Rumsey and Cleaver (Child support)

Rumsey and Cleaver (Child support) [2018] AATA 4159 (28 September 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/BC012385
APPLICANT:  Mrs Rumsey
OTHER PARTIES:  Child Support Registrar
Mr Cleaver

TRIBUNAL:Member J Thomson
DECISION DATE: 28 September 2018
DECISION:

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

(a) For the period 1 January 2017 to 31 October 2018, Mr Cleaver’s adjusted taxable income is varied to $65,305;

(b) For the period 1 January 2017 to 31 December 2017, the annual rate of child support payable by Mr Cleaver is increased by $8,482 in consideration of his contribution to the children’s 2017 private school tuition fees and compulsory charges; and

(c) For the period 1 January 2018 to 31 December 2018, the annual rate of child support payable by Mr Cleaver is increased by $11,200 in consideration of his contribution to the children’s 2018 private school tuition fees and compulsory charges, and [Child 2]’s orthodontic special needs costs.

Member J Thomson

CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – business income – costs of education of the children – orthodontic costs – 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 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

Mrs Rumsey and Mr Cleaver are the parents of [Child 1], born 2001, and [Child 2], born 2002 (the children). The children are recorded as being in the primary care of Mrs Rumsey and the regular care of Mr Cleaver.
Mrs Rumsey seeks review of an objection decision made by the Department of Human Services – Child Support (the Department) on 28 July 2017. This decision disallowed her objection to a decision dated 28 April 2017 regarding her application for a change of assessment on the basis of the grounds commonly known as Reasons 3 and 8A deciding that:
(a) For the period 1 January 2017 31 October 2018, Mr Cleaver’s adjusted taxable income is set at $63,000;
(b) For the period 1 January 2017 to 31 December 2017, the annual rate of child support payable by Mr Cleaver is increased by $11,509; and
(c) For the period 1 January 2018 to 31 December 2018, the annual rate of child support payable by Mr Cleaver is increased by $12,081.
The objections officer affirmed the Department’s decision.
The Tribunal heard this matter over the course of two days, 15 March 2018 and 14 June 2018. Both parties attended the hearings via conference telephone and gave affirmed evidence. The Tribunal had before it documentation provided by the Department, Mrs Rumsey, and Mr Cleaver. The departments documents were admitted into evidence and marked Exhibit 1; Mrs Rumsey’s and Mr Cleaver’s documents were admitted into evidence and marked Exhibits A and B respectively.
Mrs Rumsey had copies of the above documents with her at hearing. Mr Cleaver did not have a complete set of the Department’s documents at the commencement of the hearing on 15 March 2018, but otherwise had copies of the documents referred to above, and by the time of the rescheduled hearing on 14 June 2018 confirmed that he had a complete set of documents with him.
The Tribunal directed Mr Cleaver to provide additional documents; these comprised a summary of income derived by him from his father’s [City 1] based [business] for the period 1 July 2016 to date of hearing, a schedule of funds gifted to him by his father over the same period, and copies of his 2015/16 and 2016/17 income tax returns and corresponding assessment notices. Mr Cleaver has complied with the Tribunal’s directions and the documents he provided have been added to Exhibit B. Due to the nature of these documents, the Tribunal did not consider it necessary, in the interests of judicial fairness to provide copies to Mrs Rumsey for comment.
Mrs Rumsey was also directed to provide further documents post hearing. She has complied with the Tribunal’s directions in this respect, and those documents have been added to Exhibit A. Having regard to the nature of these documents, the Tribunal did not consider it necessary, in the interests of judicial fairness, to provide copies of these documents to Mr Cleaver for comment.

ISSUES

The issues which arise in this case are:
·       Mr Cleaver’s income, financial resources and property available for child support for the children;
·       The special needs of the children as regards their education expenses, and [Child 2]’s orthodontic treatment costs; and
·       Mr Cleaver’s capacity to contribute to those expenses and costs.

