Searle and Welch (Child support)

Searle and Welch (Child support) [2024] AATA 383 (9 January 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/SC026413
APPLICANT:  Mr Searle
OTHER PARTIES:  Child Support Registrar
Ms Welch

TRIBUNAL:Member S Irvine
DECISION DATE: 9 January 2024
DECISION:

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

For the period from 1 September 2022 to 30 June 2023, Ms Welch’s adjusted taxable income is set at $200,000;
For the period from 1 September 2022 to 30 June 2023, Mr Searle’s adjusted taxable income is set at $251,197;
For the period from 1 July 2023 to 30 June 2024, Mr Searle’s adjusted taxable income is set at $229,166;
For the period from 1 January 2022 to 31 December 2022, the annual rate of child support otherwise payable by Mr Searle is increased by $4,550;
For the period from 1 January 2023 to 31 December 2023, the annual rate of child support otherwise payable by Mr Searle is increased by $2,100;
For the period from 1 January 2024 to 31 December 2024, the annual rate of child support otherwise payable by Mr Searle is increased by $3,300.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – cost of school fees of the child – cost of special needs of the child – 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

Ms Welch and Mr Searle are the parents of [Child 1] (born in 2010) and [Child 2] (born in 2012). A child support assessment commenced on 8 August 2014. The assessment is currently based on Ms Welch having 62% care of both children and Mr Searle having 38% care.
There have been previous departures from the formula assessment of child support for the children. The first such application was made by Mr Searle in 2018 and resulted in a number of changes to the assessment for the period from 1 January 2019 to 31 December 2021. Relevantly, the decision (as ultimately amended by this Tribunal, differently constituted, on 11 August 2020) included a provision that the annual rate of child support otherwise payable by Mr Searle for the period from 1 January 2021 to 31 December 2021 was increased by an amount of $1,859, which was expressed as representing half of the school fees for the two children (the first departure determination).
A new departure application was made by Ms Welch on 9 December 2020. As a result of that application, Child Support made the following decision on 30 June 2021 (the second departure determination):
·Mr Searle’s adjusted taxable income was set at $200,000 for the period from 1 January 2021 to 31 December 2022; and
·Ms Welch’s adjusted taxable income was set at $188,430 for the period from 1 December 2020 to 31 December 2022.
Ms Welch objected to that decision on 1 July 2022, outside of the normal period for objecting to a decision, but Child Support refused her application for an extension of time to object, so her objection was not considered and the decision of 30 June 2021 remains in place.
On 4 December 2022 Ms Welch applied to Child Support for another departure from the administrative assessment, and this is the application that is the subject of the current review. At the time of that application the following child support assessments were in place:
·For the period from 1 September 2022 to 31 December 2022, Mr Searle was assessed to pay an annual rate of child support of $7,994, based on the incomes set in the departure determination made on 30 June 2021;
·For the period from 1 January 2023 to 21 January 2023, Mr Searle was assessed to pay an annual rate of child support of $24,590, based on Mr Searle’s adjusted taxable income in the 2021/22 income year of $251,197, and Ms Welch’s adjusted taxable income in the 2021/22 income year of $49,463.
·For the period from 22 January 2023 to 30 November 2023 Mr Searle was assessed to pay an annual rate of child support of $27,178. That annual rate was still based on the adjusted taxable incomes in the 2021/22 income year for both parents, but the annual rate increased because [Child 1] turned 13.
In her application, Ms Welch raised a number of grounds for departure. These were the grounds characterised by Child Support as Reason 2, relating to the special needs of the children; Reason 3, relating to the cost of caring for, educating or training the children in the manner expected by the parents; Reason 7, relating to a parent’s necessary costs of self‑support; and Reason 8, relating to a parent’s income, property, financial resources or earning capacity. Mr Searle made a cross-application on the basis of Reason 8B, relating to a parent’s earning capacity.
On 16 April 2023 an officer of Child Support decided not to depart from the child support assessment, as the officer found that none of the necessary grounds had been established.
Both parents objected to that decision. On 10 July 2023 an objections officer in Child Support allowed the objections and decided that:
·From 1 September 2022, the previous departure decision made on 30 June 2021 is set aside, and the normal formula is to apply in relation to the parents’ incomes; and
·For the period 1 January 2022 to 31 December 2024, the annual rate payable is to be increased by $4,000.
On 14 July 2023 Mr Searle lodged an application for a review of the objection decision by this Tribunal. The application for review was heard on 27 November 2023. Both parents attended the hearing by telephone and gave sworn evidence. The Tribunal had regard to the statement and documents provided by Child Support (folios 1 to 1187), documents provided by Mr Searle (folios A1 to A207) and documents provided by Ms Welch (folios B1 to B316). Ms Welch was represented at the hearing by [Representative A], who made some submissions on her behalf.
Ms Welch submitted additional documentation and submissions to the Tribunal on the day of the hearing. Following the hearing a copy of those additional documents and submissions were provided to Mr Searle, and I issued directions requiring both parties to make any further written submissions to the Tribunal by 13 December 2023, and for parties to provide any written submissions in response by 2 January 2024.
Both parents provided further submissions after hearing, which were exchanged with each party and considered by the Tribunal.

