romanenko had funds in an internet account which he transferred to his personal account to pay the car loan payment. The statements of that internet account have not been provided.
In relation to the business transactions in the [Bank 1] statements, Mr Romanenko provided statements for the period 1 January 2021 to 9 June 2021[13]. He denied that he withdrew any funds from the business for personal expenses and maintained that the only funds he personally accessed were his wages which he confirmed were $74,464 (gross) per year.
[13] A13-A29
The Tribunal queried a number of the transactions in the business [Bank 1] account. In particular there were some ATM withdrawals. Mr Romanenko explained these as being legitimate business expenses (such as tools and machines) which he paid for in cash. He stated that a withdrawal of $450 on 3 June 2021[14] described as “[Winery] tour” as a gift to his employees. He stated that a cash withdrawal of $8,700 on 27 April 2021 was for a [Vehicle 2] for the business. He stated that it was a private sale for which he paid cash[15]after withdrawing the funds at the bank. He stated that a purchase of alcohol of $179.97 on 31 March 2021 was a gift to a householder whose fence was accidentally damaged by one of Mr Romanenko’s employees. In a three-month period from 4 March 2021 to 3 June 2021 Mr Romanenko paid his [lawyer] a total of $12,500 from his business account. Mr Romanenko told the Tribunal that these were legitimate business expenses as the business was a relevant factor in the property settlement with Ms Yanev. However, Ms Yanev strongly denied that the legal fees paid were related to the business and the property settlement. She stated that the property settlement was purely a personal settlement and that it was clear in the legal proceedings that if Mr Romanenko wanted the business to be involved in the property settlement the business would need to be separately represented. She stated that there was never any dispute that the business was Mr Romanenko’s asset. Ms Yanev stated that Mr Romanenko’s lawyer confirmed that the legal fees would not be paid by the business. Mr Romanenko did not recall that statement by his lawyer.
[14] A14
[15] A18
The business bank statements show that an amount of $15,000 was transferred into the business account on 7 April 2021[16]. Mr Romanenko asserted that he sold a [Vehicle 1] and deposited the proceeds into another bank account before transferring the funds into the [Bank 1] business account. When the Tribunal queried why the “other” bank account statements had not been provided to the Tribunal Mr Romanenko stated that he did not think it necessary. He stated that the “other” business account is one from which he pays bills. He stated that he deposits amounts into this “other” bank account before transferring the funds to the [Bank 1] business account for “security reasons”.
[16] A19
Ms Yanev provided additional bank statements for the business for January 2020 to April 2020[17].These bank statements showed numerous cash withdrawals which Mr Romanenko stated were all related to business expenses. The bank statements also showed payments to SA Water dated 22 January 2020 for $391.81 and also on 28 February 2020 for $276.83 (referenced as “shed water”). Ms Yanev asserted that these expenses were not business-related.
[17] BF55-B66
Ms Yanev also provided bank transfer transactions[18] showing that Mr Romanenko bought a [Vehicle 2] for $15,000 and paid for it with business funds in August 2020. Mr Romanenko told the Tribunal that he purchased the [Vehicle 2] [for a work-related purpose] for his employees when they are working in country areas. He stated that [detail deleted] in those areas. He admitted that he and his partner used the [Vehicle 2] but he said that it was only on a “one-off” occasion.
[18] B58-B60
The Tribunal found a number of Mr Romanenko’s explanations for withdrawals from and the transfer to his [Bank 1] business account to be implausible and unconvincing. While the Tribunal accepts that most transactions were business related, the Tribunal was not persuaded that all of the withdrawals were business related. The Tribunal did not accept that the [Vehicle 2] was a business purchase. It also was satisfied that the payment of legal fees totalling $12,500 in a three-month period in 2021 was paid from his business account even though it was a personal expense.
In relation to his expenses and liabilities Mr Romanenko advised that when he and Ms Yanev separated in July 2019 they had a $24,000 [Credit card] debt. As part of the property settlement each parent became responsible for $12,000 of the debt. Mr Romanenko stated that he is paying off the credit card debt at the rate of $250 per week and he currently owes $5,000 on this debt. He also obtained a personal loan to pay for his private motor vehicle (a [Year, make, model]). He borrowed $10,000 and is paying $250 per week. He currently owes a balance of approximately $5,000. He estimated his household expenses to be approximately $375 per week (approximately $19,500 per year). This means that Mr Romanenko’s total expenses per week total approximately $875 ($45,500 per year) (comprising $375 household expenses, $250 per week on the credit card debt and $250 per week for his car loan) exclusive of child support.