CONSIDERATION

In reaching its decision, the Tribunal has considered the affirmed evidence of the parties given at hearing and the documents contained in Exhibits 1, A and B.

The legislative framework

The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989, (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children, and the level of care provided by each parent. Part 6A of the Act allows for a departure from the administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:
a.   One, or more than one, of the grounds for departure referred to in subsection 98C (2) exists (subparagraph 98C(1)(b)(i));
b.   A departure is just and equitable as regards the children and each parent (sub-subparagraph 98(1)(b)(ii)(A)); and
c.   It is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B))
Subsection 98C(2) provides that the grounds for departure are the same as the grounds 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 Registrar may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Grounds for departure

Subparagraph 117(2)(c)(ia) – commonly referred to as Reason 8 – provides as a ground for departure:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child…..
(ia) because of the income, property and financial resources of either parent; or….
Subparagraph 117(2)(b)(ia) of the Act, commonly referred to as Reason 2, provides as a ground for departure:
that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ia) because of the special needs of the child…
Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as reason 3 provides as a ground for departure:
that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents…
The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, 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 legislation in subsection 117(2) must be guided by the qualification that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92 -279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial position.
As noted above, the primary issue in this case is Mr Cleaver’s income, financial resources and property available for the children’s tuition costs and the costs of the child, [Child 2]’s orthodontic treatment.
Relevantly, both children are attending [School 1] where [Child 1] is in grade 12, and [Child 2] is in grade 11. Both parents acknowledge and agree that the children are being educated in the manner mutually intended by the parents. Mrs Rumsey is seeking an order that Mr Cleaver contribute to half of the costs of the children’s education at [School 1]. She has provided particulars of the school fees for the 2017 and 2018 academic years (see page 57 of Exhibit 1, and page A 33 of Exhibit A).
She has also provided particulars of additional costs associated with the children’s textbooks and other stationery requirements, a [School 1 trip overseas], scheduled for the September 2018 school vacation, [School 1 sports] club fees for [Child 2], and tax invoices for [Child 2]’s [other co-curricular activities].
Most private and public schools include miscellaneous fees similar in nature to those referred to in the preceding paragraph. Most private and public schools require students to wear uniforms and use textbooks. It is only the compulsory tuition fees that constitute special circumstances, and it is those fees to which the Tribunal will confine its attention.
Mrs Rumsey also seeks an order that Mr Cleaver contribute to half the costs in relation to [Child 2]’s orthodontic treatment. In this respect, she has provided a copy of a quotation for orthodontic treatment from [City 2] Orthodontic Specialists dated 24 February 2016 for the provision of metal braces to [Child 2]’s upper and lower teeth, together with evidence of her out-of-pocket cost of the treatment amounting to $6,125, net of healthcare rebates (see Exhibit A75).

