Roylance and Roylance (Child support)

[2018] AATA 5986

Roylance and Roylance (Child support) [2018] AATA 5986 (23 October 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC014500

APPLICANT:  Ms Roylance

OTHER PARTIES:  Child Support Registrar

Mr Roylance

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  23 October 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, refuses to make a determination under subsection 44(2) of the Child Support (Assessment) Act 1989.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether post separation costs should be excluded from the adjusted taxable income – refusal to make determination – 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

1. Ms Roylance and Mr Roylance are the parents of [Child 1] (born [in] 2013) and there has been a child support assessment in place since 5 January 2016.  Mr Roylance is the parent liable to pay child support under the assessment.

2. On 15 February 2018, Mr Roylance applied to the Department of Human Services, Child Support (the Child Support Agency) to reduce the adjusted taxable income used in the child support assessment under the provisions relating to additional income earned post-separation.

3. On 17 April 2018, the Child Support Agency made the decision to reduce Mr Roylance’s adjusted taxable income used in the assessment by an amount of $56,470 for the period 15 February 2018 to 15 July 2018.

4. On 26 April 2018, Ms Roylance objected to this decision and on 8 June 2018 the Child Support Agency disallowed the objection (the objection decision).

5. On 4 July 2018, Ms Roylance applied to the Administrative Appeals Tribunal (the Tribunal) for review of the objection decision.

6. The Tribunal conducted a hearing into the application on 23 October 2018.  Ms Roylance gave evidence on affirmation by conference telephone.  The Tribunal wrote to Mr Roylance on 19 September 2018 advising the hearing had been rescheduled to 23 October 2018.  Mr Roylance was sent an SMS on 22 October 2018 reminding him the hearing was taking place at 12:30 pm on 23 October 2018.  The Tribunal contacted Mr Roylance by telephone at approximately 12:30 pm on 23 October 2018 and he informed the Tribunal he could not participate in the hearing.  The Tribunal was satisfied that Mr Roylance was given appropriate notice of the date and time of the hearing and proceeded in his absence.

7. The Child Support Agency provided the Tribunal and the parties with papers relevant to the matter (264 pages).  Ms Roylance provided the Tribunal with additional evidence prior to the hearing (A1-A17).  A copy of this additional evidence was distributed to the parties.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. Section 44 of the Act allows a parent to apply to have the administrative assessment of child support amended so that certain income which is earned, derived or received after separation is excluded from their adjusted taxable income.

3. The issues which arise in this case are whether or not the post-separation costs provisions are applicable to Mr Roylance’s child support assessment and, if so, from what date.

CONSIDERATION

1. Ms Roylance told the Tribunal she did not dispute that Mr Roylance’s income had increased since separation.  She said the Child Support Agency had, however, inappropriately applied subsection 44(1) of the Act on the basis that Mr Roylance had not obtained this income outside the ordinary course of events.

2. Ms Roylance said that Mr Roylance had a long history of obtaining new roles and increasing his income which had been established prior to separation.  Ms Roylance said that during their relationship he worked for four separate companies and since separation had worked for another two companies.  She said he completed his [degree] while they were still married and as a result it was expected that he would gain higher paying jobs.  Ms Roylance said that Mr Roylance commenced work at [Company 1] around the time of separation and was earning approximately $140,000 a year.  She said he changed jobs frequently in order to advance his career and move up the food chain.  She said he had done this regularly while they were together and continued to do so after separation. 

3. Ms Roylance said she disagreed with the argument provided by Mr Roylance that he was pursuing more senior roles as a result of the cost of their separation.  She pointed out that in his first application to have his post-separation income excluded, Mr Roylance had referred to his new partner as justification, which was not relevant.  Ms Roylance said the Child Support Agency must have encouraged him to apply a second time because Mr Roylance then provided a completely different story in his second application.

4. The Tribunal notes in evidence, an ‘Application for post separation income to be excluded’ form completed by Mr Roylance on 15 February 2018.  In this application Mr Roylance states that his annual adjusted taxable income before separation was $140,000 and his annual adjusted taxable income after separation was $210,000.  Mr Roylance states in the application, ‘I completed my studies and worked hard to secure a higher paying job for my new partner.’  In a second application dated 12 April 2018, Mr Roylance states his annual adjusted taxable income before separation was $128,368 compared to $188,939 after separation.  In this second application Mr Roylance states in a lengthier submission:

   As our marriage ended on or around July 2015 and the matrimonial home was sold I was put under significant financial stress of having to relocate from the property and reestablish suitable accommodations for [Child 1] and myself.  In order to do this I was forced to take a lease at a high cost of $850 per week to ensure I had two bedroom accommodation for myself and [Child 1] during his regular visits.  This high cost lease was also accompanied by the high cost of re-establishing a house full of contents and acquiring a second hand automobile.  Because of these circumstances I actively commenced pursuing more senior and demanding roles with other employers.

5. Ms Roylance told the Tribunal there was no evidence to support that Mr Roylance had incurred these post-separation costs.  She said he had retained all their furniture when they separated as well as [Child 1]’s cot, pram and chest of drawers.  Ms Roylance said he chose to buy an expensive [vehicle] after separation when he could have purchased a more modest car.   Ms Roylance also said Mr Roylance had [Child 1] two nights per fortnight when they separated and he was only two years old at the time.  She pointed out he did not need a large, new apartment and this was simply his choice after he requested the sale of the former matrimonial home.

