Romeo and Bobby (Child support)
[2019] AATA 6345
•16 July 2019
Romeo and Bobby (Child support) [2019] AATA 6345 (16 July 2019)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2019/HC015824
APPLICANT: Ms Romeo
OTHER PARTIES: Child Support Registrar
Mr Bobby
TRIBUNAL:Member C Breheny
DECISION DATE: 16 July 2019
DECISION:
The decision under review is varied so that the rate of child support payable by Mr Bobby is increased by $2,824 per annum from 1 November 2018 to 31 October 2020.
CATCHWORDS
CHILD SUPPORT – departure determination – special needs of child – 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 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
Ms Romeo and Mr Bobby are the separated parents of [Child 1], born April 2001 and [Child 2], born September 2007. A child support case has been registered with the Department of Human Services – Child Support (the Department) since 15 March 2002 and registered for collection from 9 December 2004. Mr Bobby is assessed as liable to pay child support to Ms Romeo on the basis that Ms Romeo has 100% care of the children.
For the child support period 1 December 2017 to 30 November 2018, child support was administratively assessed on the basis of Mr Bobby’s 2016–17 adjusted taxable income of $84,571 and Ms Romeo’s 2016–17 derived taxable income of $20,191 resulting in an annual child support liability of $15,768 for Mr Bobby. For the period 1 December 2018 to 13 December 2019, child support was administratively assessed on the basis of Mr Bobby’s 2017–18 adjusted taxable income of $87,493 and Ms Romeo’s 2017–18 derived income of $19,419 resulting in an annual child support liability of $16,424 for Mr Bobby.
On 6 August 2018, Ms Romeo applied to the Department for a change of assessment on the basis that she incurred substantial medical costs for the children and that the administrative assessment did not accurately reflect Mr Bobby’s income, property and financial resources. On 15 November 2018 decision-maker [decided] that no ground for departure had been established and did not change the administrative assessment.
On 29 November 2018 Ms Romeo objected to the decision and provided further evidence. On 21 January 2019 an objections officer of the Department decided to allow the objection. The objections officer determined that Ms Romeo incurred significant costs in relation to orthodontic treatment and [Treatment 1] for one child, [Child 1], in the 18-month period prior to lodging her application and that a ground to depart from the administrative assessment had been established on the basis of [Child 1]’s special needs. The objections officer decided that Mr Bobby’s child support liability was to be increased by $1,872 per annum from 1 November 2018 to 31 October 2020.
On 29 January 2019 Ms Romeo applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) for an independent review of the Department’s decision. A hearing into Ms Romeo’s application for review was held on 16 July 2019. Ms Romeo and Mr Bobby attended the hearing by conference telephone and gave evidence on affirmation. A representative of the Child Support Registrar (the Registrar) did not attend the hearing.
I had before me the statement and documents provided by the Department pursuant to subsection 37(1) of the Administrative Appeals Tribunal Act 1975, received on 20 February 2019 and numbered 1-380. I also considered additional documents provided by Ms Romeo (marked A1-A25) and Mr Bobby (marked B1-B17) as a result of written directions issued on 14 May 2019, as well as documents from Ms Romeo (A26-A31) and Mr Bobby (B18-B24) provided shortly after the hearing.
LEGISLATIVE FRAMEWORK AND ISSUES
The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act) and in the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the 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 the liable parent or the carer entitled to child support may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the 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. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied that a ground for departure exists and that it is just and equitable and otherwise proper to make a departure determination.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Act. If satisfied that a ground or grounds exist, and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act.
In the legislation, each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether one (or more) ground exists, the Tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279 stated that:
It is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.
Subsection 98C(3) of the Act provides that subsections 117(4) to (9) of the Act apply and the Tribunal must consider these when deciding whether it would be just and equitable or otherwise proper to make the departure decision.
CONSIDERATION
Preliminary matter
A substantial part of the material provided by Ms Romeo to the Department referred to expenses incurred prior to 6 February 2017, the 18-month period from the date of the application for which the Registrar (or the Tribunal standing in place of the Registrar) may make a departure determination, in accordance with section 98S of the Act.