Mrs Rumsey’s evidence

Mrs Rumsey’s evidence at hearing centred on discrepancies she identified between Mr Cleaver’ taxable income as disclosed in his income tax returns for the financial years 2015/16 ($28,908) and 2016/17 ($19,078), copies of which were provided by Mr Cleaver (see pages B182 to B199 of Exhibit B), together with his payslips reflecting his gross fortnightly wages of $3,200 for the period 10 February 2017 to 23 February 2017 as an employee of his father’s company, ( [Company 1], the corporate trustee of the family trust, trading as [Business 1] and cash deposits to his [Bank 1] bank [account number 1], which she said amounted to $63,967 between the period 1 July 2016 and 30 June 2017.
Mrs Rumsey drew the Tribunal’s attention to items in Mr Cleaver’s [Bank 1] statements reflecting deposits from [gambling] establishments with which Mr Cleaver conducted online betting accounts on behalf of himself and his father over the financial years 2015/16, 2016/17 and 2017/18, which she said amounted to $21,314, an average of $10,000 per year. She asserted this income was not reflected in his annual income tax returns. She also made reference to additional deposits in respect of which she said that there was no evidence as to the source of those funds, suggestive of another undisclosed source of income for Mr Cleaver.
She also asserted he received distributions from the Cleaver Family Trust operated through the corporate entity, [Company 1], which were not reflected in his recent income tax returns.
Mrs Rumsey said Mr Cleaver had recently disposed of the former matrimonial home in [City 1], transferred to him pursuant to the property settlement affected between the parents, from which he received a net return of $180,000. She also asserted that Mr Cleaver’s father had provided him with a company car, that he is actively engaged in the administration of the Cleaver family [business] conducted by [Company 1] in its trustee capacity, operating three [business sites] located in [City 1 in State 1] and [another area of State 2] .
In summary, Mrs Rumsey submitted that, based on the level of Mr Cleaver’ income in previous years, he has the capacity to generate an income of at least $100,000, and referred the Tribunal to the income of approximately $84,000 she suggested he was deriving when he was working in his father’s business in [City 1], prior to his relocation to [City 2] in August 2015, compared with the income he returned in his 2016/17 income tax return of $19,764.
Mrs Rumsey gave evidence of a joint share portfolio she has with Mr Cleaver, comprising shares in [companies]. She said Mr Cleaver held a 75% interest in the portfolio, and that the income derived from dividends paid on those shares twice yearly amounted to approximately $2,016.
She said she has offered to sell her interest in the share portfolio to Mr Cleaver, but he refuses to respond to her offer. She believes the dividends are paid into a bank account conducted in their joint names, but she is unaware of the identity of that account or the banking institution with which the account is held.
She also gave evidence that she was aware Mr Cleaver driver’s licence was disqualified recently, that he is currently unable to drive a motor vehicle, and is reliant upon his neighbours to provide him with transport. She asserted this was some form of fringe benefit. The Tribunal rejects that submission.