In relation to earning capacity Mr Romanenko has been self-employed in the business for approximately eight years. He has not changed his occupation or ceased work. There is no evidence that he has intentionally reduced his hours of work below full-time. The Tribunal finds that he is exercising his full earning capacity.
Ms Yanev’s income, property, financial resources, earning capacity and expenses
Ms Yanev is totally dependent on Centrelink benefits. She provided a Centrelink Statement dated 13 May 2021 which confirmed that she receives parenting payment, carer allowance and family tax benefit[19]. She has a young child aged almost two (not part of this child support case). She advised the Tribunal that she is an [Occupation] and was, until recently, on leave due to her parenting responsibilities. She intended to return to the part-time work which she was undertaking prior to the birth of her child. However, due to restructuring at the workplace she found that she could not accommodate the changes in shifts and hours while caring for her children. She advised that she resigned on 25 May 2021 and that she received termination leave payments of approximately $3,200.
[19] B30-B32
Ms Yanev provided two payslips: one dated 23 April 2021 for $44.37 which related to a return to work meeting and a further one dated 6 May 2021 for $73.95 which related to training in preparation for returning to work[20]. The Tribunal accepts Ms Yanev’s statements that she no longer holds any paid employment due to the difficulties of combining her work with her caring responsibilities.
[20] B
Ms Yanev provided a copy of her 2019/2020 income tax return and this confirmed that her income comprised wages as an [Occupation], parental leave payments, newstart allowance, parenting payment (single) and a small amount from Mr Romanenko’s business from 2019[21]. In addition, the income tax return showed that Ms Yanev withdrew $10,000 as a hardship payment from her superannuation[22]. Her income tax return showed that her taxable income for the 2019/2020 year was $48,199. Ms Yanev provided a copy of her Notice of Assessment from the Australian Taxation Office for the 2019/2020 financial year and this confirmed her taxable income[23]. In addition, Ms Yanev told the Tribunal, and it accepts, that she withdrew a further $20,000 from her superannuation fund under the COVID-19 rules. That $20,000 – although a financial resource to Ms Yanev – was not counted as income nor was it taxed in accordance with the early withdrawal of super due to COVID-19 legislation.
[21] B34-B37
[22] B35
[23] B33
Ms Yanev has minimal savings, a car with a value of $500 and household contents of approximately $5,000. She owns her home which she valued at $305,000. She owes approximately $178,000 on her home and she also has a second mortgage on the home of $20,000.
In relation to expenses she has a credit card debt which was divided between her and Mr Romanenko in the property settlement. Originally the debt was $12,000 and Ms Yanev estimated that she had reduced that debt only slightly by paying $290 per month. She also has a Zip Pay debt of approximately $925. She declared that she owes approximately $12,000 in legal fees. She also declared that family and friends have loaned her approximately $6,400 due to her financial hardship.
In relation to household expenses Ms Yanev declared that these totalled $1,249 per week ($64,948 per year). Clearly her expenses exceed her income which in 2019/2020 was $48,199 (and boosted in that year by the $10,000 superannuation withdrawal due to hardship).
In relation to earning capacity, the earning capacity provisions are difficult to satisfy. There are three criteria, all of which must be satisfied. Subsection 117(7B) of the Assessment Act states:
(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is 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.
Ms Yanev decided to resign from her available employment and therefore criterion one is satisfied. However, the Tribunal accepts that she did so due to her caring responsibilities. In addition, Ms Yanev told the Tribunal, and it accepts, that she has very recently been granted the education supplement payment by Centrelink to assist her to return to study and undertake a [Certificate 4 training course]. She is hopeful that this will lead to higher paying employment. In these circumstances the Tribunal is not persuaded that she is failing to exercise her earning capacity.
Necessary commitments to support themselves or others
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[24] the Full Court of the Family Court stated at paragraph 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.
[24] [1986] FamCA3.
Neither Mr Romanenko nor Ms Yanev raised any issues in relation to self-support and the Tribunal finds accordingly.