ISSUES

The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). This requires the application of a statutory formula which takes into account factors such as the number and age of the children, the level of care provided by each parent and the income of each parent.
The liable parent or a carer may apply to the Child Support Registrar (the Registrar) for a determination to depart from the administrative assessment under Part 6A of the Act. Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. In order to depart from the formula assessment, section 98C provides that the Registrar (or this Tribunal standing in place of the Registrar) must be satisfied:
(i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and
(ii)that it would be:
(A) just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
(B) otherwise proper;
to make a particular determination under this Part.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
If satisfied that the matters set out in section 98C are met, the Tribunal may make any of the determinations set out in section 98S of the Act. Section 98S permits a range of determinations to be made, including a determination varying the annual rate of child support payable by a parent, or a determination varying a parent’s adjusted taxable income.
Ms Welch has submitted that the Tribunal should consider departing from the existing child support assessments for the maximum retrospective period available. Subsection 98S(3B) of the Act provides that a determination may not be made for a day that is more than 18 months earlier than the day the application for the determination was made, unless a court has granted leave under section 112 of the Act. The earliest date I can consider making any departure determination from is therefore 4 June 2021.
There is a previous departure determination in place which covers the period up to 31 December 2022. This process cannot be used to review the previous departure determination. However, section 98J of the Act relevantly provides that a person who has made an application for a determination in respect of an assessment is not precluded from subsequently making another application in respect of the same assessment if, because of circumstances existing at the time when the subsequent determination is made, there are grounds for departing from the administrative assessment.

CONSIDERATION

Issue 1 – What are the existing administrative assessments from which a departure is sought?

At the time of the hearing of this application, and leaving aside the effect of the decision under review, the following relevant assessments are in place:
·For the period from 4 June 2021 to 31 August 2021, Mr Searle is assessed to pay an annual rate of $9,411, based on incomes set in the second departure determination being an adjusted taxable income of $200,000 for Mr Searle and $188,430 for Ms Welch, and including an amount of $1,859 which was the result of the first departure determination.
·For the period from 1 September 2021 to 31 December 2021, Mr Searle is assessed to pay an annual rate of $9,631, based on incomes set in the second departure determination being an adjusted taxable income of $200,000 for Mr Searle and $188,430 for Ms Welch, and including an amount of $1,859 which was the result of the first departure determination.
·For the period from 1 January 2022 to 31 August 2022, Mr Searle is assessed to pay an annual rate of $9,772, based on the incomes set in the second departure determination being an adjusted taxable income of $200,000 for Mr Searle and $188,430 for Ms Welch.
·For the period from 1 September 2022 to 31 December 2022, Mr Searle is assessed to pay an annual rate of $7,994, based on the incomes set in the second departure determination being an adjusted taxable income of $200,000 for Mr Searle and $188,430 for Ms Welch.
·For the period from 1 January 2023 to 21 January 2023, Mr Searle is assessed to pay an annual rate of child support of $24,590, based on Mr Searle’s 2021/22 adjusted taxable income of $251,197 and Ms Welch’s 2021/22 adjusted taxable income of $39,463.
·For the period from 22 January 2023 to 5 July 2023, Mr Searle is assessed to pay an annual rate of $31,178, based on Mr Searle’s 2021/22 adjusted taxable income of $251,197 and Ms Welch’s 2021/22 adjusted taxable income of $39,463.
·For the period from 6 July 2023 to 30 July 2023 Mr Searle would be assessed to pay no child support on the basis of his estimated income of $0.
·For the period commencing 31 July 2023 Mr Searle would be assessed to pay an annual rate of $25,282, based on Mr Searle’s updated estimated income of $199,867 and Ms Welch’s 2022 taxable income of $39,463.

Issue 2 – Does a ground exist to depart from the administrative assessment?