Mr Cleaver’ evidence

Mr Cleaver said that up until 29 January 2017, he was employed in his father’s ACT Motor Traders business as financial controller, receiving a net weekly income of $1,300. He denied he was in receipt of commissions from [a Business 1 division] because he was not employed in [this] division of his father’s business. He said his job essentially involved the processing of customers’ finance applications through various finance brokers connected with his father’s business, relating to the purchase of motor vehicles from [Business 1].
He confirmed that his father operated [Business 1] through the family trust, the corporate trustee of which was [Company 1]. He denied he was a director or other office holder in that company, or a shareholder, and he also denied he was a beneficiary of the family trust. The tax returns he provided to the Tribunal for the 2014/15, 2015/16, and 2016/17 (see Exhibit B, pages B182 to B199) do not reflect his having received distributions from any family trust; the income reflected in those tax returns recorded his wages/salary as an employee of [Company 1], the trustee of his father’s business, [Business 1] and generally accorded with the payslips he provided to the Tribunal (See Exhibit 1, pages 80 and 81, and Exhibit B, pages B229 to B 280).
Mr Cleaver’s 2015/16 income tax return, before the Tribunal at Exhibit B, pages B182 to B190 records a gross income from his employment in his father’s business of $28,800 plus interest of $875 and dividends of $363. His 2016/17 income tax return reflected a significantly reduced gross income from [Company 1] of $19,764, negligible interest, and approximately the same dividend income for the 2016 financial year. The income he derived from his employment in his father’s business appears to be consistent with the income related deposits reflected in his bank statements.
He gave evidence that following his relocation to [City 2] in January 2017, he continued working in his father’s business, remotely from [City 2], processing [doing tasks] via telephone and computer. He said he does this one day a week, generally on a Thursday.
He gave evidence of having sought additional employment in [City 2], but said that because he does not have a driver’s licence, he has been unsuccessful.
He said he also travels to [City 1] on a monthly rotational basis to work in his father’s business, processing finance applications and attending to payment of commissions to the finance brokers who provide [specialised] finance to customers of his father’s business. He said he spends two weeks in [City 1] working in his father’s business, and because of the itinerant nature of his employment, his salary, while he is in [City 1], is paid in cash, which he usually deposits to his [Bank 1 account number 1].
Mr Cleaver gave evidence regarding the extent of additional financial support he receives from his father. He said his father has made regular direct deposits to his [Bank 1 account number 1] account since he relocated to [City 2] in January 2017 to assist him with his living expenses.
Copies of Mr Cleaver’s [Bank 1 account number 1] bank statements were in evidence before the Tribunal for the period 17 February 2017 to 11 July 2018 (see Exhibit 1, pages 210 to 218, and Exhibit B, pages B201 to B227). Mr Cleaver said the deposits received from his father to his [Bank 1[account number 1] were code referenced “[Company 1]”.
A review of the bank statements for the period 17 February 2017 to 26 June 2017, reflected cash deposits of $18,550 which Mr Cleaver said were the weekly cash payments he received as salary while he was working in [City 1], and which he deposited to his account. In addition, the statements reflected code referenced “[Company 1]” deposits amounting to $1,500.
Annualising the salary income reflected in the bank statements for the period 17 February 2017 to 26 June 2017 ($18,550 / 130 days X 365 days) results in a net income figure of $52,082.68.
In addition to this income, Mr Cleaver’s father provided cash resources in the form of deposits to his bank account during that financial year of $1,500, a combined total of net salary income and cash resources of $53,582.68 for the 2016/17 financial year. Grossing up that figure results in a gross income for that year of $66,978.
Mr Cleaver’s pay slip for the period 2 June 2017 to 15 June 2017 was before the Tribunal (see Exhibit 1, page 209). This document records his year to date salary for the 2016/17 financial year as $58,320.
The Tribunal is unable to reconcile the income reflected in the bank statements and Mr Cleaver’s pay slip at Exhibit 1, page 209 with his tax return for the 2017 financial year (see Exhibit B, pages B182 to B199) in which his gross income from his employment with [Company 1] is recorded as $19,764.
Adopting the deductions claimed in Mr Cleaver’ 2016/17 tax return of $1,084, the Tribunal finds Mr Cleaver’s income and financial resources for the financial year ended 30 June 2017 was more likely to have been $65,894 (gross income $66,978 – deductions $1,084 = $65,894).
Turning to the 2017/18 financial year income and financial resources available to Mr Cleaver during the course of that year, a review of the bank statements for the period 6 July 2017 to 30 June 2018 reflects salary related cash deposits totalling $40,240, plus [Company 1] coded deposits from his father for the period 6 October 2017 to 12 June 2018 amounting to $12,400.
These cash deposits appear to be an untaxed revenue source, and grossed up, equate to an income of $15,500.
By reference to his bank statements for the financial year ended 2018, the salary related deposits referred to above suggest a net income of $40,240, grossed up to an income of $50,300. Assuming he had approximately the same deductions reflected in his 2017 financial year return of $1,084, his income for the 2017/18 financial year would have been approximately $49,216.
Mr Cleaver provided copies of his 2017/18 financial year pay slips issued by [Company 1] post hearing (see pages B229 to B280, Exhibit B) reflecting a gross income for that year of $45.044.18, not dissimilar to the income for that period extrapolated in the preceding paragraph.