Ms Romeo submitted that she had obtained a Court Order [in] May 2019 granting leave to apply for a departure determination for past periods, beyond the initial 18-month period. In accordance with legal advice received, I accept that I do not have jurisdiction to make a determination for a period more than 18 months before Ms Romeo’s application for a change of assessment on 6 August 2018. My review is therefore limited to the matters contemplated by the objections officer in their decision of 21 January 2019.
A ground for departure
Ms Romeo asked for a departure from the administrative assessment on the basis that it did not correctly reflect the parties’ respective income, property, financial resources (Reason 8A) and that the children have special needs and thus Ms Romeo has additional medical expenses (Reason 2). In this case the evidence provided by Ms Romeo for the period under review relates to medical expenses incurred for [Child 1].
[Child 1]’s special needs
Ms Romeo submitted that [Child 1] has special needs and that Mr Bobby ought to be paying for the additional medical expenses. The Act provides as a ground for departure (subparagraph 117(2)(b)(ia)):
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected: …
(ia) because of special needs of the child;…
The term “special needs” is not defined in the Act. In the matter of Lightfoot and Hampson[1] the Full Court of the Family Court of Australia stated that:
......"special needs of the child" -- encompasses a wide range of needs of a child which are seen as "special" in the sense of necessary or at least desirable for that child's welfare but outside the "normal" needs of a child which would be catered for within the formula. This would include such things as unusual medical expenditure, facilities for a handicapped child, etc. If necessary it could include "special needs" in education.
[1] [1996] 20 Fam LR 69.
I note that a child’s special needs may often be a fact accepted by both the liable parent and carer. However, in cases where there is a dispute, a party relying on this reason will need to provide documentation, such as medical evidence and evidence of the net expenditure associated with the special needs to substantiate their claim.
In this case, the parents strongly disagree about [Child 1] having special needs. Ms Romeo submits that [Child 1] has to have orthodontic work done, as well as needs to see a [Practitioner 1] and chiropractor.
Mr Bobby disputes these claims. He does not believe that the orthodontic treatment for [Child 1] is medically necessary or that [Child 1] needs [Treatment 1] and/or chiropractic care. Mr Bobby also submitted that some of these costs might have been paid for by the public health system and suggested Ms Romeo ought to have sought orthodontic treatment in the public system, rather than opt for a private orthodontist.
Medical expenses
Ms Romeo believes Mr Bobby should pay for all of the necessary medical expenses she incurred for [Child 1], given that Mr Bobby’s financial resources are so much greater than hers are. Ms Romeo indicated the following expenses:
Orthodontic costs:
Consultation 15 March 2018 (folio 62) $95
Phase 2 treatment plan (folio 239) $7,000
Paid $1,600 on 19 October 2018, $5,400 remaining, payable at $200 per month over 27 months from November 2018.
[Treatment 1]:
Assessment 15 May 2018 (folio 64) $120
Short sessions 29 May, 26 June, 24 July 2018 (folios 64–65)
$45 per sessions $135
Short sessions 21 August, 4 September, 18 September (folios 164–166)
$45 per sessions $135
Short session 10 November (folio 170): $45
Chiropractor:
Initial consultation 22 March 2018 (folio 35) $60
Standard consultations 4 April, 16 May, 11 July 2018 (folios 36–39)
$60 per consultation $180
These expenses amount to a total of $7,095 for orthodontics, $435 for [Treatment 1] and $240 for chiropractic treatment, a total of $7,770.
Medical evidence
Ms Romeo provided the following medical evidence to support her claims. Ms Romeo submitted a referral letter from [Organisation 1] dated 26 November 2008 (folio A29) indicating that [Child 1] had been examined by Dental Therapist, Ms [A], and she believed that [Child 1] would “benefit from a specialist orthodontic opinion”. Ms Romeo also provided a patient treatment summary from [Organisation 1], dated 29 November 2018 (folio A30) noting that [Child 1] has a “[physical ailment]”. The treatment history notes that [Child 1] had been referred to Dr [B] for [specific treatment] on 21 June 2017 (folio A31).