Ms Welch sought a departure from the administrative assessment on the ground that the administrative assessment of child support does not reflect her income, property and financial resources. This is the ground reflected in subparagraph 117(2)(c)(ia) of the Act. Mr Searle sought a departure from the administrative assessment on the ground that the administrative assessment of child support does not reflect Ms Welch’s earning capacity. This is the ground reflected in subparagraph 117(2)(c)(ib) of the Act.
At the hearing, Mr Searle explained that the main issue for him was Ms Welch’s income and earning capacity, as well as her current financial position in relation to his own. He described Ms Welch as “asset rich, income poor”.
Mr Searle said that it is clear to him that Ms Welch has made a choice not to work, and for that reason her income in the child support assessment should be based not on her current taxable income but on her earning potential. On this point, Mr Searle said that Ms Welch has failed to provide sufficient evidence as to why she left her employment with [Employer 1]. He believes that if Ms Welch had sought assistance from her employer, they would have put support in place to assist her and perhaps offered her alternative positions to accommodate her health issues. He believes that Ms Welch did not take advantage of those opportunities but chose instead to leave her employment, in his view with a primary purpose of obtaining more child support from him. Mr Searle also stated that there is no medical evidence indicating that Ms Welch is unable to work.
In his initial application to Child Support Mr Searle submitted that Ms Welch should be assessed as having an income of $254,996, which he submitted is equivalent to the median income of a person employed in the top [management level] at [Employer 1], Ms Welch’s former employer.
In his evidence to the Tribunal, both oral and written, Mr Searle said that the only medical evidence about Ms Welch’s unfitness to work is a fitness for duty health assessment dated [in] May 2018. That assessment found that Ms Welch was fit to work at the level she had previously been working, but with reduced hours of 0.8FTE. In relation to the termination of Ms Welch’s employment in 2021, Mr Searle stated that in his view this must have been effectively a result of Ms Welch choosing to stop working, as in his view [Employer 1] is a model employer that would have offered Ms Welch accommodations in her role, or perhaps alternative roles, if she had been interested in trying to retain her employment.
Subsection 117(7B) of the Act provides that in having regard to the earning capacity of a parent of the child, a determination that the parent’s earning capacity is greater than is reflected in his or her income can only be made if:
·one or more of the following applies (paragraph 117(7B)(a)):
o    The parent does not work despite ample opportunity to do so; or
o    The parent has reduced their hours of work below full-time work; or
o    The parent has changed his or her occupation, industry or working pattern; and
·the parent’s decision not to work, to reduce their hours or to change their occupation or working pattern is not justified on the basis of one of the following (paragraph 117(7B)(b)):
o    The parent’s caring responsibilities; or
o    The parent’s state of health; and
·The parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child (paragraph 117(7B)(c)).
In this case, I am satisfied that up until her employment was terminated in July 2021 Ms Welch was employed as a senior [manager], initially on a full-time basis although she had difficulty performing in that role due to her health issues for a period of time. Since her employment was terminated Ms Welch did not work in paid employment for a period of time and has now returned to work in a different industry and is working up to 10 hours per week. I am therefore satisfied that paragraph 117(7B(a)) is met.
In relation to the circumstances surrounding her termination from employment, I have considered the following evidence:
·The “Outcome of fitness for duty health assessment” dated [in] May 2018 provided to Ms Welch following her health assessment with [Doctor A], Consultant Occupational Physician. That report states that Ms Welch was found to be suffering from a number of conditions, and notes that [Doctor A’s] observations were that her illnesses were not likely to resolve in the foreseeable future and were considered to be at maximal medical improvement. [Doctor A’s] recommendation was that Ms Welch drop back to 0.8FTE work capacity based on the impact on her stamina caused by pain and fatigue.
·Medical certificates signed by [Doctor B] which cumulatively state that Ms Welch was:
o    Suffering from a medical condition on 29 January 2021 but fit to return to work with reduced hours and modified duties from 2 February to 1 March 2021;
o    Suffering from a medical condition on 10 February 2021 and unfit to work on 11 and 12 February 2021, or able to work from home if well enough on 12 February 2021;
o    Suffering from a medical condition on 26 February 2021 and fit for graded return to work from 1 March 2021 to 2 April 2021 with reduced hours and modified duties;
o    Suffering from a medical condition and unfit for work from 10 March 2021 to 10 October 2022;
·Medical certificate from [Health Service 1] stating that Ms Welch required medical attention on 24 March 2022 and would be absent from work on that day;
·Letter dated 21 July 2021 from [Doctor C], Orthopaedic Surgeon, stating that Ms Welch underwent shoulder surgery [in] July 2021 and required a period of incapacity and recuperation from 6 July 2021 to 18 August 2021;
·Letter dated 18 August 2021 from [Doctor C] stating that Ms Welch required a further period of incapacity and recuperation from 18 August 2021 to 5 September 2021;
·Employment separation certificate indicating that Ms Welch’s employment was terminated on 25 June 2021, with the reason for termination marked as “unsatisfactory work performance”;
·[Health] benefits statements submitted by Ms Welch, which indicate that Ms Welch continued to receive frequent osteopathy and medical treatment through the latter half of 2022 and first half of 2023;
·A report by rheumatologist [Doctor D variant] dated 3 March 2022, which in part states:
[Ms Welch] was wondering whether she would qualify for total and permanent incapacity. This is quite reasonable given that it is extremely unlikely that she will be able to return to work given her severe lethargy and pain which has been resistant to all treatments so far. Her prognosis remains poor with no real prospects for recovery in the long term.
Ms Welch does not dispute that her employment with [Employer 1] ended in July 2021. She explained that in the lead-up to her being dismissed from that employment she had suffered a number of health issues which had made it difficult for her to attend work, including [medical condition 1] and a hip replacement. Although she had medical certificates supporting that she was unfit for work, she was performance managed by her employer and placed on a “back on track” plan. From around March 2021, in the lead-up to shoulder surgery that eventually occurred in July 2021, she was too unwell to work and so could not complete her back-on-track plan, and she said it was that that resulted in her dismissal.
Ms Welch’s evidence, which I accept, was that she was not offered alternative positions or duties. Ms Welch said that she regards her termination as unfair and illegal, given that she had medical certificates certifying her inability to attend work throughout the period leading up to her termination. She did not take any legal action in respect of her unlawful dismissal because she hasn’t had the money or the physical capacity to do so.