Taking into account the financial resources available to Mr Cleaver in the form of the $12,400 cash deposits made by his father to his [Bank 1 account number 1]account, grossed up to an income of $15,500, the combined total of salary income and cash resources available to Mr Cleaver for the 2017/18 financial year would appear to be $64,716 ($49,216 plus $15,500 = $64,976).
In response to Mrs Rumsey’s allegations regarding the gambling accounts Mr Cleaver operated in conjunction with his father, Mr Cleaver acknowledged that he did maintain accounts with [gambling organisations]. He acknowledged he controlled the betting activities with these accounts as his father was not sufficiently computer literate, and that the proceeds of the winnings were banked to his [Bank 1 account number 1].
A review of the entries in the bank statements for that account for the period 16 July 2015 to 15 October 2015 revealed betting returns totalling $3,540; for the period 11 January 2016 to 17 January 2016, a total of $12,428.68; for the period 20 January 2017 to 7 February 2017 - $1,425, and for the period 10 January 2018 to 11 May 2018 - $2,050.
Mr Cleaver was unable to provide any direct evidence regarding his and/or his father’s outlays for these returns, however, based on the [gambling agency] deposits statement he provided (see Exhibit B, page B165), his outlays from that account were in the range of $50 to $500, some of which was drawn against his credit card number 7421, the bank statements for which were not provided to the Tribunal.
He gave evidence that he and his father shared the proceeds of their gambling venture, although the proceeds were generally re-invested through his betting accounts. In any event, his share of the gambling proceeds for the 2016/17 and 2017/18 financial years were relatively negligible - $712, and $1025 respectively, and the Tribunal does not intend taking them into account for the purposes of determining his income and financial resources for child support purposes during the period under review.
At hearing, Mrs Rumsey made submissions regarding various cash deposits, funds transfers and betting establishment deposits to Mr Cleaver’s [Bank 1 account number 1] bank account. The Tribunal has considered Mr Cleaver’s [Bank 1account number 1] account bank statements for the period 1 January 2017 to 26 June 2017 (see Exhibit B, pages B72 to B75, and Exhibit 1, pages 183 to 190), and identified cash deposits, Internet transfers, [Company 1] deposits and [gambling agency] deposits totalling $27,839. Annualised, a figure of $56,139 results ($27,839 / 181 days x 365 = $56,139.41). However, the Tribunal has factored these items into its determination of Mr Cleaver’s income and financial resources earlier herein.
53. Mr Cleaver provided copies of bank statements relating to his [Bank 1 account 2] joint account with Mrs Rumsey, covering the period 10 October 2015 to 1 January 2017 (see Exhibit B, pages B 13 to be 21). These bank statements reflected payments relating to the children’s education expenses and dividends from the parents’ joint share portfolio. The amounts of the transactions were not remarkable nor were the balances reflected in those bank statements.
Mr Cleaver gave evidence that he closed his [Bank 1 account number 2] in about July 2017 which then had a negligible balance, and reverted to an earlier set of [two other accounts]. He provided copies of the bank statements for these accounts reflecting little or no transactions and balances of any significance.
In response to Mrs Rumsey’s evidence regarding the parents’ joint share portfolio, Mr Cleaver confirmed the value of his share of that portfolio at approximately $5,000.
Mr Cleaver gave evidence regarding his Internet [Bank 1] account number 0885. He said he used this account primarily as a holding account into which he deposited surplus funds from his [Bank 1 account number 1] account, over and above his daily living expenses, because it attracted a higher interest rate. He also gave evidence that following the sale of his [City 1] property in about October 2015, he deposited the net proceeds of sale of $180,243.56 to his [Bank 1 account number 1] account on 16 October 2015, and transferred $160,000 of those funds to his [Bank 1 account number 2] on 20 October 2015.