Any hardship to either parent or the children by the making of, or refusal to make, an order
In relation to hardship Mr Romanenko stated that he cannot afford to make payments of $385 per week in child support. He stated that the business would have to be shut down if he had to pay that much. He stated that he would be happy to pay above the formula assessment but not to the level that was decided by the Child Support Agency (in its original decision as affirmed by the objections officer).
Ms Yanev stated that she will suffer severe financial hardship if the assessment reverts to the formula administrative assessment based on the parent’s taxable incomes. She stated that their daughter would no longer be able to do [Activity] and the children would miss out on other activities. She stated that financially she was “beyond struggling” and was borrowing money from family members. She stated that she is worried that she will have to sell her house to make ends meet. She has had to apply for her family tax benefit to be paid according to the disbursement method because the amount of child support she is receiving from Mr Romanenko is below the assessed rate.
Proposed determination
The Tribunal has carefully considered the evidence provided and the statements and submissions of both parents.
The Tribunal is satisfied that Mr Romanenko’s access to income is higher than is reflected in his wages and taxable income as determined by the Australian Taxation Office. It is satisfied that he is paying some personal expenses from his business bank account. This includes legal bills, SA Water bills and a [Vehicle 2] to date. There is no evidence in his personal bank statements that he is paying electricity or gas accounts from the personal account or payments for any large purchases. His personal bank statements do show that he paid one Ezyreg payment of $285.83 on 11 May 2021; [Credit card] payments of $250 on 12 March 2021 and another [Credit card] payment of $500 on 3 May 2021. There is one car loan payment of $250 on 12 March 2021. There is one payment of $560 on 12 April 2021 to DHS – which the Tribunal presumes is a child support payment. His personal bank statements show that a total of approximately $1,616 was spent on food and beverages alone in the month of May 2021 and a total of approximately $1,822 was spent on food and beverages in April 2021. There were numerous multiple transactions (many on the same day) described as “transport and travel” which realistically could not all have related to fuel as Mr Romanenko asserted. Mr Romanenko admitted that he had a further bank account, the statements for which he had not provided.
Mr Romanenko admitted that his current gross salary from wages is approximately $74,464 per year. From the business he could obviously afford to buy at least the [Vehicle 2] in August 2020 to the value of $15,000 and pay legal fees of at least $12,500 in 2020. He did not deny that he used his business vehicle for some personal use. There were a number of withdrawals from Mr Romanenko’s business account which he stated were business expenses and in the absence of proof to the contrary, the Tribunal has disregarded those transactions.
The Tribunal has not relied on the company tax return from 2017/2018 because it is difficult to know whether the information is still current and reliable for ascertaining the financial situation of the business in 2021.
Taking all of these circumstances into account the Tribunal proposes to vary Mr Romanenko’s income to $93,000 per year. The Tribunal has not added into his gross income of $74,464 all of the $12,500 of legal fees and all of the $15,000 he paid for the [Vehicle 2] because it acknowledges that neither of these are regular expenses and the business’ income and profit may vary from year to year. However, they are an indication that Mr Romanenko’s business has the financial capacity to meet significant personal expenses at his discretion.
The Tribunal is therefore satisfied that Mr Romanenko has access to considerably more income – if he chooses - than is reflected in his wages. It is satisfied that he, as the owner and controller of the business, has the capacity to adjust the expenditure of the business to ensure that he provides the financial support that his children require.
In addition, the Tribunal considers it would be just and equitable to increase Mr Romanenko’s child support liability by $1,926 per year as his 50% contribution to the out of pocket special needs costs of the eldest child. This amount is based on 50% of the average out of pocket costs of $3,840 in 2020 and $3,864 in 2021 (average being $3,852).
The Tribunal is satisfied that Mr Romanenko can afford the child support liability based on the above proposals. Currently he has very few expenses and debts. His personal bank statements show that he is spending more than $400 - $450 per week on food and beverages alone. He has $5,000 outstanding on a credit card debt from the marriage and $5,000 outstanding on a personal loan for his car. He told the Tribunal that the repayments on each of these debts is $250 per week. If that is the case and they are repaid at $1,000 month as he asserted, those debts will be fully paid by the end of the year. If they are being paid at a slower pace the repayments will not be $250 per week. Mr Romanenko’s household expenses total only $19,500 per year and even if he is paying $500 per week for the two debts ([Credit card] and car loan) his total expenses for the household and the two debts are $45,000 per year (with the debts being paid out in full in five months’ time).
