Rutter and Briggs (Child support)

[2018] AATA 3281

Rutter and Briggs (Child support) [2018] AATA 3281 (28 June 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/BC012734

APPLICANT:  Mr Rutter

OTHER PARTIES:  Child Support Registrar

Ms Briggs

TRIBUNAL:Member M Martellotta

DECISION DATE:  28 June 2018

DECISION:

The decision under review is affirmed

CATCHWORDS

Child support - Departure determination - Administrative assessment based on a previous departure determination - Income of the liable parent - Ground for departure does not exist - Refusal to make a determination - Decision under review affirmed

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. Mr Rutter and Ms Briggs are the parents of [Child 1] (aged 14 years). [Child 1] is in Ms Briggs's 100% care.  Mr Rutter is the parent liable to pay child support. This review is about whether there should be a departure from the administrative assessment of child support.

2. On 16 June 2017 Mr Rutter lodged a change of assessment (COA) application with the Department of Human Services – Child Support (the Department).  His application was on the ground of reason 8A and specifically referred to his income, property and financial resources.

3. The child support assessment that was in place at the time of Mr Rutter's application was that for the period 26 November 2016 to 30 September 2017 Mr Rutter was assessed to pay an annual rate of child support of $13,068 based upon an adjusted taxable income (ATI) of $90,000 for Mr Rutter and an 2015/16 ATI of $60,565 for Ms Briggs. Mr Rutter’s ATI had been set by a previous COA decision made on 3 June 2016 (Neither Mr Rutter nor Ms Briggs objected to that decision).

4. On 31 July 2017 a senior case officer refused Mr Rutter's application and he objected to this decision. On 27 September 2017 a Department objection officer disallowed the objection. Mr Rutter lodged an application seeking independent review of the decision by the tribunal.

5. On 28 June 2018 the tribunal conducted a hearing.  Mr Rutter and Ms Briggs both gave affirmed evidence attending by way of conference telephone.  The tribunal had before it the following documents which had also been provided to the parties:[1]

   ·     statement and Documents provided by the Department (1-160)

   ·     documents provided by Mr Rutter (A1-A69)

   ·     documents provided by Ms Briggs (B1-B16).

ISSUES

[1] At hearing Mr Rutter advised that he did not have a copy of the documents but was familiar with their contents.

1. The issues for the tribunal to determine in this case are:

   (1) Whether a ground for departure exists; and

   (2) Whether it would be:

   a)just and equitable as regards the children, the liable parent, and the carer entitled to child support; and

   b)otherwise proper;

   to make a particular determination to depart from the administrative assessment of child support.

CONSIDERATION

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

Issue 1 – is there a ground to depart from the administrative assessment?

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income, which is worked out using section 43 of the Act.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a change of assessment). The liable parent or a carer may apply to the Child Support Registrar (the Registrar) for a determination to depart from the child support administrative assessment under Part 6A of the Act (section 98B).  Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and as noted, establishes a three step process.

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act.  Only one ground is required in the special circumstances of the case to depart from the administrative assessment and thereby satisfy the requirements of subsection 117(2) of the Act.[2]  In this matter the only ground that was identified was whether a ground for departure is established pursuant to reason 8A.

   [2] The phrase “special circumstances of the case” is not defined in the Act. However the Family Court has held that “it is intended to emphasise that the facts of the case must establish something special or out of the ordinary” (Gyselman and Gyselman (1992) FLC92-279). Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”. 

Reason 8A – income, property and financial resources of the parties

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Act relating to the 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 because of the income, property and financial resources of either parent.

2. Mr Rutter told the tribunal that the assessment was not fair as his actual income was not $90,000 as now verified by his 2016/17 tax return. He said that on the basis of that return his actual taxable income was $57,622.  He noted that this new income amount has now been applied to the assessment as of 1 October 2017 but he wants the 2016/17 taxable amount applied to the assessment as of the date of his COA application (namely 16 June 2017).

3. Mr Rutter told the tribunal that in about June 2016 he started work with a new [company] ([Company 1]) he described himself as being a partner in that business with two other individuals. Mr Rutter stated that he was a director and held shares and was also employed by the company.  However, problems arose with the other partners and he did not receive agreed wages. He decided to leave the company after a dispute with one of the other partners.  He since commenced work with a new company as of August 2017 as [an occupation] and is earning about $120,000 per annum – according to Mr Rutter’s Statement of Financial Circumstances he is currently earning about $2,975 gross per week.