Dr [B]’s treatment plan of 15 March 2018 (folio 66) states that there are concerns about [Child 1]’s [condition] and that [Child 1] has an [ailment 1]. The treatment plan indicates the process to correct [one part of the ailment], but not the [second part of the ailment], which is a “separate procedure and fee”. The plan also states that for the “vast majority of patients, orthodontic treatment is an elective procedure” and that patients could accept their oral condition and have no treatment at all.
On 15 March 2018, Dr [B] referred [Child 1] to Ms [C], for assessment and therapy to “improve [ailment 2]” (folio 63). Ms Romeo also provided a letter from Ms [C] to Dr [B], dated 20 November 2018, regarding the progress of [Child 1]’s treatment (folio 257). The letter is heavily redacted, but indicates [Child 1] had [therapy] to correct his [ailment 2], but that he was still having some difficulties.
In terms of the chiropractic treatment, Ms Romeo stated that she and [Child 1] had consulted her doctor, as [Child 1] was experiencing frequent headaches, whilst sitting at his desk at school, doing his schoolwork. The doctor suggested that [Child 1] might benefit form chiropractic treatment. Ms Romeo took [Child 1] to the chiropractor upon her doctor’s recommendation.
Ms Romeo submitted a letter from Ms [D] (chiropractor), dated 28 November 2018 (folio 190). Ms [D] states that [Child 1] is being treated for “[ailment 3]”. Ms [D] notes that treatment has been successful in alleviating the symptoms, as well as reducing the frequency and severity of symptom onset. Ms [D] further recommends regular check-ups to maintain function and “prevent the progression of poor postural habits as [Child 1] continues his studies”.
Conclusion
As noted above whether or not [Child 1] has a medical condition and thus has “special needs” is vigorously disputed by the parents. Ms Romeo submits that [Child 1] needs orthodontic treatment, [Treatment 1] and chiropractic care to correct [ailment 1] and help with the frequent headaches he is experiencing. Mr Bobby asserts that the orthodontic treatment is a “cosmetic treatment” only and that chiropractic care is also more of a lifestyle choice, rather than a medical necessity.
Based on the medical evidence before me I am persuaded that [Child 1] does suffer from [ailment 1] and that there are some [impairments] associated with this, [although], as noted, Ms Romeo heavily redacted the letter from the [Practitioner 1]. Whilst there is generally some cosmetic aspect to any orthodontic treatment, I note that in this case [Child 1] had initially been referred for orthodontic assessment by the public health system, when he was quite young (about seven years old), and I accept that some medical concerns would have been present then. I also accept that the [ailment 1] would have led to problems with [Child 1] [that] needed to be addressed.
I am thus persuaded that these needs can be regarded as “special needs” for the purpose of the legislation. I now need to consider whether Ms Romeo incurred expenses by virtue of that “special need” and whether these significantly affect her ability to maintain [Child 1].
Orthodontic expenses claimed by Ms Romeo amount to $7,095, of which she paid $1,895[2] in 2018. The remaining $5,200 is to be paid at $200 per month for 26 months. Ms Romeo also paid a total of $435 for [Child 1]’s [Treatment 1] sessions between May and November 2018. This brings her total expenses in 2018 to $2,330.
[2] $95 (initial consultation) + $1,600 deposit + $200 one monthly instalment
I note Mr Bobby’s submission that Ms Romeo ought to have sought treatment in the public system, but the referral letter from [Organisation 1] (folio A29) specifically states that [Organisation 1] “will not be responsible for any cost incurred with an orthodontic consultation or any subsequent orthodontic treatment”. Current public information in relation to the Child Dental Benefits Schedule[3] also indicates:
The Commonwealth provides assistance for 2-17 year olds through the Child Dental Benefits Schedule (CDBS). The CDBS provides individual benefits for a range of services including examinations, x-rays, cleaning, fissure sealing, fillings, root canals and extractions. Benefits are not available for orthodontic or cosmetic dental work...
