Sand and Haver (Child support)

[2022] AATA 316

Sand and Haver (Child support) [2022] AATA 316 (21 January 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022061

APPLICANT:  Mr Sand

OTHER PARTIES:  Child Support Registrar

Ms Haver

TRIBUNAL:Member R Anderson

DECISION DATE:  21 January 2022

DECISION:

The tribunal sets aside the decision and, in substitution decides that:

• The adjusted taxable income of Mr Sand is varied to $60,000 in respect of the period 8 January 2021 to 30 June 2021;

• The adjusted taxable income of Mr Sand is varied to $65,000 in respect of the period 1 July 2021 to 31 December 2023; and

• The annual rate of child support payable by Mr Sand is to reduce by $756 in respect of the period 1 February 2021 to 17 December 2021.

CATCHWORDS

CHILD SUPPORT – departure determination – cost of maintaining the children are significantly affected – income, property and financial resources of the liable parent – a ground for departure established – 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 omitted 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 Sand and Ms Haver are the separated parents of [Child 1].  According to the records of Services Australia – Child Support (the Agency), the child support assessment was registered on 10 January 2018.  The Agency has been responsible for the collection of child support from Mr Sand since that time. 

2. Several change of assessment (departure) applications have been lodged in respect of this case since registration. The most recent, which is the subject of this review, was lodged by Ms Haver on 12 January 2021.  At that time, the administrative assessment was based on the most recently lodged tax returns of the parents, as the previous departure decision made on 9 January 2020 whereby the annual rate of child support payable by Mr Sand was varied to the minimum annual rate, ceased on 31 December 2019.  Following a change in the registered care attributed to the parents in respect of [Child 1], the annual rate of child support payable by Mr Sand reduced to nil.  This was on the basis of him being attributed with 21% care of [Child 1] from 8 January 2021 and the 2019/20 adjusted taxable income (ATI) of Mr Sand and Ms Haver being $16,291 and $32,861 respectively.

3. Ms Haver’s departure application of 12 January 2021 was lodged on the basis that the administrative assessment produced an unfair outcome due to the income, property and financial resources available to Mr Sand and his earning capacity (Reason 8A and 8B).  Mr Sand has raised the issue of the administrative assessment being unfair because of the high costs incurred in enabling him to spend time with [Child 1] (Reason 1).

4. On 18 March 2021, a delegate of the Child Support Registrar decided not to depart from the administrative assessment because no ground was found to be established.

5. On 10 April 2021, Ms Haver lodged an objection to the decision of 18 March 2021. Subsequently, on 17 July 2021, an objections officer decided to allow the objection and made the following decision:

   ·     In the period 1 March 2021 to 31 December 2023 the ATI of Mr Sand is varied to $83,535.

6. The objections officer’s decision resulted in the annual rate of child support payable by Mr Sand increasing to almost $7,000.  Consequently, Mr Sand lodged an application to this tribunal on 20 May 2021, requesting an independent review of the Agency’s decision. The directions hearing was conducted by conference telephone with Mr Sand and Ms Haver on 23 November 2021. Following this hearing, directions were made to both parties requiring them to provide further information and documents.

7. In the meantime, the Agency accepted a change in the care attributed to the parents based on final orders made in the Federal Circuit Court and Family Court of Australia at Brisbane [in] December 2021(the final orders), such that Mr Sand was registered with 100% care of [Child 1] from 17 December 2021.  Consequently, Ms Haver became the parent liable to pay child support to Mr Sand at the minimum annual rate.

8. The hearing was held on 21 January 2022. Both parties participated by conference telephone and gave oral evidence on affirmation.  The tribunal considered information in the documents provided by the Agency in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 825, documents lodged by Mr Sand numbered A1 to A173 and documents lodged by Ms Haver numbered B1 to B96. Information received from Centrelink was numbered C1 to C8. All of the documents were provided to all parties prior to the hearing. 