He gave evidence that he then purchased his [City 2] residential property, in which he currently resides, for $285,000, and expended approximately $174,950 on renovations to that property, utilising the net proceeds of sale of his [City 1] property for that purpose.
He provided copies of his [Bank 1 account number 2] bank statements for the period 6 June 2015 to 5 July 2017 (see Exhibit B, pages B 24 to B38) which reflected the $160,000 [City 1] property sale proceeds transferred to that account, and approximately $147,850 expended on renovating his [City 2] residential property between 16 December 2015 and 18 March 2016.
His [Bank 1 account number 1] account bank statements reflect an additional expenditure of $30,000 in renovation costs between 26 April 2016 and 5 May 2016. He said in evidence at hearing, his renovations costs were closer to $220,000.
Mr Cleaver also responded to Mrs Rumsey’s allegations regarding deposits totalling $53,000 reflected in the bank statements for his [Bank 1 account number 1] account in respect of which she said the source for those funds was not identifiable. The Tribunal questioned Mr Cleaver regarding these items and, with the exception of one entry dated 20 October 2015 amounting $1,245.33, he provided satisfactory explanations as to the source of those funds. He said he believed the amount of $1,245.33 may have been a refund of an overpayment of his mortgage instalments, credited after the completion of the sale of his [City 1] property. The Tribunal accepts his evidence in this regard.
Mr Cleaver acknowledged that his income for the 2016/17 financial year was considerably reduced, by comparison with his 2015/16 income. He said this was because since relocating to [City 2] in January 2017, he had not been able to undertake the same volume of work for his father’s business as he had when he was residing in [City 1] and working in his father’s business. He also said his father had not referred the same volume of work to him in [City 2] as he had previously managed when he was working in [City 1].
Mr Cleaver gave evidence that he lost his driver’s licence approximately three years ago, and will not be eligible to hold a driver’s licence until September 2018. He said this has impacted upon his ability to find part-time work since relocating to [City 2] in January 2017, with the corresponding effect on his income earning capacity.
He confirmed he has a [motor] vehicle at his disposal, but is unable to use the vehicle as he does not hold a current driver’s licence, and is dependent upon his neighbours to meet his necessary transportation requirements, including the collection of the children from school. He said that on occasions, his neighbours use his vehicle for his transportation purposes and he contributes to the cost of fuel when his neighbour’s vehicle is deployed for those purposes.
Mr Cleaver submitted he would accept an assessment of his adjusted taxable income for the 2016/17 and 2017/18 financial years at $63,000.
The evidence regarding Mr Cleaver’s income and financial resources as outlined above suggests that his taxable income from his employment in his father’s [Company 1] business for the 2016/17 financial year was $65,894, inclusive of the cash resources provided by his father of $1,500.
For the 2017/18 financial year, the evidence suggests a taxable income of $64,716, based on his [Company 1] salary of $49,216 plus his cash resources contributed by his father, grossed up to $15,500.
Taking all these factors into account, the Tribunal considers it appropriate to set Mr Cleaver at a rate of child support commensurate with a combined income and financial resources base of $65,305 ($64,716 + $65,894 / 2 = $65,305). for the financial years ended 30 June 2017 and 30 June 2018.

