Saunderson and Saunderson (Child support)

[2020] AATA 5573

Saunderson and Saunderson (Child support) [2020] AATA 5573 (3 November 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/PC019126

APPLICANT:  Mr Saunderson

OTHER PARTIES:  Child Support Registrar

Ms Saunderson

TRIBUNAL:Member M Martellotta

DECISION DATE:  3 November 2020

DECISION:

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

For the period 1 October 2019 until a terminating event for the youngest child, Mr Saunderson’s adjusted taxable income is varied to $100,000 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – benefits derived from business – 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 Saunderson and Ms Saunderson are the parents of two children.[1] The children are recorded as being in the above primary care of Ms Saunderson. Mr Saunderson is the parent liable to pay child support.

   [1] Born 21 August 2007 and 6 December 2008. Mr Saunderson also has two other relevant dependants in his full-time care aged 2.5 years and 5 months.

2. On 11 October 2019 Ms Saunderson lodged a change of assessment application with Services Australia[2] (the Agency). Her application was on the grounds of reasons 8A and 8B.

   [2] At the time of the original decision known as Department of Human Services

3. At the time of Ms Saunderson’s change of assessment application according to the Agency the assessment in place was that for the period 29 June 2019 to 31 March 2020 Mr Saunderson was assessed to pay an annual rate of $435. This was based upon a derived income of $12,877 for Mr Saunderson and a 2017/18 adjusted taxable income (ATI) of $99,790 for Ms Saunderson.

4. On 6 December 2019 an Agency decision maker decided that reason 8A was established and the administrative assessment was varied so that for the period 6 November 2019 until the youngest child ceased to be an eligible child the annual rate of child support was varied to $20,000.

5. Mr Saunderson objected and on 29 April 2020 a new decision was made which was to vary the administrative assessment so that from 1 October 2019 until a terminating event for the youngest child Mr Saunderson’s ATI was varied to $122,962. On 1 October 2020 and annually thereafter his ATI was to be increased in line with the June quarter CPI for the City of Perth. Further that should Mr Saunderson’s employment cease or his earnings reduce by at least 15% then the decision would cease to have effect.

6. Mr Saunderson lodged an application with the tribunal seeking independent review of the Agency’s decision. The tribunal convened a telephone directions hearing following which it issued directions.

7. The tribunal convened a hearing on 7 October 2020. Mr Saunderson and Ms Saunderson participated by conference telephone and both gave evidence on affirmation. Also in attendance was Mr Saunderson’s legal representative [Mr A] of [Law firm] and an interpreter in [a] language. The tribunal deferred making a decision to allow for Ms Saunderson to review some Agency documents which she said she had not received, to provide some financial documents and to give the parties the opportunity to make further written submissions on those materials.

8. Documents provided to the tribunal and parties relevant to this application included:

   ·      Statement and documents provided by the Agency (349 pages)

   ·      Documents provided by Mr Saunderson (A1–A176)

   ·      Documents provided by Ms Saunderson (B1–B101)

ISSUES

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

2. Child support legislation is interpreted by the Agency with the aid of the Child Support Guide (the Guide). The tribunal is not bound by law to apply the policy as set out in the Guide but, provided the policy is consistent with the legislation, it is required to have regard to it and in the ordinary course follow it.[3]

   [3] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.

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

   ·      Does a ground for departure exist; if so

   ·      Would it be just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination to depart from the administrative assessment of child support; and

   ·      Is it otherwise proper to make a particular departure determination?

CONSIDERATION

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 ATI, which is worked out using section 43 of the Act. The general approach is that the Registrar will utilise a parent’s ATI as assessed by the Australian Taxation Office (ATO) for the last relevant year of income, so for example for a child support period commencing 16 February 2019 (as in this case) the relevant assessed ATI (if available) to be used in the assessment is that for the 2017/18 financial year.

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.[4] In this matter the only ground contested at hearing was whether a ground for departure is established pursuant to reason 8A.

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

[4] 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 Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

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. At the outset the tribunal notes that there is a significant level of disagreement between the parties which has been expressed across a range of issues including disputes and legal proceedings in [Country]. Several submissions were made in relation to matters and disputes that do not have any direct bearing upon the matters to be determined by the tribunal. At its core the issue to be determined is the relevant income, property and financial resources available to the parties for the purposes of the child support assessment.