[3] >
I am thus satisfied that orthodontic treatment is not available through the public health system and Ms Romeo will have to bear these costs privately.
I will accept that [Child 1] may experience tightness in his neck and shoulders, which may result in headaches, if he spends long hours sitting at a desk. The evidence is that [Child 1] had four chiropractic treatment sessions (one per month) between March and July 2018. These cost $40 each or about $10 per week. Ms Romeo said that she acted upon recommendations from her doctor and the chiropractor notes that the treatment was beneficial in addressing poor posture. There is however no evidence that this treatment was medically necessary. [Child 1] is getting headaches because he spends long hours studying and I would suggest that many children in their final year/s of schooling would be sitting at their desks for long hours and poor posture would lead to head and neck pain. I do not consider however that this constitutes “special needs” and will not consider these costs further.
At the time of Ms Romeo’s change of assessment application in August 2018, Mr Bobby’s child support liability was $15,768 per annum, being $7,884 per annum per child (or about $151 per week. Ms Romeo indicated in her Statement of Financial Circumstances that she is otherwise reliant on Centrelink payments (newstart allowance and family tax benefit) of about $500 per week. Thus, about 30% of Mr Bobby’s child support payment for [Child 1] is spent on medical treatment for [Child 1] (about $45 per week for orthodontic costs and [Treatment 1]).
I am satisfied that the costs in relation to [Child 1]’s special need are of such magnitude as to significantly affect the costs of maintaining him, and that special circumstances exist as those costs are not taken into account in the administrative assessment. I therefore find that the ground for departure provided for in subparagraph 117(2)(b)(ia) of the Act is made out in this case.
Just and equitable
Subparagraph 98C(1)(b)(i) of the Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found a ground for departure is established in relation to [Child 1]’s special needs, I must now determine whether it would be just and equitable to make a departure determination. To do so I must have regard to a number of factors set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the statutory formula.
Mr Bobby
Income and earning capacity
Mr Bobby works full-time [and] he has been with the same employer for [years]. Current payslips (folios B12–B15) show that his weekly gross salary is $1,708.82 or about $88,858 per year and I so find.
Mr Bobby lodges regular tax returns. In 2016–17 his taxable income was $84,965 (folio 141) and in 2017–18 his taxable income was $87,080 (folio 309). The 2017–18 tax return shows that Mr Bobby claimed income and expenses in relation to a rental property and that he incurred net rental losses of $413 that year. I note that these rental losses are added back to Mr Bobby’s taxable income for child support purposes and a 2017–18 taxable income of $87,493 is used in the administrative assessment of child support (folio 346).
Ms Romeo noted that Mr Bobby’s tax return shows that he claimed a private health insurance rebate as a “single person with dependents” (folio 310) and suggested that this may not be accurate. I note that private health insurance rebates for a single person under 65 years of age, earning less than $90,000 was 25.934% from 1 July 2017 to 31 March 2018 and 25.415% 1 April 2018 to 30 June 2018[4], which is the rebate claimed in Mr Bobby’s tax return. The actual “tax claim code” used thus makes no difference to the amount of rebate available. I also note that Mr Bobby does have two dependent children ([Child 1] and [Child 2]) for whom he is financially responsible even though they do not reside with him.
[4] >
Ms Romeo also claimed that Mr Bobby has access to a fully maintained company vehicle and phone, which he can use privately and his financial resources are thus greater than his taxable income. The use of a company car or other benefits paid instead of wages or salary are subject to taxation calculated on the taxable value of the fringe benefits provided and reportable fringe benefits (if applicable) must be listed by the employer for tax return purposes.