6. Ms Roylance acknowledged that Mr Roylance had obtained a second job as a [occupation] post-separation and that he did not have this second job prior to separation.  She said this had nothing to do with Mr Roylance’s assertion that he needed a second job due to his increased costs as a single parent.  Ms Roylance said that Mr Roylance continues to be employed in a second job, now at [a workplace], even though his current income is approximately $222,000 a year.  Ms Roylance said that his initial second job and subsequent second job were more about self-promotion and increasing his profile rather than financial reward.

7. Ms Roylance said, in summary, there was no connection between their separation and Mr Roylance’s employment and income earning capacity.  She said Mr Roylance obtained these new positions using his skills, experience and education, which was a pattern established during their relationship. 

8. For post-separation income to be excluded, it is necessary under the Act for certain requirements to be met.  Subsection 44(1) of the Act states:

9. A parent (the applicant) of a child may apply to the Registrar to amend an administrative assessment of child support payable by or to the parent for the child for part of a child support period if:

   (a)  the applicant and the other parent of the child lived together on a genuine domestic basis for at least 6 months; and

   (b)  the separation, following that 6 month period, of the applicant from the other parent occurred:

   (i)  within the last 3 years; and

   (ii)  before the application for administrative assessment of child support for the child was made under section 25 or 25A; and

   (c)  at the time of the application under this section, the applicant and the other parent remain separated; and

   (d)  in the last relevant year of income, or in the application period for an income election (if such an election has been made by the parent), the applicant earns, derives or receives income:

   (i)  in accordance with a pattern of earnings, derivation or receipt that is established after the applicant and the other parent first separate; and

   (ii)  that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events.

10. If the applicant makes an application under this section, the Registrar may determine that the applicant’s adjusted taxable income for the child for a day in the child support period is a specified amount that excludes the income referred to in paragraph (1)(d).

11. However, the Registrar may make a determination under subsection (2) only if the determination:

    (a)reduces the applicant’s adjusted taxable income for the child for a day in the child support period by 30% or less; and

    (b)  applies in respect of a day in the child support period, being a day that is less than 3 years after the last separation referred to in paragraph (1)(b).

12. It is not in contention and the Tribunal accepts that paragraphs 44(1)(a), 44(1)(b) and 44(1)(c) of the Act are satisfied and that Mr Roylance made a valid application under subsection 44(2) of the Act on 15 February 2018. The task for the Tribunal is to determine if Mr Roylance’s income is in accordance with a pattern established after separation and whether or not it is of a kind that he would not have been expected to receive in the ordinary course of events.

13. Although Mr Roylance did not participate in the hearing, the Tribunal notes the following in evidence from the Child Support Agency:

    ·     Mr Roylance’s adjusted taxable income in 2014-15 was $104,244;

    ·     Mr Roylance’s adjusted taxable income in 2015-16 was 128,368; and

    ·     Mr Roylance’s adjusted taxable income in 2016-17 was $188,236.

14. Mr Roylance applied for exclusion of post separation income from his 2016-2017 adjusted taxable income.

15. The Act does not define the term 'ordinary course of events'.  The Explanatory Memorandum to the Bill for the Amending Act provides a brief explanation of the intent of the legislation:

    Income that would have been earned in the normal course of events, such as an annual pay rise, is not additional income for the purposes of paragraph 44(1)(c). An application for the lower level of income may not be necessary if, for example, the income pattern has reverted to what it was before the parents separated.

16. Mr Roylance states in his application to the Child Support Agency for his post-separation income to be excluded that he was placed under significant financial stress after separation and was required to lease new accommodation and set up a house full of contents.  Mr Roylance states that it was due to these circumstances that he ‘actively commenced pursuing more senior and demanding roles.’  Ms Roylance has told the Tribunal that Mr Roylance is ambitious and has frequently moved to better paid roles in order to build his career.

17. There is no doubt Mr Roylance took on additional employment following separation, however, he continues to work for a second employer more than three years after the parents separated around July 2015.  The fact he is now earning more than he was prior to separation is not, in the view of the Tribunal, as a direct result of his separation.  The evidence before the Tribunal tends to support Ms Roylance’s contention there is a pattern to Mr Roylance regularly changing his employment to improve his circumstances.

18. The discretion found in section 44 of the Act is to be applied where a parent has taken steps to change their income after separation primarily in order to re-establish themselves.  The discretion is not to be applied simply because the parent’s income has changed.

19. In this case, the Tribunal is not satisfied there was a new pattern of earnings established by Mr Roylance.  Nor is the Tribunal satisfied his post-separation income was earned outside the ordinary course of events.  Indeed, the additional income Mr Roylance earned from his new employment and his second job following separation, would very likely be more expected than not for someone with his qualifications and career trajectory.

20. The Tribunal finds, therefore, that paragraph 44(1)(d) of the Act is not satisfied and refuses to make a determination under subsection 44(2).

DECISION

The Tribunal sets aside the decision under review and, in substitution, refuses to make a determination under subsection 44(2) of the Child Support (Assessment) Act 1989.