ISSUES

1. When calculation of the rate of child support is based on the usual administrative formula it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. Section 98C of the Child Support (Assessment) Act 1989 (the Act) allows for a decision maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:

   ·         whether a ground exists to depart from the administrative assessment; and if so

   ·         whether any proposed departure is fair to Mr Sand, Ms Haver and [Child 1]; and if so

   ·         whether any proposed departure is fair to the public.

CONSIDERATION

1. Mr Sand told the tribunal that he considered the Agency decision under review was unfair because it did not take his business expenses into consideration, nor did it make any allowance for the significant travel costs he incurred to communicate with and have contact with [Child 1].

2. Ms Haver gave oral evidence that in her view the relevant costs of Mr Sand were factored into the objections officer’s decision of 17 July 2021, which was fair and reasonable.

Issue 1 – Does a ground exist to depart from the administrative assessment?

1. The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act. However, the tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are “out of the ordinary” and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC 90-433).

Reason 1 – The costs of spending time with or communicating with [Child 1]

1. Subparagraph 117(2)(b)(i) of the Act provides a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the high costs involved in enabling a parent to spend time with, or communicate with, the child. 

2. In addition, subsection 117(2C) of the Act also provides that if a parent has at least regular care of a child, then the only costs that can be taken into account for the purposes of subsection 117(2B) are costs related to travel to enable the parent to spend time with, or communicate with, the child. Regular care is defined in subsection 5(2) of the Act as having at least 14% care but not more than 35% care.  In this case, Mr Sand had 21% care of [Child 1], or regular care, from 8 January 2021 until 16 December 2021. Consequently, consideration of costs incurred to spend time with [Child 1] are limited to travel costs and cannot include costs to enjoy the time spent with [Child 1], such as accommodation and meal costs.

3. To determine whether the travel costs enabling contact with [Child 1] were “high”, subsection 117(2B) of the Act provides that a parent’s costs involved in enabling the parent to care for a child can only be high if the costs that have been or will be incurred during a child support period total more than 5% of the amount worked out by dividing the parent’s ATI by 365 and then multiplying the quotient by the number of days in the child support period.

4. For the purposes of subsection 117(2B) of the Act, the relevant ATI is that used in the administrative assessment.  If necessary, the relevant child support periods are divided into sub-periods.  In this case, the relevant child support periods are 1 September 2020 to 31 August 2021 (365 days) and 1 September 2021 to 30 November 2022 (456 days).

5. Mr Sand gave oral evidence that he moved to [Town 1] in late January/early February of 2021.  Since that time he has incurred travel costs on a fortnightly basis to spend time with [Child 1].  He further stated that when he didn’t fly, he drove between Brisbane and [Town 1], some [number] kilometres one way. Mr Sand maintains that with the exception of one occasion, he travelled using his partner’s car, a [Vehicle 1].  He further stated that it takes two tanks of petrol for a return trip at an average cost of $220. In response to a question from the tribunal, Mr Sand stated that he missed contact with [Child 1] on only one occasion to 31 August 2021, due to the COVID-19 lockdown.

6. While Ms Haver asserted that Mr Sand often collected [Child 1] in the business truck, the tribunal accepts the oral evidence of Mr Sand that the fuel costs would increase significantly if that were the case.  Ms Haver asserted that Mr Sand missed contact with [Child 1] on two occasions to 31 August 2021.  Both parties agreed that Mr Sand missed contact with [Child 1] in the period 1 September 2021 to December 2021 on only one occasion.

7. Based on the evidence provided, the tribunal finds that the flight costs incurred by Mr Sand from 1 February 2021 to 31 August 2021 on six occasions totalled $1,795.  On those occasions, it was necessary for Mr Sand to hire a car at an average cost of $160 or $960. The fuel costs incurred to drive to [Town 1] on a further eight occasions total $1,760 (8 x $220). Therefore, the tribunal calculates the overall costs to communicate and spend time with [Child 1] in the child support period 1 September 2020 to 31 August 2021 to be $4,515.