Mr Bobby provided a copy of the signed “Motor Vehicle Declaration” for the 2018–19 fringe benefit tax assessment period (folio B16). In this document Mr Bobby declares that his use of the company vehicle was “restricted to business use, travel between home and work and minor, infrequent and irregular private use”. On this basis, no fringe benefit tax was payable.
Ms Romeo stated that she had photographed Mr Bobby with the company car at the local [named location] and that other persons had also seen Mr Bobby using the company vehicle for private occasions. Mr Bobby did not deny that he occasionally stopped at the [named location]. He said the club is on his way from work to home. He was able to use the car to travel between his workplace and home and there was no extra travel involved, if he stopped at the [location].
I have considered both parties submissions in this matter. I accept that Ms Romeo (or other persons) may have seen Mr Bobby and the company car at the local [named location] or in another non-work related setting, but Mr Bobby is able to stop at a venue on the way between work and home and the use of the company vehicle does allow for some limited private use. Overall, I have no evidence before me to indicate that the assessment of Mr Bobby’s employer (that there are no reportable fringe benefits) is incorrect and that Mr Bobby’s taxable income should be changed on this basis.
I thus find that Mr Bobby’s income, property and financial resources are adequately represented by his annual income tax returns.
Ms Romeo also submitted that Mr Bobby had greater earning capacity in that he was earning about $150,000 three or four years ago (folio 91). I note that Departmental records show (folios 346–347) that Mr Bobby’s taxable income was $75,483 in 2011–12, $85,311 in 2012–13, $84417 in 2013–14, $86,652 in 2015–16, $84,571 in 2016–17 and $87,493 in 2017–18. He has worked for the same employer for [years] and it is highly unlikely that his income would have been significantly different.
I note that for a period in 2013 the Department used a “reconciled income estimate” of $109,946 in the administrative assessment of child support (folio 177). This amount however represents the Department’s calculations, not Mr Bobby’s actual taxable income from employment in 2012–13. Estimate reconciliations are complex calculations and can arrive at a very high annualised income figures for a particular reconciliation period. They are not the same as income earned from employment or “money held in a bank account”.
The relevant legislative provisions for consideration of a parent’s earning capacity are provided for in subparagraph 117(2)(c)(ib) and also in subsection 117(7B) of the Act. Essentially the provision restricts the circumstances in which a person’s earning capacity can be used as a basis to depart from a formula assessment.
There are three essential matters to be considered in determining whether the administrative assessment should be departed from on the grounds of earning capacity. In simple terms they can be explained as follows:
·did the parent not work despite ample opportunity to do so, reduce their hours of work or change their occupation, industry or working pattern; and
·was the parent’s decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern not justified because of caring responsibilities or their state of health; and
·the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support.
All three of the above criteria must be met before a change of assessment can be made to take into account whether the parent has a greater earning capacity.
In this case, Mr Bobby is in full-time employment and he has not changed his occupation or reduced his working hours. I therefore find that paragraph 117(7B)(a) of the Act is not satisfied in this case. As all three criteria provided for in subsection 117(7B) of the Act are therefore not met, I cannot consider Mr Bobby’s earning capacity further.
Self-support expenses
Mr Bobby completed a Statement of Financial Circumstances (folios B1–B9). He listed income of $1,907.72 per week (comprising of his salary, rental income and a nominal trust distribution of $3.90 per week). He indicated expenses (including his current, increased child support liability) of $1,822.61 per week, leaving a weekly “surplus” of about $85.11.
I have examined Mr Bobby’s expenses further and I note here that the Family Court has been prescriptive about the types of expenses that can be considered “necessary” expenses. There are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children. This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities, and some loans. In Mee and Ferguson (1986) FLC 91-716, 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.
Mr Bobby stated he has been living with his parents for the past year or so (after the separation from his partner) and he pays them $80 per week “board”. His parents are age pensioners. Ms Romeo disputed that Mr Bobby would pay his parents anything, as this money would be classed as their income and their age pension would be reduced accordingly. Mr Bobby however indicated that his parents still receive the full rate of age pension.