Ms Welch said that since her employment was terminated, she was unable to work for a significant period due to her continuing health conditions.
Ms Welch explained at the hearing that her capacity to work continues to be compromised by her medical conditions, principally [medical condition 2] as well as pain relating to previous hip replacement surgery and shoulder surgery. She is unable to sit for long periods of time. Her pain profile is variable and she suffers from chronic fatigue and severe pain, which in turn make it difficult for her to concentrate and organise her thoughts and can cause cognitive delay. Some days are better than others. She also explained that she is hoping to be able to increase her hours of work in the new year, but her ability to do so will depend on the availability of work as well as her health – she doesn’t feel that she would currently be able to manage much more than 10 hours per week.
Ms Welch explained that she is still trying to manage her health conditions, and at the time of hearing is attending a six-week pain clinic to help her manage her symptoms, but her long term prognosis is not clear. This is further complicated by the fact that her GP has recently found a lesion on Ms Welch’s chest, and this is being investigated as it may be a sign of a new or recurring [medical condition 1].
I am satisfied, based on the evidence provided by Ms Welch, that her dismissal from her previous employment was not voluntary, and that her decision to not work or work reduced hours since then are explained by the state of her health. I note particularly the report of [Doctor D] in March 2022, in which [Doctor D] expresses the opinion that it is extremely unlikely that Ms Welch will be able to return to work.
Since paragraph 117(7B)(b) of the Act is not satisfied, I am not able to make any determination that Ms Welch’s earning capacity is greater than is reflected in her actual income. Reason 8B is not established.
In relation to her actual income, Ms Welch’s oral evidence is that she is currently working on a casual basis at a [business 1] which is owned by a friend of hers. She carries out general duties to assist the [staff], including [specified duties]. She is currently working around 10 hours per week, and she has taken on the position both because she needs the income and also to test her current work capacity. Her only other income is her rental property income, and she has received a small amount of Family Tax Benefit payments, although she is expecting that when she lodges her 2022/23 tax return she may turn out to have a family tax benefit debt which will have to be repaid.
Ms Welch provided the Tribunal with the following evidence:
·A statement of financial circumstances, provided in September 2023, in which she states that her total average weekly income is $1,364.65, made up of rental income totalling $1,005 per week, income from employment of $193.19 per week and family tax benefit payments.
·Payslips as follows:
o    Payslip for the period 30 October 2023 to 5 November 2023 showing total weekly earnings of $309.10 for 10 hours of work, and a year-to-date income of $3,987.62;
o    Payslip for the period 23 October 2023 to 29 October 2023 showing total weekly earnings of $270.46 for 8.75 hours of work;
o    Payslip for the period 16 October 2023 to 22 October 2023 showing total weekly earnings of $278.19 for 9 hours of work.
·A copy of her 2022/23 tax return information from the Australian Taxation Office (ATO) showing taxable income from a superannuation lump sum of $138,437 paid on 19 January 2023 as well as an untaxed component of $58,581, and income from employment in the 2022/23 tax year of $1,125.
·Documentation from [Agency 1] showing that a disability benefit was paid to Ms Welch on 19 January 2023 in the amounts of a taxed element of $138,437 and an untaxed element of $58,581.
·A notice of amended assessment from the ATO for the 2021/22 tax year, showing that in that year Ms Welch’s taxable income was $39,463.
·A notice of assessment from the ATO for the 2020/21 tax year, showing that in that year Ms Welch’s taxable income was $47,377.
·A notice of assessment from the ATO for the 2019/20 tax year, showing that in that year Ms Welch’s taxable income was $188,430.
·Rental statements relating to a property in [Town 1], Queensland, which show that in relation to that property:
o    In 2021/22 she received total income of $23,541 and had expenses of $20,375;
o    In 2022/23 she received total income of $25,935 and had expenses of $17,520;
o    In 2023/24, up to a statement date of 9 November 2023, she had received income of $9,360.26 and had expenses of $5,081.
·Rental statements relating to a property in [Town 2], Queensland, which show that in relation to that property:
o    In 2021/22 she received total income of $20,749 and had expenses of $12,111;
o    In 2022/23 she received total income of $22,440 and had expenses of $11,142;
o    In 2023/24, up to the end of October 2023, she had received income of $7,865 and had expenses of $6,797.53.
In written submissions made to the Tribunal following the hearing of the matter, Ms Welch stated that her 2022/23 tax return has been completed and she estimates that taxable income in 2022/23 will be $138,297.
I note that Ms Welch has asked the Tribunal to consider departing from the existing child support assessment for a period commencing on 4 June 2021, which is the date 18 months prior to the day she applied to child support for the departure determination that is currently under review.
As set out above, the incomes used in the assessment for Ms Welch over the period she has asked the Tribunal to consider are:
·from 4 June 2021 to 31 December 2022, an adjusted taxable income of $188,430, which was set in the departure decision made on 30 June 2021;
·from 1 January 2023 to 30 November 2023, Ms Welch’s 2021/22 adjusted taxable income of $39,463.
I note that the departure decision made on 30 June 2021 was made on the basis, among other things, that Ms Welch had stated in her application that she expected to return to her employment as [an employee at Employer 1], albeit on a gradual basis, from February 2021. Ms Welch’s evidence, supported by documentation provided by Ms Welch to Child Support in March 2023, is that that gradual return to work did not eventuate. Instead, she remained medically unfit to work throughout the first half of 2021, and her employment was terminated by her employer on 25 June 2021. According to the information available to me Ms Welch received a payment in respect of her termination on 29 July 2021. The gross amount of her termination payment was $25,075.54 which included an amount of accrued leave as well as a payment of 5 weeks’ salary in lieu of notice.
On the basis of the evidence available to me, I am satisfied that in the period from 1 July 2021 to 30 June 2022 Ms Welch’s actual taxable income was $39,463, which is significantly lower than the income used in the child support assessment.
I am also satisfied that in the 2022/23 financial year Ms Welch received lump sum disability payments from her superannuation fund of a taxed element of $138,437 and an untaxed element of $58,581. In addition, according to the rental property statements she submitted, she received total rental income from her two rental properties of $48,375 and had expenses in relation to those properties totalling $28,662. According to bank statements submitted by Ms Welch she also paid interest on her property loans of approximately $880 per month or $10,560 for the year. I am therefore satisfied that Ms Welch had income from her rental properties in the 2022/23 year of approximately $9,000. According to the documentation Ms Welch provided, she also had income from employment in the 2022/23 year of $1,125. On the basis of that information, I am satisfied that Ms Welch’s income in the 2022/23 year, excluding the untaxed lump sum amount from her superannuation fund, was approximately $148,000.
Ms Welch submitted, both in her oral evidence to the Tribunal and in her written submissions received after the hearing, that the non-taxable component of her superannuation lump sum payment should be disregarded for child support purposes. In her written submission she has asked that that component be excluded “on grounds of hardship already endured, errors with child support incomes and all additional costs and fees to loans and credit cards and the family home rates that come as late payment fees or compounding interest.” That aspect of Ms Welch’s income, property and financial resources will be considered in relation to whether any departure would be just and equitable.
Even if I were to exclude the non-taxed component of the superannuation payment, it is clear that Ms Welch’s stated income in the 2022/23 year was significantly higher than the income of $39,463 that is used for Ms Welch in the child support assessment from 1 January 2023.
I am satisfied that special circumstances exist such that Ms Welch’s income, property and financial resources mean that the administrative assessments of child support result in an unjust and inequitable determination of the level of financial support to be provided for the children. On that basis, I find that Reason 8A is established, and therefore at least one of the grounds for departure mentioned in subsection 117(2) of the Act exists.
Ms Welch has raised a number of other grounds of departure, which will be considered as part of the consideration of whether a particular departure determination would be just and equitable.