8. In respect of the child support period commencing 1 September 2021 until [Child 1] relocated to [Town 1] in mid-December 2021, the flight costs as evidenced before the tribunal on three occasions totalled $328 and additional car hire costs of $480.  The fuel costs incurred to drive to [Town 1] on a further seven occasions total $1,540 (7 x $220).  Therefore, the tribunal calculates the overall costs to communicate and spend time with [Child 1] in the child support period 1 September 2021 to 30 November 2022 to be $2,348.

9. The tribunal notes that since [Child 1’s] relocation to [Town 1] in December 2021, the expectation is that Mr Sand bring [Child 1] to Brisbane on a monthly basis and Ms Haver travel to [Town 1] on a monthly basis.  As the costs of either or both contact centres are to be shared equally between the parents, as per the final orders, each will be incurring similar costs.  Therefore, the tribunal is satisfied that no special circumstances will exist in relation to this ground from mid-December 2021.

10. The table below sets out the ATI’s of Mr Sand in respect of the relevant child support periods and the corresponding 5% thresholds as calculated by the tribunal.

Sub-period	ATI as per administrative assessment $	Calculation of ATI for child support period $	5%     threshold $
01/09/20 – 31/08/21 (365 days)	16,291	16,291	814
01/09/21– 30/11/22 (456 days)	25,914	25,914/365 x 456 = 32,375	1,619

1. It is clear that the costs incurred by Mr Sand exceed the 5% threshold in the child support periods ending 31 August 2021 and 30 November 2022 by $3,701 and $729 respectively.  Consequently, the costs can be considered as “high”.  Furthermore, given the low ATIs of both parents used in the assessment and the corresponding low costs of [Child 1], the tribunal is satisfied that the “high” costs significantly impact on the costs of maintaining [Child 1].  Therefore, in the special circumstances of the case, the ground for departure under subparagraph 117(2)(b)(i) of the Act is established.

Reasons 8A and 8B – the income, property, financial resources and earning capacity of each parent

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by either parent because of the available income, property and financial resources available to each of them. The Act goes on to state in subsection 117(7A) that the decision maker must have regard to “the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of the parent that do not produce, but are capable of producing, income” and disregard “the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child”. Mr Sand’s partner, [Ms A], clearly has no legal duty to provide for [Child 1].

2. It is a well-established principle in the Family Court that the taxable income of a person who is involved in their own business may not be an accurate reflection of their earning capacity, income, benefits and financial resources for child support purposes (DJM and JLM [1988] FamCA 97; Scott and Scott (1994) FLC 92-457; Carey and Carey (1994) FLC 92-489). As discussed at hearing, the Court has observed on numerous occasions that the tribunal is not required to undertake a “forensic audit” or major investigation of the financial circumstances of a party (Podmore & Pillai [2011] FMCAfam 952 and Frost and Frost [2011] FMCAfam 1311). Rather, the tribunal must be satisfied on the balance of probabilities as to the party’s income, property and financial resources available to the parties for child support purposes, such that a fair decision can be made in respect of the child support liability (Shearer & Benson (SSAT Appeal) [2011] FMCAfam 623).

3. The tribunal considered the circumstances of Mr Sand.  He gave oral evidence that he set up [Business 1] as trustee for [Family Trust 1] (the business) in 2007.  The business required significant travel to source [product 1] from suppliers overseas and to on sell the product to customers through a retail shop in Australia.  The retail shop closed in June 2019.  Since then, Mr Sand told the tribunal that he has been unable to travel.  However, he has managed to source a limited range of [product 1] from some suppliers that are well known to him and sell them to wholesale customers.  He has also commenced buying and selling a range of [product 2].  He subcontracts through the business to [Business 2] and receives a commission on the profit on sale of each [product].  Mr Sand further stated that [Ms A] earns additional income as [an occupation 1], which has been treated as income through the business since July 2021. 