Mr Saunderson

1. In relation to Mr Saunderson a relevant question is the extent of his involvement in a private company [Company name] (the company) and the business operated by that company [Business name] (the business).

2. Mr Saunderson has according to the Agency documents previously asserted that his income was derived from social security payments he received due to being unemployed. He otherwise has earned income as an employee of the company, but this is limited in hours and income of about $20,000 per annum. He says that he has no financial or other interest in the company that owns and operates the business which is owned by his wife [Ms B]. Mr Saunderson further asserts that he owns no real property or holds any other significant assets which are also owned by his wife.

3. [Mr A] submitted on behalf of his client that his client does not have the financial resources as found by the Agency and is not in a financial position to pay child support at the rate determined on the change of assessment application. It is submitted that the most he can afford is $400 per month considering his limited financial circumstances and his care of two young children born to him and [Ms B]. Other submissions made include the following:

   a)Mr Saunderson is employed as [an Occupation 1] and earns nominal income – his most recent ATO-lodged tax return declared an ATI of $20,657.

   b)He resides in a property that was purchased by his wife [Ms B]. That property is registered in her sole name. She purchased the property with her own savings and from selling [a commodity]. When she arrived in Australia in 2018 she had about $70,000 in savings. Mr Saunderson has no rights or interest in the property and makes no financial contribution to that property.

   c)Mr Saunderson’s wife also purchased the company and business from Mr Saunderson’s brother [Mr C]. This was purchased by her with assistance from her father for $100,000. A copy of a translated agreement of sale was provided by Mr Saunderson.

   d)Mr Saunderson also transferred his interest in his car to his wife in order to appease her as he was not making any financial contributions to the household.

4. The following evidence is not in dispute and the tribunal finds that:

   a)The company was registered on 5 February 2014.

   b)Mr Saunderson was registered as a director of the company from 5 February 2014 to 18 February 2014 and again from 8 February 2019 to 26 March 2019, for this period he was also appointed company secretary.

   c)Mr Saunderson’s brother [Mr C] was also appointed as a director from 5 February 2014 until 26 March 2019.

   d)On 26 March 2019 Mr Saunderson’s wife [Ms B] was appointed sole director and company secretary of the company.

   e)Mr Saunderson was also previously a shareholder in the company however his wife [Ms B] is now sole shareholder.

   f)Mr Saunderson’s wife [Ms B] arrived in Australia in May 2018.

   g)In November 2018 [Ms B] is registered as the proprietor of the residence where she lives with Mr Saunderson and their two children.

5. Mr Saunderson stated in his evidence that:

   a)His involvement in the company was at the behest of his brother and he became a director and shareholder to help his brother out.

   b)When the company and business was established, he did not have much to do with either entity, in fact he did not even know that his brother had involved him. The business opened in October 2014.

   c)His brother left Australia in 2015 and he employed managers to run the business.

   d)In 2016 he was a manager for about six months from about July to December that year, but then due to injuries he sustained he stopped working there and was unable to work for about two years (February 2017).

   e)His subsequent reappointment to the company as a director was a mistake made by the accountant.

   f)Since March 2020 he has returned to work in the business as [an Occupation 1].

   g)His wife purchased the company and business from his brother after moving to Australia from [Country] in May 2018. He sponsored his wife to Australia. She bought the business because his brother could not return to Australia and he did not want to operate the business. His wife knew his brother from [Country], and he asked her to purchase the business.

   h)His wife started work in the business in early 2019 as the manager. He would help her from time to time to explain how to work things in the business and this was also because his brother asked him to help.

   i)He had owned a [car] he bought new in January 2018 for $29,000. He said that he got the money to buy the car from his mother when he was overseas. His wife bought his car when she arrived in Australia because she needed a car and she paid him $5,000 so he no longer owns that asset in his name. He agreed that it was an unusual arrangement.

6. The tribunal referred Mr Saunderson to information obtained by the Agency that states that he transferred significant funds overseas; this included the following amounts: $77,725 (2016/17); $83,398 (2017/18) and $101,682 (2018/19). Mr Saunderson did not deny these amounts but said that it was money provided by his brother and not his money. He said that the funds were put into his account by his brother to pay for cigarettes and for business-related expenses. He would sometimes transfer money to his brother in [Country]. He said his brother only trusted him which is why these amounts were coming in and out of his accounts.