Issue 3 – is it just and equitable in relation to Mr Searle, Ms Welch and the children to make a particular departure determination?

As I am 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 requires the Tribunal to have regard to a range of factors, including but not limited to those set out in subsection 117(4) of the Act.
Subsection 117(4) of the Act sets out a list of factors that must be considered in determining whether a particular departure determination would be just and equitable:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); an
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da)the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)    to:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)    to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii)   to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
I take into account the nature of the duty of the parent to maintain a child as stated in section 3 of the Act. The parents of a child have the primary duty to maintain the child, and the duty of a parent to maintain a child is not of lower priority than the duty of the parent to maintain any other child or person. The duty to maintain the child has priority over all commitments of the parent other than commitments necessary to enable the parent to support themselves and any other child or person the parent has a duty to maintain, and is not affected by the duty of any other person to maintain the child, or any entitlement of the child or another person to an income tested pension, allowance or benefit.
I have considered all of the matters set out in subsection 117(4) of the Act. I do not propose to explore every matter in detail but will discuss those I regard as pertinent to this application.
Subsection 117(6) of the Act provides that in having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated and trained, and any special needs of the child.
I am satisfied that [Child 2] is attending [School 1], which is a Catholic fee‑paying school, and that she is being educated in the manner expected by both parents. I am satisfied that it is the expectation of both parents that [Child 2] will continue to attend [School 1] until the end of the 2024 school year.
I am satisfied on the basis of evidence provided to Child Support by Ms Welch that:
·[Child 2’s]s school fees for the 2022 school year were $3,304, and in that year she also required an iPad at a cost of $998;
·[Child 2’s] school fees for the 2023 school year were $4,073, and payment of a building fee of $200 was also required in that year.
Ms Welch provided further evidence to the Tribunal that [Child 2’s] school fees for 2024, including tuition fees and all school-based levies, will be $3,960. In addition, Ms Welch has estimated that there will be a fee for the year 6 school camp of $450. On that basis I am satisfied that [Child 2’s] education costs in 2024 are likely to be $4,410.
I am satisfied that [Child 2] required orthodontic treatment in 2021, at a total cost of $2,550. The evidence as to how those costs are met is not entirely clear, but Ms Welch’s oral evidence is that there was a contribution from private health insurance and she thinks that she paid 50% of the remaining cost.
Ms Welch also submitted evidence that [Child 2] has some optometry costs, but there is no clear evidence about what costs are associated with [Child 2’s] glasses. Ms Welch was not sure if [Child 2] got new glasses during 2023. In relation to [Child 2’s] podiatry costs, I note that Ms Welch submitted two invoices to Child Support relating to podiatry for [Child 2], one for $99 in January 2022 and the other for $105 in September 2022. Ms Welch also gave oral evidence that she was required to buy new sandshoes for [Child 2] in 2022 as her orthotics went up a size. Mr Searle’s oral evidence was that he accepts [Child 2] does require treatment from a podiatrist, and that he has also paid for some visits. I am satisfied that [Child 2] does require both optometry and podiatry, but I am not satisfied that the costs associated with that treatment is enough to significantly affect the costs of caring for [Child 2].
In relation to [Child 1’s] needs, it is not disputed that [Child 1] attended [School 1] until the end of the 2021 school year, and since then has attended a public high school. I note that up to the end of the 2021 calendar year Mr Searle’s child support liability was adjusted to include a contribution to school fees for both children.
Ms Welch has submitted that the costs of maintaining [Child 1] are significantly affected by the out-of-pocket expenses for occupational therapy, hearing aids, psychology, autism assessment, orthodontic treatment, ADHD/Learning Assessment and optometry. At the hearing Ms Welch also submitted that she incurs podiatry costs for [Child 1].
It is not disputed that costs have been incurred for [Child 1] for all of those conditions. Mr Searle did not dispute that any of the costs were necessary, except for the cost for hearing aids.
In relation to costs incurred for hearing equipment for [Child 1], there is no dispute that Ms Welch incurred a cost of $1,417 for hearing aid devices for [Child 1]. Mr Searle’s evidence at hearing was that he had agreed to this treatment on the basis that Ms Welch would be participating in a free trial and he understood there would be no cost. While he does not dispute that [Child 1] suffers from auditory processing disorder, he stated that the treatment was not recommended by any of [Child 1’s] medical practitioners and is not a proven treatment for that condition. His contention is that this is not a necessary expense in relation [Child 1’s] special needs, and he should not be required to contribute to the cost. In any event he said that [Child 1] did not end up participating in the trial as the stigma of wearing the hearing aids was too much for him.
Ms Welch stated at the hearing that she became aware of the hearing aids through an online auditory processing group that she belongs to. Some of the parents in that group were talking about the treatment and had found it helpful for their children. The trial was to “baseline” [Child 1’s] hearing, and then the hearing aids could be reprogrammed to [Child 1’s] specific needs. Ms Welch was required to purchase the equipment for [Child 1] to use for the trial, and that was the cost of $1,417. She said that [Child 1’s] specialist had no objection to him participating in the trial.
Ms Welch did not produce any evidence as to whether the hearing aids constituted a necessary cost in relation to [Child 1’s] auditory processing disorder, or any medical evidence as to the need or desirability of that treatment. On that basis, I am not satisfied that the hearing aids constitute a necessary cost in respect of [Child 1’s] special needs.
In relation to the other costs relating to [Child 1’s] special needs, I have considered the evidence provided to Child Support and to the Tribunal by Ms Welch in relation to [Child 1’s] needs, in particular:
·A tax invoice from [Health Service 2] for payment received on 7 September 2022 relating to [Child 1]. The invoice appears to show that Mr Searle has paid $130 of a total cost of $260.
·A letter dated 16 September 2022 from the [Health Service 2], which states that [Child 1] has generalised anxiety disorder, learning disorders, auditory processing disorder, sensory processing disorder and high conflict/parental separation.
·A tax receipt from [Health Service 3] dated 1 November 2022 for an ADHD/Learning Assessment at a cost of $2,700. That document shows that at that time Mr Searle had paid $1,350 and Ms Welch had paid $810 toward the total cost, leaving a balance of $540 owing. At hearing, Ms Welch gave oral evidence that she has since paid the outstanding $540 because the clinic would not release the report until the balance had been paid. She stated that she had had to borrow from family to make that payment.
·[Bank 1] statements covering a period from 11 June 2021 to 1 February 2023, which show payments made to [Health Service 4] over that period totalling $2,527.58. Ms Welch has annotated that statement with notes stating that she was unable to make any payments between 26 September 2022 and 18 November 2022 as she did not receive any child support, and also that she received a Medicare rebate of $81.60 for one session on 5 December 2022, so that her total out of pocket expenses for [Child 1’s] occupational therapy at that point was $2,445.98. Ms Welch has also provided four further invoices that appear to have been paid outside of the period covered by the bank statements, in the amount of $88 each.
·A Medicare claims history for [Child 1] for a period from 2 June 2021 to 2 June 2023, and a Medicare claims history for [Child 1] for a period from 11 November 2022 to 11 November 2023.
·Documentation from [Health Service 5] setting out [Child 1]’s need for orthodontic treatment at a total cost of $6,800, and copies of emails showing that Mr Searle agreed with [Health Service 5] to pay half of that cost and requesting separate accounts.
·Referral letter dated 22 February 2023 from [Health Service 6] to [Doctor E].
·Pharmacy receipt for [Child 1] from [a named] Pharmacy showing items dated from 10 July 2023 to 25 October 2023.