4. In response to a question from the tribunal, Mr Sand stated that he works up to 60 hours per week, while [Ms A] works three days per week as [an occupation 1] and is responsible for the paperwork of the business.  Mr Sand estimated that [Ms A’s] income now represents approximately 40% of the business income while the [product 1] and [product 2] sales commissions represent approximately 30% each.

5. Mr Sand’s 2020/21 individual tax return was before the tribunal, recording a taxable income of $25,914.  This consisted of gross wages from the business in the amount of $11,180, jobseeker payment in the amount of $14,733 and a small amount of interest.  According to Centrelink records, Mr Sand ceased receiving jobseeker payment and the coronavirus supplement on 11 February 2021. 

6. “Financial resource” was considered in the case of Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39 where the court referred to something which is not property but from which financial benefit is or may be gained. It was also noted that “in light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children”.

7. Upon examination of the 2020/21 financial statements of the business, it was evident that Mr Sand was the sole wage earner.  The general ledger account of Mr Sand’s drawings account records drawings in the 2020/21 year in the amount of $49,148.  After year-end adjustments, his wages and credit card pay out, the net drawings from the business totalled $12,592 and are clearly a financial resource. 

8. It is also noteworthy that the net profit of the business in 2020/21 was $72,008.  However, the tribunal is cognisant of the continued lease commitments in respect of the [Vehicle 2] and [Vehicle 3] (which according to the lease agreements from [named finance businesses], total $3,477 per month) whereby only the interest component of the monthly repayments in the amount of $8,154 is reflected in the profit and loss statement and the depreciated written-down values were written off in full in 2019/20.

9. The profit was clearly also used to meet the net drawings paid out to Mr Sand in the amount of $12,592 and additional payments to [Ms A] in the amount of $20,009.  The tribunal is cognisant of Mr Sand’s oral evidence that [Ms A] did not commence contributing a source of income to the business until 2020/21. Loans between the business and family are unsecured and there is no evidence of any legal agreements.  While the tribunal understands Mr Sand’s position of prioritising repayment of those loans, for child support purposes, the availability of profits from the business must still be attributed to Mr Sand accordingly.

10. Mr Sand gave oral evidence that [Ms A’s] [Vehicle 1] is held in the name of the business.  It is unclear from the profit and loss statement what proportion of motor vehicle running expenses are attributable to the [Vehicle 1].  As no employee contribution is evident, clearly a benefit is received, albeit it is difficult to quantify with precision. At the very least, based on his own evidence, Mr Sand has received the benefit of using the [Vehicle 1] to spend time with [Child 1].

11. On balance, the tribunal estimates the income and financial resources available to Mr Sand from the business in 2020/21 to be $58,515, consisting of wages, jobseeker payment, interest and the movement in the drawings and loan accounts of Mr Sand and [Ms A] ($11,180+$14,733+$1+$12,592+$20,009).  In addition, a benefit through private use of the [Vehicle 1] also exists approximating $2,000.

12. Mr Sand confirmed the written declaration from [Accountant A] of [Firm 1], dated 17 June 2021, that his weekly gross income is $572 ($29,744 per annum) and $520 after tax. 

13. Upon examination of the financial statements of the business from 1 July 2021 to 30 November 2021, it was evident that Mr Sand was again the sole wage earner.  The general ledger account of Mr Sand’s drawings account records drawings in the period 1 July 2021 to 30 November 2021 in the amount of $13,107, compared to the balance sheet movement of Mr Sand’s drawings of $12,060.  Notably, according to the balance sheet at 30 November 2021, [Ms A] has withdrawn her outstanding loan amount of $15,581 in full and in addition has loaned additional funds from the business in the amount of $23,329.  Mr Sand told the tribunal that part of this should have been allocated against her mother’s loan account.