68. The current administrative assessment requires Mr Cleaver to pay an annual rate of child support from 1 January 2017 to 6 October 2017 of $nil, based on his 2015/16 adjusted taxable income of $28,908. The Tribunal has found that Mr Cleaver’s income and financial resources available for child support purposes for the financial year ended 30 June 2017 was $65,849, and for the financial year ended 30 June 2018, his income and financial resources available for child support purposes was $64,716. This makes the administrative assessment unfair and a ground for departure established.

Just and equitable

The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.
Mr Cleaver did not challenge Mrs Rumsey’s claim for contribution to the tuition fees for the children’s education at [School 1]. A previous unchallenged determination by the Tribunal on 8 July 2015 regarding Mr Cleaver’s liability for contribution to the children’s school tuition costs established it was the mutual intention of the parents that the children be educated privately. His concern related to the calculation of the fees and the application of a tuition scholarship awarded by the school to [Child 2].
Mrs Rumsey provided evidence of the children’s school fees and other compulsory charges at pages A12 to A32 of Exhibit A. As noted above, the Tribunal will only consider those ‘special’ costs in excess of the costs which are regarded as the normal costs of educating children in the public school system; extra-curricular costs such as uniforms, school books, ballet and dancing tuition fees, discretionary extra-curricular ski touring excursions, surcharges for late payment of fees, and sporting related costs do not constitute ‘special’ costs, and will not be taken into account.
Mrs Rumsey provided evidence of a tuition fees scholarship awarded to [Child 2] for the 2017 academic year of $1,754.40 ($438.60 per term X 4 = $1,754.40), and $1807.20 ($451.80 per term X 4 = $1,807.20) for the 2018 academic year (see Exhibit A, pages A75 and A76).
The relevant school fees and charges for the academic years January to December 2017 and 2018 therefore appear to be as follows:
Fees: [Child 1] (grade 11) - $11,696.00   [Child 2] (grade 10) - $11,696
General Purpose Levy     - $     395.00  - $395
Sibling Discount               - $      nil     - $ 1,169.60
Less Tuition Scholarship   - $      nil  - $ 1,754.40
Total:  - $12,091.00  - $ 9,114.40
The 2018 academic year’s fees and compulsory charges are set out at page A33 of Exhibit A. They comprise the following:
Fees: [Child 1] (grade 12) - $12,048.00   [Child 2] (grade 11) - $12,048.00
General Purpose Levy     - $     395.00  - $ 395.00
Sibling Discount              - $      nil  - $ 1,204.80
Less Tuition Scholarship - $      nil  - $ 1,807.20
Total:  - $12,443.00  - $ 9,431.00

75. The combined total of school fees and compulsory charges for the 2017 academic year is, therefore, $21,205.40, and for the 2018 academic year, $21,874.
76.The Tribunal needs to consider if, in the special circumstances of the case, the costs of maintaining the children are significantly affected because they are being educated in the manner that was expected by their parents.
77. The Tribunal considers the education costs referred to above do significantly affect the costs of maintaining the children because they are being educated in the manner expected by the parents. This makes the case special and a further ground for departure from the administrative assessment established.
78. Mrs Rumsey also provided evidence in support of her claim for contribution from Mr Cleaver toward the costs of [Child 2]’s orthodontic treatment.
79. She provided a report from [Child 2]’s treating orthodontist, [Dr B] dated 13 August 2018 (see page A75, Exhibit A), and invoices evidencing the cost of the treatment provided by [Dr B] amounting to $7,625, comprising fees relating to [Child 2]’s initial orthodontic visit of $155, pre-orthodontic dental treatment costing $260 and [Dr B]’s treatment fees of $7210, total $7625. Mrs Rumsey’s [dental] insurance rebate amounts to $1,500 leaving the net out-of-pocket cost to her for [Child 2]’s orthodontic treatment of $6,125.
80. [Dr B]’s report describes significantly serious symptoms, other than cosmetic, involving the moving of the lower left first and second permanent molars forward to allow the currently impacted lower left third molar (wisdom tooth) to erupt into a functional position, thus eliminating the need for a prosthetic replacement for the congenitally missing tooth. [Dr B] describes the objectives of [Child 2]’s orthodontic treatment as the opening of a deep bite to reduce the potential for future tooth wear, eliminate the crowding, align the teeth, avoid future restrictive treatment for the missing tooth, and monitoring the eruption path of the remaining permanent teeth.
81. The Tribunal is satisfied that the treatment referred to in the preceding paragraph was out of the ordinary and special, and, in the special circumstances of this case, the costs of maintaining [Child 2] are significantly affected because of her special orthodontic needs described in [Dr B]’s report.