In relation to [Child 1’s] orthodontic treatment, there was no dispute that this treatment is necessary. At the hearing Mr Searle’s oral evidence was that he pays for half of these costs and he is happy with that arrangement. Ms Welch’s evidence is that she paid an initial amount toward the deposit for the treatment, but she has been unable to contribute regularly to the other half of the costs because she hasn’t been able to afford those payments. Ms Welch contended that while Mr Searle decided he would pay half the costs there was no agreement between them that she would meet the other half, and she is unable to afford that cost. Mr Searle contended that he can’t afford to contribute more than half of the costs and in his view an arrangement where the parents pay half the costs each is reasonable.
I am satisfied that the total cost of [Child 1’s] orthodontic treatment is $6,800 over the period from approximately mid-2023 to the end of 2024 and that this is a necessary cost for [Child 1’s] support. I am satisfied that each parent is presently contributing 50% to that cost.
In relation to psychology costs, both parents agreed that this treatment is necessary for [Child 1]. I am satisfied that the parents incurred a cost of $2,700 for [Child 1] to undergo a learning assessment in November 2022.
In relation to ongoing costs for [Child 1’s] psychology treatment, Ms Welch’s evidence at the hearing was that she paid for [Child 1’s] initial session on 29 June at a cost of $280, and a GP mental health plan on 21 July 2023 at a cost of $180. [Child 1] attends his psychologist about every 6 to 8 weeks. The sessions are now covered by Medicare and Ms Welch’s out of pocket cost is $57.40 per session. The arrangement is that the parents will alternate attending the sessions with [Child 1], and if that works out they will end up paying for half the sessions each. However, Ms Welch expressed her concern that Mr Searle did not always attend the sessions he had agreed to attend and pay for, and consequently she would end up bearing an increased cost. Mr Searle’s evidence was that he agrees the psychology sessions are helpful for [Child 1], and he agreed that the parents alternate sessions and costs should be shared equally over time.
Following the hearing Ms Welch provided further written submissions in which she stated that in a session following the hearing, which Mr Searle was according to the schedule expected to attend and pay for, Mr Searle refused to attend and so Ms Welch was required to pay for that session.
I am satisfied that psychology treatment is a necessary cost for [Child 1’s] support. I am satisfied that the costs incurred and to be incurred are:
·$2,700 for a learning assessment in November 2022, and that the parents each contributed 50% toward the cost of that assessment; and
·Ms Welch incurred initial costs of $460 in June and July 2023, and since then the out-of-pocket expenses are approximately $57.40 every two months.
I am satisfied that [Child 1] continues to receive ongoing psychology treatment at an approximate out-of-pocket cost of $360 per year.
At hearing the parents’ oral evidence was that [Child 1] also attends a paediatric psychologist approximately every three months to have medication prescribed. [Child 1] is currently taking Ritalin and melatonin. According to the Medicare statements provided by Ms Welch, the costs incurred so far have been $188.25 out of pocket for an initial consultation on 12 May 2023, and a further $30 out of pocket on 24 August 2023. Ms Welch’s oral evidence is that the next review would be in December 2023 at a total cost of $275. I note that for the August visit the total cost was $275 but $245 of that was covered by Medicare, so the out-of-pocket cost to Ms Welch was $30. Mr Searle’s oral evidence was that this treatment is very helpful to [Child 1] and he expects it will continue for at least the next couple of years. Mr Searle thought he may already have paid for one visit to the paediatric psychologist although he was unable to provide any details. In relation to medication, according to the pharmacy receipts provided by Ms Welch her costs for [Child 1’s] medication are $39.97 for melatonin approximately every three months, and $7.30 for Ritalin approximately every month.
I am satisfied that attendance at the paediatric psychologist, and medication prescribed, is necessary for [Child 1’s] support. I am satisfied that in the period from May 2023 to 30 June 2024 the out-of-pocket costs for attendances at the paediatric psychiatrist will total approximately $278, and that the medication costs are approximately $180 per year.