14. As noted above, the availability of profits from the business must still be proportionately attributed to Mr Sand. The recorded profit for the five-month period 1 July 2021 to 30 November 2021 is $78,612.  However, Mr Sand gave oral evidence that a further $20,000 or more was expended on stock purchases in December. 

1. On balance, the tribunal estimates the income and financial resources available to Mr Sand from the business in the period 1 July 2021 to 30 November 2021 to be $60,025, consisting of wages and the movement in the drawings and loan accounts of Mr Sand and [Ms A] ($8,008+$13,107+$38,910).  In addition, a benefit through private use of the [Vehicle 1] remains, albeit less than in 2020/21 now that [Ms A] is generating income through the business. Based on the oral evidence of Mr Sand in relation to travel costs, the benefit exceeds $1,500.

2. The tribunal acknowledges that it is not necessarily appropriate to assume the same level of drawings will occur throughout the remainder of the 2021/22 year.  However, based on the annualised sales and commission figures in respect of Mr Sand, it is clear that the business is generating increased levels of income through [product 1] sales and commissions from [product 2] sales.  Mr Sand indicated that the income through [product 2] sales commissions had become the main source of income in the business, corresponding to the financial information provided.

3. Excluding the income generated by [Ms A], the sales to 30 November 2021 of $103,882 ($56,119+$47,763) annualises to $249,316.  The tribunal accepts that the expenses may be impacted by timing issues.  Therefore, assuming a similar level of expenses to 2020/21, when the income was limited to [product 1] sales and commission on [product 2] sales generated by Mr Sand and the net profit represented 38.3% of sales, the tribunal calculates the estimated annualised net profit of the business to 30 November 2021, as generated by Mr Sand to be $95,488. 

4. Mr Sand gave oral evidence that the [Vehicle 3] was sold and the corresponding finance paid out in full in September 2021.  He confirmed that there were no excess funds remaining. The tribunal calculates the finance commitments in respect of the [Vehicle 3] (to September 2021) and the [Vehicle 2] for 2021/22 not reflected in the profit and loss statement to approximate $30,000. The contract is due to end by December 2022.  However, Mr Sand stated that the required balloon payment in excess of $27,000 will likely be refinanced. For the reasons discussed above, the tribunal is satisfied that the net profit should be reduced by this commitment, which is not reported in the profit and loss statement.  The tribunal is satisfied that in the period to 17 December 2021, when Mr Sand assumed sole care of [Child 1], the income, benefits and financial resources available to him approached $65,000.

5. There is no evidence to suggest that Mr Sand has reduced his working hours or changed his occupation or working pattern.  Accordingly, as the first of the three criteria under subsection 117(7B) of the Act cannot be met, it is not open to the tribunal to determine an earning capacity in respect of Mr Sand.

6. Mr Sand is one of four members of [Superannuation Fund 1].  It holds land, which Mr Sand explained is currently on the market.  Funds from a sale will be confined to [Superannuation Fund 1] and not accessible to Mr Sand.  It is evident from the financial statements of [Superannuation Fund 1] in respect of the 2018/19 year, that Mr Sand contributed over $18,000 of personal contributions.  Mr Sand gave oral evidence that he has made no further personal contributions. According to the business financial statements, no excess employer contributions have been made on behalf of Mr Sand.  While more recent financial statements have not been completed, the balance at 30 June 2019 in respect of Mr Sand is recorded as $60,828.

7. It is unclear whether Mr Sand is currently in receipt of family tax benefit (FTB). In any event, pursuant to subparagraph 117(7)(b)(ii) of the Act, for child support purposes FTB would not be considered to be a part of Mr Sand’s ATI. FTB is an income-tested benefit. FTB is not defined as a tax-free benefit under section 5 of the Act to be included in ATI (paragraph 43(1)(e) of the Act). Therefore, as FTB is not required to be included in ATI, it is to be disregarded, as clarified at 2.6.17 of the Child Support Guide.