7. The tribunal referred Mr Saunderson to the business bank accounts; in relation to these accounts Mr Saunderson said that he used to be a signatory to the account until December 2019. He ceased being a signatory as his wife owns the company and business. He then said that he was the only one who could make cash withdrawals from the account up until January 2020.

8. The tribunal asked Mr Saunderson about the purpose of various and at times large cash withdrawals from the account for the periods leading up to December 2019. Mr Saunderson said some of the large cash withdrawals were for ‘cash out’ in the shop and for cigarettes. The regular rent was $10,126 per month and this accounted for some of the internet transfers. He said that whilst he didn’t start work again until March 2020, he was still operating the business account because he was still the only signatory.

9. Mr Saunderson provided financial statements for the company but said that he would not be able to speak to matters contained in the statements as he doesn’t know anything about those aspects. According to the financial statements (year end 2019) the company made a post expenses profit of $38,068. After rent the largest expense was wages ($71,214). The financials for the period year end June 2018 show a post expenses profit of $23,199 and wages of $38,012. Mr Saunderson’s lawyer submitted that the most recent profit for the company was $43,348 for the most recent financial year.

10. Mr Saunderson said however that any profit the company makes goes to his wife and he derives no  direct financial benefit. Mr Saunderson rejected the proposition that due to his relationship with his wife that he derives a financial benefit from his wife owning the business. She uses the money she makes to pay for the mortgage and household expenses and in that regard he indirectly but not directly benefits from her income.

11. Mr Saunderson said that he lives in an apartment in the CBD which his wife purchased in November 2018.[5] She used money from her previous work in [Country]. He does not know how much in savings she had. He thinks she took a mortgage out for the property. He does not make any contribution to the mortgage costs but sometimes he gives her $130 per week when he can. He said that he and his wife are not joint owners despite being married because it is her home not his. Mr Saunderson rejected the suggestion that the legal ownership arrangements for the business and personal property were done in order to reduce his financial interests on paper. The tribunal asked Mr Saunderson how his wife could afford to purchase a property and he said that she had savings.

    [5] The purchase price for the property according to online research is recorded as being $350,000

12. In [Country] his wife worked as [an Occupation 2] and does not have prior experience working in a business such as the one she purchased. Ms Saunderson told the tribunal that Mr Saunderson and his brother operated similar businesses to the one purchased by their company in Perth when they lived in Sydney and he has significant experience. Ms Saunderson says that his suggestion that his wife is the person who owns and operates and benefits from the business is not plausible.

13. Mr Saunderson asserts that he has nothing to do with the business operated by the company. He says that his wife is the owner and operator of the company and business and is the person who derives the benefit from profits and income generated by that business. He says that his income is limited to a part-time income from working in the business since March 2020 and social security and family assistance payments. He also says that he has no interest in the home purchased by his wife and that he sold a car that he purchased for $29,000 in 2018 to his wife for $5,000.

14. It is a long-established principle of law that when a person conducts their business or profession through an intermediary such as a company it is proper to lift the corporate veil to determine the value of the entity to that person.[6] These principles have been affirmed by the Family Court,[7] with regard to the determination of a parent’s income for child support purposes and in these cases, effective control of the businesses was found to rest with the person conducting the business and generating the income and not the intermediary. In this regard the tribunal notes the Guide: [8]

    Generally, income is alienated when the income generated or derived by a person is attributed to others and, consequently, reduces the first person's taxable income. Personal services income, or income derived through personal exertion, can be defined as income that an individual earns predominantly as a direct reward for their personal efforts…A parent who operates a business may legitimately pay wages or salaries to employees. However, if the employee is a related person, such as the parent's new spouse, de facto partner or a family member and the payments exceed the reasonable value of the work performed, the Registrar may treat the income of that employee as the income of the parent.

    [6] See in particular Stein [1986] Fam CA 27; and Ashton [1986] Fam CA 20. In Ashton, the Court stated that “this Court is not bound by formalities designed to obtain advantages and protection for the husband who stands in reality in the position of the owner”.

    [7] In cases such as Carey and Carey (1994) FLC 92-489.

    [8] 2.6.14

15. In this matter having had the opportunity of reviewing the documents and hearing Mr Saunderson provide his evidence the tribunal concluded that it does not accept the submission that Mr Saunderson does not have a relevant interest in the operation of the company and its related business.

