Rood and Rood (Child support)

This matter concerned a dispute between Mr Rood and Ms Rood regarding child support assessments. The primary issue before the Tribunal was whether to depart from the administrative assessment of Mr Rood's child support liability, based on his income, property, and financial resources.

The court was required to determine if Mr Rood's taxable income accurately reflected his earning capacity and financial resources for child support purposes, and if not, whether a departure from the administrative assessment was warranted. Specifically, the Tribunal had to consider whether certain expenses paid from Mr Rood's company account, such as legal fees and entertainment costs, should be added back to his income, and whether non-cash benefits derived from his self-employment, like depreciation and personal use of a company vehicle, should be factored into his financial resources.

The Tribunal applied the principle that the taxable income of a self-employed individual may not always be a true reflection of their financial capacity. It noted that while the Tribunal's role is not to conduct a forensic audit, it must assess available evidence to determine a fair child support liability. The Tribunal found that Mr Rood's company had paid significant personal legal fees, and that non-cash benefits and other deductions increased his cash flow beyond his declared taxable income. Consequently, the Tribunal determined that the ground for departure under subparagraph 117(2)(c)(ia) of the Act had been established due to the impact of these circumstances on Mr Rood's financial resources, which were conservatively estimated to be more than $90,000 per annum for the 2022 financial year.

The Tribunal set aside the previous departure decision and substituted its own. It ordered that Mr Rood's child support liability be assessed with reference to his adjusted financial resources, which were found to be significantly higher than his declared taxable income, resulting in a substantial difference in the child support liability.