Whilst Ms Romeo’s assertion is generally correct in principle, current information freely available on the Centrelink website, shows that a pensioner couple is able to earn $308.00 per fortnight[5] (or $154 per week) without their pension payment being affected. The weekly contribution of $80 from Mr Bobby would therefore not affect his parents’ age pension payment and I accept that Mr Bobby does contribute to his parents’ household as indicated.
[5] >
Mr Bobby listed repayments of $145.27 per week for a car loan and the current outstanding loan amount is about $22,500. Mr Bobby said that he purchased a car about 12 months ago for his private use. Ms Romeo asserted that Mr Bobby uses the company car for private trips and he only purchased another car to increase his expenses and avoid paying more child support.
Mr Bobby submitted a copy of the car loan schedule (folios B19–B24). This indicates that the car was purchased for a total price of $25,467.40 ($24,246.40 purchase price, plus $1,221 fees) and is fully financed by the loan. Mr Bobby signed the loan contract on 27 August 2018 (about 12 months ago). Mr Bobby’s repayments are $629.71 per month (folio B20) and in the approximately five-month period to mid-February 2019 (when the Statement of Financial Circumstances was completed) he would have reduced the loan by about $3,148 to about $22,300.
I note Ms Romeo lodged her change of assessment application on 6 August 2018, however the Department did not process this application until 6 September 2018, when a letter was written to Mr Bobby advising of the application (folio 102). The Department unsuccessfully attempted to call Mr Bobby on 7 September 2018 (folio 105) and on 12 September 2018 (folio 108). Ms Romeo’s application was discussed with Mr Bobby for the first time on 19 October 2018 (folio 115).
Ms Romeo stated that she has no contact with Mr Bobby and Mr Bobby has no care of the children. Allowing for a day or two for the notice of 6 September 2018 to reach Mr Bobby, he would not have been aware of Ms Romeo’s application until about 7 or 8 September 2018, approximately two weeks after he purchased the car. On the evidence before me, I am thus not persuaded that Mr Bobby bought the car in order to reduce his capacity to pay child support.
Ms Romeo noted that Mr Bobby has $242,241 in his superannuation account and she submitted that Mr Bobby is salary sacrificing to add to his superannuation. Mr Bobby’s payslips show that he does not currently have a salary sacrificing arrangement. It is possible that Mr Bobby may have had such an arrangement in the past, but there is no evidence in this regard for the period under consideration in this review.
In assessing the amount in Mr Bobby’s superannuation account, I had regard to the Federal Magistrates Court (now Federal Circuit Court) case of Parrish & Torrey[6] in which Riethmueller (FM) concluded [at 21/22]
21.The fundamental reason for not adding to a person’s income amount for child support the compulsory employer contributions to superannuation of 9% is that those funds are simply not available to the person for them to pay child support. The funds must be deposited into a superannuation account and are not able to be accessed until later years. In some cases, where the payer of child support is of more advanced years and may have access to those funds, they may be relevant; however the appellant in this case is many years away from having access to those funds.
22.In cases where a person salary sacrifices or otherwise enters into voluntary arrangements to make additional contributions on their own behalf, ordinarily such additional contributions would be considered as if they were available income.
[6] Parrish & Torrey (SSAT Appeal) [2009] FMCAfam 274
As noted, Mr Bobby does not make additional voluntary contributions into his superannuation account at the present time and he is unable to access the funds already in his account until he retires. I will thus not consider Mr Bobby’s superannuation entitlements further in this case.
Mr Bobby does have an investment property. It appears to have been bought in 2017 with his (then) partner for $490,000 (A20). Mr Bobby stated that the property is on the market for sale for about $380,000. It will be part of the property settlement with his former partner. The property is still being rented out and is subject to a mortgage of about $320,000.
Mr Bobby indicated that his share of the rental income is $195 per week (folio B2) and his share of expenses amounts to $274.25 per week. Rental income thus does not meet the property expenses and Mr Bobby has to expend an additional $79.25 per week to cover these expenses.