8. The tribunal considered the financial circumstances of Ms Haver.  According to her 2020/21 tax return, Ms Haver’s income totalled $27,930, which consisted largely of parenting payment (single) (PPS) and the coronavirus supplement in the amount of $27,459.

9. Ms Haver gave oral evidence that she commenced a [service] business through a sole trader entity in late June 2021.  Her profit and loss statement in respect of the period 25 June 2021 to 12 December 2021, as prepared for Centrelink purposes, recorded gross sales of $8,474.  While Ms Haver’s entitlement to PPS has ceased since 17 December 2021, she told the tribunal that she is awaiting finalisation of her application for jobseeker payment.  Her jobseeker payment entitlements will vary in accordance with the net income from her sole trader business.  As the jobseeker payment entitlements are significantly less than PPS, the tribunal considers it unlikely that the income and financial resources available to Ms Haver will exceed the self-support amount used in the administrative formula in 2022 of $27,063. Furthermore, the government assistance in the form of the coronavirus supplement has since ceased.

10. According to Centrelink information, Ms Haver was in receipt of FTB parts A and B, in addition to rent assistance prior to [Child 1] relocating to [Town 1] in the amount of $448.56 per fortnight.  For the reasons discussed above, FTB is not considered to be a part of Ms Haver’s ATI. These payments have also ceased since December 2021 when Ms Haver’s care of [Child 1] reduced to below 35%.

11. The tribunal considered the assets and liabilities of Mr Sand and Ms Haver.  Neither party has access to a significant asset base.  Given the outstanding personal liabilities of each parent in respect of credit cards and other loan facilities, it is clear that both parties have a negative asset base.

12. Mr Sand resides with [Ms A] in rented accommodation and since 17 December 2021 has sole care of [Child 1].   Based on the average weekly expenses page of the Statement of Financial Circumstances, Mr Sand estimates the weekly household expenses to be $970, of which 50% are related to him.  There is no evidence that Mr Sand is not able to meet his necessary costs of self-support.

13. Ms Haver resides in rental accommodation and based on the average weekly expenses page of the Statement of Financial Circumstances completed prior to [Child 1] relocating, estimated her weekly household expenses to be $884. It is evident from the Centrelink information that Ms Haver regularly accessed advance payments.  She told the tribunal that she also used facilities such as [payment services] to assist her in meeting the everyday costs of the household.  Clearly, Ms Haver has struggled to meet the weekly household costs and will likely continue to struggle due to her reduced income from Centrelink.

14. Based on the findings above, it is clear that there is a significant discrepancy between the income and financial resources available to Mr Sand and the ATIs used to calculate the child support liability payable by Mr Sand or Ms Haver.  In respect of the period commencing 8 January 2021, when Mr Sand’s care of [Child 1] increased from 0% to 21% and based on the income recorded on the parents’ 2019/20 tax returns of $16,291 and $32,861 respectively, the administrative assessment calculates the child support liability payable by Mr Sand to be nil.  In comparison, based on the tribunal’s findings in respect of the income and financial resources available to the parents in 2020/21, the child support liability payable by Mr Sand exceeds $4,000 per annum and approaches $5,000 per annum from 1 July 2021.

15. Going forward, as Mr Sand is providing 100% care of [Child 1], it is Ms Haver who becomes the parent liable to pay child support to Mr Sand, which will likely be at the minimum annual rate of $459.  Mr Sand told the tribunal that he does not want any child support from Ms Haver.  It is open to the parties to discuss the issue with the Agency and elect to make their own arrangements for private collection of child support.

16. The tribunal is satisfied that the administrative assessment has not produced a fair outcome. Accordingly, the tribunal finds that special circumstances do exist in this case.  As such, the tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.

Issue 2 – Is it fair or “just and equitable” in relation to Mr Sand, Ms Haver and [Child 1] to make a particular departure determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

1. Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Sand and Ms Haver have the primary duty to financially support [Child 1] and that contributing to her costs should take priority over all other costs other than their “necessary” costs of self-support.