16. In the tribunal’s view it is open on the evidence to conclude that Mr Saunderson is involved in the day to day operation of the business and that the financial resources generated by the business are relevant when considering his income, financial resources and property for child support purposes. In reaching this conclusion the tribunal notes the following:

    a)Mr Saunderson has a history of being both an office holder and shareholder of the company.

    b)He was the director and secretary of the company just prior to those positions being registered in his wife’s sole name on 26 March 2019.

    c)Whilst Mr Saunderson’s brother has not been in the country since 2015, Mr Saunderson suggests that until the sale of the business to his wife, his brother was the person operating the business and that he (Mr Saunderson) was simply acting on his brother’s directions in transferring funds through his accounts. On any view of that evidence, in the tribunal’s view it suggests that Mr Saunderson has a sustained and continued knowledge, connection and relationship with the day to day operation of the company and the business.

    d)Mr Saunderson has had prior experience of working in similar businesses when living in New South Wales. By comparison his wife only arrived in Australia in May 2018, on the evidence her English was limited[9] and she has no prior experience of working in a business, her previous occupation being that of a teacher. She has two young children in her care.

    e)Despite Mr Saunderson stating he has only been re-employed by the business in March 2020, his evidence in relation to his being a signatory to the business bank accounts and operating those accounts suggests that his involvement goes beyond and predates that time, this includes his evidence that he was receiving and paying out significant amounts from his bank accounts at the direction of his brother who was overseas.

    [9] See discussion between Agency and Mr Saunderson at p 98

1. In the tribunal’s view it is open on the evidence to conclude and the tribunal is satisfied that Mr Saunderson is the person involved in the day to day operation of the business and that the financial resources generated by the business are relevant when considering his income, financial resources and property for child support purposes.

2. In post hearing submissions, Mr Saunderson’s lawyer submitted that if the tribunal were mindful of taking an approach which regarded the profits and income generated by the business as relevant then this would result in an ATI of about $109,305. This being comprised of Mr Saunderson and his wife’s combined income ($65,957) from the business and the profit generated by the business ($43,348).

3. As a starting point the tribunal agrees that any profit made by the company should be attributed to Mr Saunderson despite his wife assuming the directorship and sole shareholding of the company in March 2019. The tribunal is also satisfied that Mr Saunderson’s involvement in the business is not limited to that of [an Occupation 1] – rather the tribunal is satisfied that he is the person who manages the business and not his wife and in this regard the tribunal accepts that the combined figure as suggested of about $65,957[10] is appropriate to utilise as income relevant to Mr Saunderson’s role.

   [10] Desktop research suggests $66,000 to be an average salary for a [specified] manager in Australia >

   In addition, the tribunal notes that a person who operates a business through an entity such as a company may further derive personal benefit from payments made by the company for non-work-related items:[11]

   Expenses partly for business purposes & partly for private purposes

   Where an expense is partly business and partly private the expenses must be apportioned for taxation purposes. Parents who are self-employed or who operate a business might claim expenses that may otherwise be considered private as a legitimate income tax deduction. Examples include the fixed-costs component of telephone expenses such as the rental and connection fees, home office expenses or motor vehicle expenses. These deductions are generally not available to parents who derive income solely from salary and wages.

   Depreciation represents the loss or expense attributed to the use of business property or equipment. It is an entry in the business account that is not necessarily an expense that is actually incurred by the business. The aim of depreciation is to spread the cost of a capital asset (e.g. motor vehicle, plant and equipment, machinery, building) over the period of its useful life, with a portion of the cost being expensed each financial year.

   [11] The Guide at 2.6.14

4. As noted Mr Saunderson was not able to provide any detailed evidence about the financial statements for the company. Those statements show claimed expenses for a motor vehicle, telephone and also depreciation. The company bank accounts also show personal expenditure items such as child care, visa fees, groceries and similar expenses. In the tribunal’s view a proportion of those expenses met or claimed by the company can reasonably be included as a relevant financial resource.

5. Assuming income of about $66,000 for his role as [manager], this means that taking into account the profit made by the business, in 2017/18 Mr Saunderson would have had income and financial resources of about $79,000; in the following financial year 2018/19 $104,000 and in 2019/20, $109,200 – over the last three years this is an average of about ($97,400), allowing an amount of about $3,000 per annum to represent personal benefits derived from expenses met by the company which would result in an annual figure of about $100,000.