I note that Mr Bobby declares the rental income and expenditure in his tax returns and he is able to reduce his taxation liability as a result. I have therefore decided that it is fairer to disregard both the rental income and the expenses associated with the investment property for the purposes of assessing Mr Bobby’s self-support expenses.
I also note that Mr Bobby included $160 per week for entertainment, holidays, books and gifts in his expenses. I do not consider these expenses as necessary self-support expenses and have therefore disregarded these.
On the basis of these deliberations, I have concluded that Mr Bobby’s current income amounts to $1,712.72 per week (excluding the rental income) and his expenses (including his current (already increased) child support liability) amount to $1,388.36. This leaves a weekly “surplus” of $324.36 and I so find.
Ms Romeo
Income and earning capacity
Ms Romeo is not working and I noted that she last worked in about 2005. Ms Romeo is reliant on Centrelink payments (newstart allowance and family tax benefit) and child support payments from Mr Bobby.
Ms Romeo’s newstart allowance amounted to $19,419 or $373.44 per week (folio A15) in 2017–18 and $19,998 or $384.57 per week (folio A16) in 2018–19.
Ms Romeo indicated that she receives family tax benefit payments of $128 per week (folio A3) and her child support payments from Mr Bobby currently amount to $350.64. This is a total income of about $852 per week.
Ms Romeo is not required to lodge income tax returns, but I am satisfied that Ms Romeo has no other source of income.
Mr Bobby submitted that Ms Romeo could be working, as the children are now older and there was no evidence that she was medically unfit for work. I note that Ms Romeo has not been in the workforce for a very long time and there is no evidence before me that she is not working “despite ample opportunity to do so”. I cannot be satisfied that paragraph 117(7B)(a) of the Act is met in this case and there is no reason to consider Ms Romeo’s earning capacity further.
Self-support expenses
Ms Romeo indicated in her Statement of Financial Circumstances that her home is valued at about $167,000 and that she has a mortgage of about $134,793. She also noted that she bought a new car in 2017 for about $35,000. She had been in a car accident and her old car had been written off completely. The insurance money covered most of the purchase price and she contributed $2,000 to the purchase.
Mr Bobby submitted that Ms Romeo’s home is probably worth about $260,000 and her car would be worth about $25,000 now (folio B18) and thus the value of Ms Romeo’s assets would be greater than she indicates.
I have no further evidence in this regard and whilst it is possible that Ms Romeo has assets of greater value that she indicated on her Statement of Financial Circumstances, these assets comprise her family home and a car needed for transport and there is no expectation that she should sell these for the purposes of assessing child support.
Ms Romeo listed household expenses of $856 per week (including minimal expenses of $7 for holidays and entertainment). Ms Romeo’s income thus barely covers her expenses. She stated that her own self-support expenses amount to $198 per week or $10,296 per annum (less than one third of her total household expenses), which is below the self-support amount provided for in the statutory formula.
The children
[Child 1] is now 18 years old and [Child 2] is nearly 12 years old. They are both still at school. Ms Romeo indicated that weekly expenses for the children amount to $658 or $34,216 per annum and the most significant expenses (apart from food) are medical expenses. Ms Romeo submitted that medical expenses amount to $63 per week or about $3,276 per year. This is more than the expenses related to [Child 1]’s special needs ($2,330 in 2018) and Ms Romeo explained that [Child 2] also has special needs, which she has to pay.
Apart from the medical expenses, Ms Romeo did not list any other out of the ordinary expenses for the children and there is no evidence that the children have any income, property or financial resources relevant to my determination.
Otherwise proper
The requirement to consider whether it is “otherwise proper” to depart from the administrative assessment 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 or benefits (subsection 117(5) of the Act).
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 abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.
Ms Romeo is in receipt of Centrelink payments, which are affected by maintenance payments such as child support. Any increase to child support payable would result in an appropriate decrease in these payments. Such a result would be otherwise proper.