Both parents provided Statements of Financial Circumstances.
Mrs Rumsey’s Statement dated 29 July 2017 at pages A1 to A9 discloses she is a [occupation] in the employ of [Organisation 1] on a gross salary of $1,900, per week, annualised to $98,800. In addition, she reports her share of income from a jointly owned rental property of $440 per week, a dividend return on her interest in the joint share portfolio with Mr Cleaver of a negligible $2 per week, and a weekly payment from [a bank account] of $384, all three amounts totalling $826, annualised to $42,952, resulting in total gross income of $141,752
Mrs Rumsey does not receive any Government benefits.
She lists assets comprising her half share with her current partner in the family home valued at $480,000, her half share in their jointly owned rental property valued at $380,000, and household contents valued at $20,000, total assets of $880,000. She lists superannuation of $10,000, and liabilities totalling $714,000 comprising her share of the mortgage debts on the two properties of $700,000, plus income tax and credit card debt of $14,000.
Her average weekly expenses amount to $2,221, comprising income tax instalments of $480, superannuation contributions of $116, life insurance and health cover premiums of $375 and credit card repayments of $1,250.
Average weekly household expenditure is reported at $2,652, including mortgage payments of $1,000. Her other expenses were unremarkable.
Mr Cleaver’s statement dated 22 September 2017 at pages B1 to B8 of Exhibit B records his occupation as a salesman broker employed by his father’s company, [Company 1], as trustee of the family business entity, [Business 1]. On an average gross weekly salary of $1,200, annualised to $62,000. He also reports the same negligible weekly dividend income of $12 from the share portfolio he holds jointly with Mrs Rumsey.
He lists assets to a total value of $255,800, comprising his equity in his residential property in [City 2] which he values at $490,000 with a mortgage debt of $290,000 to [a financial institution], bank savings of $800, household contents of $50,000, and a boat valued at $5,000. He does not list the [motor] vehicle he mentioned in his evidence, which he said was registered in the name of his father’s company, [Company 1].
He reports superannuation of $100,000.
Mr Cleaver’ lists liabilities totalling $328,000, comprising his mortgage debt referred to above, a [bank] loan of $19,000, and Visa card debts totalling $19,000. His average weekly personal expenditure items totalling $702 were unremarkable, as were his average household expenses totalling $1,178.

CONCLUSION

Having regard to the financial circumstances of the parents as detailed above, in particular the disparity in the incomes of the respective parents, and taking into account that Mr Cleaver will recover his driver’s licence in September 2018, which should improve his prospects of finding additional employment and increasing his income, the Tribunal considers it appropriate to apportion the contributions of the respective parents to the costs of the children’s private education, and [Child 2]’s special needs orthodontic treatment.
The Tribunal intends adopting a broad brush approach in this regard, and will assess Mr Cleaver’ contribution at 40%, and Mrs Rumsey’s contribution at 60% to reflect the disparity in their respective incomes, financial resources and property as outlined above.
The Tribunal has found that the income and financial resources available to Mr Cleaver for each of the 2017 and 2018 financial years was approximately $65,305, and accordingly, intends varying his adjusted taxable income for the period 1 January 2017 to 31 October 2018 to $65,305.
The Tribunal also intends increasing the annual rate of child support payable by Mr Cleaver for the period 1 January 2017 to 31 December 2017 by $8,482 ($21,205.40 x 40 / 100 = $8,482.16) in consideration of his 40% contribution to the children’s 2017 private school tuition fees and compulsory charges.
The Tribunal will also increase the annual rate of child support payable by Mr Cleaver for the period 1 January 2018 to 31 December 2018 by $11,200, in consideration of his 40% contribution the children’s 2018 private school tuition fees and compulsory charges –$8,749 ($21874 x40 /100 = $8,749 60), and the child, [Child 2]’s orthodontic treatment costs –$2,450 ($6,125 x 40 /100 = $2,450).
The Tribunal considers this determination to be just and equitable.

Otherwise proper

The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Varying the income for Mr Cleaver on which child support is calculated from that used in the administrative assessment, based on his income and financial resources which are not reflected in the administrative assessment, and increasing the annual rate of child support payable by him in consideration of his contribution to the children’s private school education costs and the [Child 2]’s orthodontic special needs will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

DECISION

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

(a) For the period 1 January 2017 to 31 October 2018, Mr Cleaver’ adjusted taxable income is varied to $65,305;

[2018] AATA 4159

28 September 2018

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