6. Mr Saunderson’s lawyer made a number of written submissions pertaining to Ms Saunderson’s income suggesting that financial information was not fully provided and where it was that information was inaccurate. The tribunal does not place any great weight on those submissions. Ms Saunderson derives her income from employment as [an Occupations 3 and 4]. She also owns an investment property. Her 2019/20 personal tax return declares relevant income relating to her employment and rental property.

7. The tribunal concluded that in relation to Mr Saunderson for child support purposes he would have access to income, financial resources and property of about $100,000 per annum. In relation to Ms Saunderson, the tribunal is satisfied that her income, financial resources and property are reflected in her income tax returns as provided by the ATO.

8. As noted at the relevant time, the Agency was relying upon Ms Saunderson’s last relevant tax return for 2017/18 of her ATI of $99,790 and a derived income of about $12,877 for Mr Saunderson. The tribunal has concluded that based upon its conclusions and findings of fact that Mr Saunderson has income and financial resources of about $100,000 per annum.

9. Utilising a figure of $100,000 instead of $12,877 would result in a significant change in the level of child support that is payable by him. For this reason, the tribunal concludes that a ground of departure exists because 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 children because of the income, property and financial resources of Mr Saunderson.

Issue 2 – Is it just and equitable to make a particular departure determination?

1. As the tribunal is satisfied that there is a ground to depart from the assessment of child support as set out above, the next step for the tribunal is to consider whether it is just and equitable as regards the children and the parental parties 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 consider the matters set out in subsection 117(4) of the Act: which are discussed in the following paragraphs.[12]

Proper needs of the children

[12] The tribunal notes the Federal Magistrates Court case of Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886 which directs that in considering the matters set out in subsection 117(4) the section need not be “slavishly followed, each of the relevant factors listed in … should be considered”.

1. In determining the proper needs of the children it is necessary to have regard at a broad level to the manner in which the children are being, and in which the parents expect the children to be, cared for, educated or trained, and also any other needs of the children. Ms Saunderson at hearing stated that the children have been assessed as needing [dental work] and she has been quoted $18,000 over the next three to four years. Ms Saunderson says that she has private health insurance but could not say with any degree of certainty what her out of pocket expenses would be. There is a treatment plan dated 10 October 2020 quoting $10,000 for each child. Mr Saunderson says he cannot pay half of those costs. His solicitor submits that his client also has extensive dental work required and cannot afford those costs.

2. In this matter the tribunal was not satisfied on the available evidence that at this point in time it was able to make a determination in relation to a future treatment plan for the dental costs for the children where it appears that such treatment is yet to be undertaken and there is no clarity as to what Ms Saunderson’s out of pocket expenses would be.

Income, earning capacity, property and financial resources of the children

1. In having regard to the income, earning capacity, property and financial resources of the children the tribunal must disregard any entitlement of the children or the carer entitled to child support to an income tested pension, allowance or benefit (subparagraph 117(7)(b)(ii) of the Act).

2. There was no evidence presented to the tribunal that the children have any income or unused earning capacity that needs to be taken into account in the child support assessment and as such the tribunal concludes that there is no basis for any adjustment pursuant to this consideration.

Other party receiving money, goods and property for the benefit of the children

1. Neither party made submissions in this regard and as such the tribunal concludes there is no basis for any adjustment pursuant to this consideration.

The income, property and financial resources of each parent who is a party to the proceeding

1. The tribunal has already made some findings in this regard and does not repeat those matters here.

2. Whilst Mr Saunderson states in his Statement of Financial Circumstances that he owns no assets the tribunal notes his evidence that the home where he lives is registered in his wife’s name and he states he sold his car to his wife. The tribunal was not convinced by Mr Saunderson’s explanation for arranging his affairs in this manner.

3. Ms Saunderson has two properties. The property where she lives ($420,000) and an investment property ($380,000); both are subject to mortgages. She owns a vehicle and has about $83,000 in superannuation.

Earning capacity

1. A ground for departure exists if, in the special circumstances of the case, 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 earning capacity of either parent (subparagraph 117(2)(c)(ib)). Whilst this was a ground that was raised as part of the original change of assessment process neither party agitated this particular ground at hearing.

2. The tribunal notes that Mr Saunderson states (and the tribunal has found) that he is employed in the business. The tribunal has concluded that Mr Saunderson’s role in that business is that of [ manager]. The tribunal was satisfied that the parties’ earning capacities are not a relevant consideration in relation to any departure determination.