Conclusion
Section 98S of the Act describes the determinations that the Registrar, and the Tribunal standing in place of the Registrar, may make if it decides to depart from the administrative assessment. It is open to the Tribunal to set a rate of child support payable or set some of the variables used in the administrative assessment formula (for example, vary one or both parents’ adjusted taxable income).
Based on the evidence provided by Ms Romeo, her necessary costs for [Child 1] in 2018 were increased by his special needs and associated medical expenses. I have found that Ms Romeo had total expenses of $2,330 for orthodontic costs and [Treatment 1] in 2018 and she will need to pay the remaining $5,200 for orthodontic costs in instalments over the two years.
Ms Romeo argued that Mr Bobby should pay 100% of the costs associated with [Child 1]’s special needs, as Mr Bobby’s income and financial resources are far greater than hers are. She submitted that she could not afford to pay for the medical expenses, but did so because they were necessary for the children and for [Child 1] in particular.
Mr Bobby disputed that [Child 1] had special needs and that any of the additional medical expenses incurred by Ms Romeo were actually necessary. Mr Bobby submitted that he should not have to be responsible to pay for financial decisions made by Ms Romeo without any prior consultation or agreement.
I note the objections officer ultimately decided that Mr Bobby ought to pay 50% of the costs associated with [Child 1]’s special needs. The objections officer calculated that the total costs for [Child 1]’s orthodontic treatment and [Treatment 1] amounted to $7,485[7] and that Mr Bobby should pay 50% of these costs over two years. Mr Bobby’s child support liability was thus increased by $1,872 (rounded up) per annum for two years, resulting in an annual rate of $18,296 or $350.67 per week (folio 26).
[7] $95 initial consultation + $7,000 treatment plan + $390 speech therapy
Mr Bobby does pay this amount now and based on the information provided by Ms Romeo in her Statement of Financial Circumstances, she is barely able to meet her financial commitments even with the increased child support payments from Mr Bobby (income $852 per week, expenses $856 per week).
Mr Bobby’s financial situation is such that he comfortably meets his financial commitments (income $1,712.72, expenses $1,388.36 per week), including the additional child support liability (i.e. 50% of medical costs).
I have considered the arguments before me. I have not found that the administrative assessment ought to be changed on the basis of the income, property, financial resources or earning capacity of either parent, but I have found that [Child 1] does have special needs and the administrative assessment ought to be changed because of the costs associated with these special needs.
I have calculated that the total costs for orthodontic treatment and [Treatment 1] are $7,530. This is a bit higher than the amount calculated by the objections officer, as they missed that Ms Romeo also paid for one [Treatment 1] session on 10 November 2018.
I am also of the view that Mr Bobby ought to pay more than 50% of these costs, as his financial resources are greater than Ms Romeo’s financial resources. I am not convinced however that he should be responsible for all of those costs, but I am of the view that Ms Romeo should also contribute to these, given that there is such disagreement between the parents.
I have therefore decided that it is reasonable that Mr Bobby ought to pay 75% of the total costs of $7,530, being $5,648 (rounded up) and that these costs ought to be paid over two years (i.e. $2,824 per year). I note the current determination commences on 1 November 2018 and ends on 31 October 2020 and I see no reason to change these dates.
My decision will increase Mr Bobby’s current child support liability to $19,248 per annum or about $370 per week. This is $20 more per week than he currently pays and I am satisfied that he has capacity to do so. It will also create arrears for Mr Bobby; given seven months have elapsed from 1 November 2018 to now, of about $760. I do not consider that this will cause Mr Bobby to be in financial hardship.
I am aware that the increase in payments to Ms Romeo is not great, but I also note that the child support case for [Child 1] will end in December 2019 (folios 26–31) and this will significantly affect the amount of child support payable to her (a reduction of approximately $6,000 per year). Ms Romeo will thus need to take steps to address her financial situation in due course.
DECISION
The decision under review is varied so that the rate of child support payable by Mr Bobby is increased by $2,824 per annum from 1 November 2018 to 31 October 2020.
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