2. In determining the proper needs of the child, subsection 117(6) of the Act also requires the tribunal to have regard to the manner in which the parents expected the child to be cared for, educated and trained as well as a consideration of any special needs of the child.

3. It was undisputed that [Child 1] is in good health and has no special needs.  However, Mr Sand told the tribunal that while she is in good health, he is currently incurring additional costs in respect of [Child 1’s] supervised contact at a contact centre with Ms Haver. The tribunal notes that the final orders require the costs to be shared equally between the parents. Furthermore, there is no cost incurred in respect of sessions with the [specified] therapist.  There is no evidence before the tribunal to suggest that the allowance used in the administrative assessment in respect of [Child 1’s] costs is not appropriate. 

The earning capacity, income, property and financial resources and commitments of each parent

1. The tribunal found earlier that Mr Sand likely had access to income, benefits and financial resources of approximately $60,000 in 2020/21, increasing to around $65,000 from 1 July 2021. Sales continue to increase and indicate improved financial circumstances going forward.

2. In respect of Ms Haver, the tribunal found earlier that her most recently lodged tax returns are an accurate reflection of her income and financial resources, which in 2021/22 is unlikely to exceed the self-support amount.

3. Furthermore, both parties have a negative asset base and commitments to meet outstanding liabilities.

Conclusion

1. After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Sand, Ms Haver and the needs of [Child 1], the tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Act. The tribunal may make one of the determinations set out in section 98S of the Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the ATI of a parent, or the costs of self-support.

2. The tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). In this case, the tribunal is limited to considering any backdating to July 2020. 

3. Ms Haver requested the tribunal consider backdating a departure decision for the maximum allowable period.  As discussed at hearing, the tribunal must be cognisant of whether either party has rested on their rights in not pursuing an objection or appeal process and also whether backdating would cause prejudice to either party in the form of overpayment or additional arrears. There is also the generally accepted principle that the parties should be able to rely on the child support assessment in making financial decisions until such time as they are put on notice of a possibility of a change.

4. The previous departure decision ended on 31 December 2019.  Neither party sought to lodge a change of assessment application until January 2021.  In such circumstances, the tribunal decided that it was not appropriate to commence a departure decision until 8 January 2021, aligning with the day upon which Mr Sand is attributed with 21% care of [Child 1].

5. In relation to an end period, the tribunal is cognisant of the preference of the parties for a degree of certainty going forward. The tribunal is also aware that the business operations of both parties are somewhat unpredictable as the economy comes out of the COVID-19 pandemic.  However, given that Mr Sand has sole care of [Child 1] and Ms Haver’s ATI is likely hovering around the self-support amount, any increase in Mr Sand’s income and financial resources would not impact on the child support assessment.  Accordingly, the tribunal proposes to end the departure decision on 31 December 2023.  At this time the 2021/22 and 2022/23 financial circumstances of the parties should be available for scrutiny.

6. Given the many changes in relation to the care of [Child 1] in recent times, the tribunal does not propose to make a decision going forward that does not enable future changes in care to be accounted for through the administrative formula.   

7. The tribunal proposes to vary the adjusted taxable income of Mr Sand to $60,000 in respect of the period 8 January 2021 to 30 June 2021 and to $65,000 in respect of the period 1 July 2021 to 31 December 2023. 

8. As discussed in paragraph 23 above, the tribunal was satisfied that the ground for departure under subparagraph 117(2)(b)(i) of the Act was established in respect of the “high” costs incurred by Mr Sand to communicate and spend time with [Child 1] during the child support periods 1 September 2020 to 31 August 2021 and 1 September 2021 to 30 November 2022.  As also noted, subsection 117(2B) of the Act requires consideration of the ATI used in the administrative assessment. 