The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain

1. Mr Saunderson and his lawyer made repeated submissions regarding Mr Saunderson’s obligation to provide for his two children of his current relationship. The tribunal notes that the administrative formula makes provision for relevant dependents and likewise any proposed departure would factor this aspect in. The tribunal is otherwise satisfied taking into account the relevant costs of self-support utilised in the assessments and based upon evidence provided at hearing that neither party has extraordinary costs of self-support that are relevant to the assessment.

Any hardship that would be caused

1. Mr Saunderson submits that the departure as determined by the Agency has caused him financial hardship. He is in arrears. His lawyer submits that his client would only be able to manage child support of about $400 per month. Ms Saunderson says Mr Saunderson is avoiding his responsibility to their children and using the structure of the company and the appointment of his wife as director and shareholder in an attempt to hide his actual financial position, likewise she says that he has attempted to ‘hide’ assets such as the purchase of the apartment which is registered in his wife’s sole name.

Conclusions as to a particular departure determination

1. As noted the tribunal can vary the rate of child support payable or it can vary some of the variables that are used in the administrative formula. In this matter the tribunal came to the same conclusion as reached by the Agency namely that Mr Saunderson’s ATI as utilised in the administrative assessment is not an accurate reflection of his income and financial resources available to him.

2. In this matter the tribunal is satisfied that Mr Saunderson derives his income and has access to financial resources through the operation of a business that is owned by a company currently registered in his wife’s name. The average of the available financial information for the last three years results in the tribunal concluding that for the purposes of child support Mr Saunderson’s ATI should be varied to $100,000 per annum. In relation to Ms Saunderson her care of the children means that she has greater costs of care. In her case the tribunal is satisfied that her taxable income from year to year will form the basis of the assessment, with reconciliations relevant to estimates as appropriate.

3. Ms Saunderson lodged a change of assessment application on 11 October 2019. The tribunal may not (without the leave of a court) depart from an assessment for a period which is more than 18 months prior to the date of application (subsection 98S(3B) of the Act). In this matter the tribunal noted that the Agency commenced the departure from 1 October 2019 and the tribunal is satisfied that this is an appropriate commencement date.

4. As for the duration of the change in assessment the tribunal also considered that it is appropriate that the departure apply until a terminating event applies in relation to the youngest child. A departure in these terms provides some stability and certainty until such time that the youngest child ceases to be an assessable child. As always should there be a significant change in circumstances this does not prevent the parents making application for a change of assessment.

5. The tribunal notes that utilising an ATI of $100,000 in the assessment for Mr Saunderson (and based upon the most recent assessment which utilises a provisional ATI of $167,000 for Ms Saunderson) results in an annual child support liability of $11,560 or $220 per week. Mr Saunderson in his Statement of Financial Circumstances suggests household expenditure for the entire household of about $470 per week (which includes mortgage payments of $130 per week). The tribunal is satisfied that based on an annual income of $100,000 that Mr Saunderson has the financial capacity to meet a child support liability in these terms. The tribunal notes that overall a departure in these terms will result in some reduction in the current arrears as calculated as a result of the Agency departure. The tribunal is satisfied that Mr Saunderson has a level of financial capacity sufficient to meet the child support liability that would arise from a departure in these terms.

6. The tribunal concluded that for all of the above reasons, in the special circumstances of this case, it was just and equitable to make a departure determination from the administrative assessment issued in accordance with the Act so that:

   For the period 1 October 2019 until a terminating event for the youngest child, Mr Saunderson’s ATI is varied to $100,000 per annum.

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

1. The final step is for the tribunal to determine whether it is “otherwise proper” to make a particular departure determination. Subsection 117(5) requires the tribunal to take into account whether the proposed departure is proper in the context of public interest and welfare expenditure of the community. A prime objective of the legislation is that parents are obliged to support their own children to the extent of their real capacity and such obligation should not be unnecessarily left to the public welfare system.

2. According to her Statement of Financial Circumstances Ms Saunderson is not in receipt of family tax benefit and the proposed departure from the administrative assessment will not impact her entitlement to government assistance. In this case the tribunal finds that the requirements under paragraph 117(5)(a) of the Act are met. The tribunal concludes that it is otherwise proper to depart from the administrative assessment.

DECISION

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

For the period 1 October 2019 until a terminating event for the youngest child, Mr Saunderson’s adjusted taxable income is varied to $100,000 per annum.