4. Mr Rutter provided a copy of his 2015/16 and 2016/17 income tax returns. According to his 2015/16 return Mr Rutter earned a total income of $156,745 and after work related deductions of $8,917 received a net income of $147,828. Mr Rutter’s 2016/17 return (which covers the period he worked with [Company 1]) does not disclose that Mr Rutter was a director or shareholder of that entity.  According to that return Mr Rutter earned gross wages of $64,106 from [Company 1]. His return claimed work related expenses of $6,484 resulting in an income of $57,622.

5. Ms Briggs told the tribunal that Mr Rutter constantly changed employment and was regularly lodging COA’s which caused ongoing issues in terms of ensuring a regular amount of child support.  The tribunal noted her written submission that Mr Rutter’s taxable income in 2016/17 was not reflective of his actual earnings as Mr Rutter took on other paid work in addition to the work he did with [Company 1].  As the tribunal understands Mr Rutter submissions, he asserts that the only income he earned that financial year was what he received as wages from his work with [Company 1].

6. Mr Rutter provided a copy of his bank statement for the period August 2016 to August 2017 which shows that he regularly received deposits identified as [Company 1] wages of $1,345.92 (annualised this comes to about $69,100 – which given that Mr Rutter stated he did not quite work with [Company 1] for the full 12 months equates to the gross wages reported in his 2016/17 tax return).  Mr Rutter also regularly received other smaller deposits not identified as wages into this account – these amounts averaged to about $2,000 per month (or $24,000 per year). Although Mr Rutter submits that his income is as reflected in his tax return (namely wages received from [Company 1]) the evidence suggests that he was also receiving some additional income over that period not identified as [Company 1] wages.  Including those income amounts to Mr Rutter’s 2016/17 ATI of $57,633 results in an annual figure of about $81,600.

7. The tribunal concluded that in the 2016/17 financial year Mr Rutter earned $81,700.  As noted as at the beginning of the new financial year (2017/18) Mr Rutter has now commenced employment with a new company, according to Mr Rutter’s Statement of Financial Circumstances he is currently earning $2,975 per week gross (annualised $154,700).

8. Ms Briggs works in [a certain industry]. In 2015/16 she had a taxable income of $60,565 and in 2016/17 she had a taxable income of $65,822. There is no evidence that she has any other sources of income.

9. A parent's child support liability is usually based upon the parent's most recent ATO assessed income for the relevant year of income.  The Department can also look beyond a parent's taxable income when considering an application for a change of assessment. Income, earning capacity, property and financial resources, which do not necessarily form part of a parent's taxable income, can be added to or excluded from a child support assessment.[3]

20.The question for the tribunal is whether the facts of the case establish something, which is special, or out of the ordinary which makes the administrative assessment unfair. Child Support policy notes that:

If the Registrar finds that there is a discrepancy between the child support assessment and the income, property and financial resources of the parent, the extent of the discrepancy will also be considered before deciding whether or not the assessment produces an unfair result. In this sense, “unjust and inequitable level of child support”, is narrower than the “just and equitable” elements under section 98C of the Act.[4]

21.In this matter the tribunal has noted that the amounts utilised in the assessment at the time of Mr Rutter’s application for change of assessment were those for the period 16 November 2016 to 30 September 2017 Mr Rutter was assessed to pay an annual rate of child support of $13,068 based upon a previous COA determined income of $90,000 for Mr Rutter and an 2015/16 ATI of $60,565 for Ms Briggs. In this matter the tribunal has found Mr Rutter’s actual income in 2016/17 to be in the vicinity of $81,600. Utilising the ATI as found by the tribunal would not result in any significant change in the administrative assessment that was in place at the time of Mr Rutter’s application for change of assessment (it results in a difference of about $28 per week) and for this reason the tribunal concludes that the facts of the case do not establish something special or out of the ordinary that makes the assessment unfair. For this reason the tribunal is satisfied that a ground for departure pursuant to reason 8A is not established.

22.In reaching this conclusion the tribunal notes that Ms Briggs has advised that she had since lodged a further COA application based upon Mr Rutter’s current level of earnings which she says is not reflective of the administrative assessment that has been put in place since 1 October 2017.  The tribunal notes that the current assessment is based upon an ATI $57,622 based upon Mr Rutter’s 2016/17 tax return.  The tribunal has noted that Mr Rutter’s income for the 2017/18 financial year is likely to be in the vicinity of $154,700 (based upon gross weekly earnings of $2,975 per week gross).  Given that a further change of assessment is on foot and that Mr Rutter’s actual earnings for the 2017/18 financial year should be made clear with the lodgement of his tax return for that financial year the tribunal does not propose to consider making  a departure determination for the period commencing 1 October 2017.

[3] Carey and Carey (1994) FLC 92-489

[4] 2.6.14 Child Support Guide V4.05 12/12/14

DECISION

The decision under review is affirmed