9. Based on the findings of the tribunal in respect of the actual income and financial resources of Mr Sand in the child support periods 1 September 2020 to 31 August 2021 and 1 September 2021 to 30 November 2022 in the amounts of $60,000 and $81,205 ($65,000/365x456) respectively, it is clear that the overall costs to communicate and spend time with [Child 1] in the child support period 1 September 2020 to 31 August 2021 of $4,515 continue to exceed the revised 5% threshold by $1,515 and therefore are considered to be “high”.  However, in respect of the overall costs to communicate and spend time with [Child 1] in the child support period 1 September 2021 to 30 November 2022 of $2,348, they fall short of the revised 5% threshold of $4,060 and it is therefore not appropriate to consider them to be “high”.

10. Accordingly, when considering the actual income and financial resources available to Mr Sand, the tribunal finds that it is just and equitable to depart from the administrative assessment in respect of costs incurred by him to communicate with [Child 1] in the period 1 February 2021 to 31 August 2021 that exceed the 5% threshold.  That is $1,515.  Based on the ATI for Mr Sand of $60,000 to $65,000 and for Ms Haver in the vicinity of $28,000, Mr Sand has been responsible for meeting approximately 71% of [Child 1’s] costs.  It is appropriate to apply the same proportion to the “high” portion of the costs to communicate with [Child 1].  Therefore, the tribunal proposes to reduce the child support liability payable by Mr Sand to Ms Haver in the period 1 February 2021 to 31 August 2021 by $439 (29% of $1,515), which equates to $756 per annum ($439/212 days x 365).

11. Subsection 117(4) of the Act requires the tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.

12. Mr Sand maintains that the high costs of contact he incurred diminished his financial position and therefore any further increase in child support would cause him hardship. He had no comment in respect of Ms Haver being assessed to pay child support at the minimum annual rate, other than he was not seeking any child support from her.

13. Ms Haver disputed that Mr Sand is in financial hardship, asserting that he has money and also the capacity to pay an appropriate level of child support.   In her view, given her current financial position, being assessed to pay child support to Mr Sand for [Child 1] at even the minimum annual rate would cause her hardship.

14. According to Agency records, Mr Sand’s child support arrears at 31 December 2021 were $6,981.  The tribunal’s decision will reduce the arrears.  Furthermore, Mr Sand is no longer the parent liable to pay child support in respect of [Child 1].  Based on Mr Sand’s average weekly expenses of $485 and his weekly available income and financial resources in the vicinity of $1,250, the tribunal is satisfied that he has the capacity to meet the reduced arrears and also meet the “necessary” costs of him and [Child 1].

Issue 3 – Is it otherwise proper to make a particular departure determination?

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination.

2. As noted above, at the time of writing it was unclear whether Mr Sand would be in receipt of FTB.  However, Ms Haver received FTB part A and part B until mid-December 2021.  As a sole parent, a change in the child support payable by Mr Sand will have no impact on her entitlement to FTB part B.  In respect of FTB part A, given her taxable income is well below the threshold, the increase in child support support payable by Mr Sand to December 2021 is unlikely to impact on Ms Haver’s entitlement to FTB part A.  If so, the impact is likely a very minimal cost to the community.  In the circumstances, the tribunal considers that it is otherwise proper to make the particular proposed determination. 

3. It is open to either party to lodge a further change of assessment application should the future circumstances of either party change significantly from the circumstances upon which this decision is based. In particular, in respect of the business operations of both parties going forward.

DECISION

The tribunal sets aside the decision and, in substitution decides that:

• The adjusted taxable income of Mr Sand is varied to $60,000 in respect of the period 8 January 2021 to 30 June 2021;

• The adjusted taxable income of Mr Sand is varied to $65,000 in respect of the period 1 July 2021 to 31 December 2023; and

• The annual rate of child support payable by Mr Sand is to reduce by $756 in respect of the period 1 February 2021 to 17 December 2021.