The proposed determination will mean that when Mr Romanenko’s income is varied to $93,000 per year and Ms Yanev’s 2018/2019 adjusted taxable income is $40,515 (as assessed by the Australian Taxation Office) the annual rate of child support will be approximately $19,168 per year plus the contribution to the eldest child’s special needs of $1,926 per year = $21,094. When Ms Yanev’s 2019/2020 income of $48,199 is used in the assessment, the annual rate of child support for the two children will be approximately $18,916 per year plus the contribution to the eldest child’s special needs of $1,926 = $20,842. By comparison if Mr Romanenko’s income from wages ($74,464) was used in the assessment with Ms Yanev’s 2019/2020 taxable income of $48,199 the annual rate of child support payable would be approximately $13,960 plus $1,926 for the additional special needs contribution, making a total rate payable of approximately $15,886. In the Tribunal’s view it is affordable for Mr Romanenko to pay child support to the extent of an additional $5,000-$6,000 per year above what he would pay if only his wages were used in the assessment.
The above figures are very approximate because there may be changes in the care of the children or in Ms Yanev’s income which will affect the calculations.
The Tribunal proposes to put its decision in place from 10 February 2020 that being the date that Ms Yanev made her application for a change to the assessment. In terms of the duration of the change to the assessment Mr Romanenko favoured a short duration of between six months and one year but Ms Yanev favoured a determination being in place for around two to two and a half years. She referred to the protracted nature of the change of assessment process and the difficulties in obtaining documentation.
In this case the Tribunal proposes that it would be fair and reasonable to put the decision in place for almost two years until 31 January 2022. This length of time will provide some certainty to both parents for a period of time without being so lengthy that the determination becomes no longer suitable to the children’s circumstances.
The Tribunal considers this proposed determination is fair, just and equitable and that it balances the needs and financial capacities of both parents.
Is it otherwise proper to depart from the administrative assessment?
The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman). It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.
The Tribunal is satisfied that Ms Yanev needs financial assistance to support the children and for the eldest child’s special needs and that Mr Romanenko has the capacity to contribute to those costs.
Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income tested pension, allowance or benefit.
Ms Yanev is receiving family tax benefit and she confirmed that she is aware of the impact of child support payments on that benefit.
The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
from 10 February 2020 to 31 January 2022, the adjusted taxable income of Mr Romanenko is varied to $93,000 per annum; and
from 10 February 2020 to 31 January 2022 the annual rate of child support payable by Mr Romanenko is increased by $1,926 per year in relation to his contribution to additional costs associated with the eldest child’s special needs.
SCHEDULE
List of Exhibits
Services Australia – Child Support Agency marked as C exhibits:
· CSA’s large bundle of 201 pages marked as exhibit – C1
Mr Romanenko has provided the following documents marked as A exhibits:
· A1–A10 Statement of Financial Circumstances
· A11–A12 Written submission
· A13–A30 [Bank 1] bank statements
· A31–A58 [Bank 2] bank statements
Ms Yanev has provided the following documents marked as B exhibits:
· B1–B9 Statement of Financial Circumstances
· B10–B17 Written submission
· B12–B18 Orthodontist letters and costs of orthodontic treatment
· B19 –B23 Individual learning plan
· B24–B27 Upper limb stretches plan
· B28–B29 Centrelink income statement
· B30–B32 Centrelink statement for parenting payment children
· B33 Notice of assessment year ended 30 June 2020
· B34–B37 Income tax return 2019/2020
· B38–B39 Payslips
· B40 Email re NDIS plan and plan management styles
· B41–B53 NDIS plan from February 2021
· B54 [Therapy services provider] invoice for therapists’ travel
· B55 [Bank 3] statement
· B56–B57 Email and invoice re a transaction
· B58–B60 Details re transactions for [Vehicle 2]
· B61 –B66 [Bank 1] business overdraft account January 2020–April 2020
· B67 Details from [Bank 1] re transaction
Key Legal Topics
Areas of Law
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Family Law
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Administrative Law
Legal Concepts
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Jurisdiction
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Remedies
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Statutory Construction
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Judicial Review
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