In relation to occupational therapy, Ms Welch stated at the hearing that [Child 1] is not currently attending occupational therapy. She stated that her total out-of-pocket costs for [Child 1] totalled $2,445.98, as detailed in her bank statements provided to Child Support, as well as three additional payments of $88 made outside of that period. Those costs were incurred in the period from June 2021 to December 2022. Mr Searle’s oral evidence was that he agreed that those sessions were necessary and helpful for [Child 1], and his contribution should be 50%.
I am satisfied that Ms Welch’s costs in relation to [Child 1’s] occupational therapy was approximately $2,700 incurred over the period from June 2021 to December 2022, and that those costs were necessary for [Child 1’s] support. I am satisfied that Mr Searle did not contribute directly to those costs.
I am also satisfied based on the evidence before me that costs have also been incurred for toric lenses for [Child 1], and for podiatry treatment up to the end of the 2022 calendar year, but I am not satisfied that the costs associated with that treatment is enough to significantly affect the costs of caring for [Child 1].
Ms Welch submitted that Mr Searle’s contribution to [Child 2’s] school fees and to costs associated with both children’s special needs should be greater than 50%, given that he has a higher income than she does. She proposed that each parent’s contribution should be in accordance with their proportion of the total income available to support the children.
I have also considered other costs incurred for the children. Mr Searle, in his statement of financial circumstances, has set out total weekly costs incurred for the children of $65, comprising $10 per week for each of clothing, children’s activities, entertainment, and education expenses, $20 per week for medical/dental/optical expenses and $5 per week for pharmaceutical expenses. Mr Searle has not allocated any expenses for the children for food or utilities, but given that Mr Searle has 38% care of the children I will surmise that he does also incur those expenses while the children are in his care.
Ms Welch, in her statement of financial circumstances, has listed expenses of approximately $1,453 for the children, comprising:
·Food – $175
·Mortgage – $654
·Gas – $10
·Electricity – $30
·Water charges – $20
·Telephone – $65 per month (equivalent to $15 per week)
·Council rates and levies – $75
·Motor vehicle – $254 per fortnight (equivalent to $127 per week)
·Petrol – $45
·Car maintenance – $15
·Car registration – $15
·Medical/Dental/Optical – $80
·Education expenses – $212 per fortnight (equivalent to $106 per week).
Leaving aside mortgage and car loan payments and council rates (for the sake of comparison between the costs claimed by each parent), this equates to ongoing expenses for the children of $470 per week. There is obviously a significant disparity in the amounts each parent identifies as being spent on the children per week, which to some extent is due to a difference in how the parents are accounting for the costs but also reflects that Ms Welch is bearing the cost of [Child 2’s] school fees and also bears more of the ongoing medical costs for [Child 1] in particular. I accept that both parents incur costs in the day-to-day maintenance of the children including providing them with accommodation, food, utilities, transport and medical needs. Mr Searle has also submitted that he provides private health insurance for the children which is of benefit to both parents.
I have considered the income, property and financial resources of each parent. As set out above, I am satisfied that Ms Welch’s taxable income in the 2021/22 financial year was $39,463. There is no evidence before me to suggest that this is not an accurate measure of the income available to Ms Welch in that financial year. I am also satisfied that Ms Welch’s taxable income in the 2022/23 year is approximately $148,000, comprising a taxable superannuation payment, income from her rental properties and a small amount of income from employment. In addition, I am satisfied that in that year Ms Welch received an additional untaxed payment of $58,581.
In relation to her future income, Ms Welch’s evidence was that she is hoping to increase her paid work, although her ability to do so will depend on both her state of health and the availability of suitable work. She expects to continue to receive an income from her rental properties in a similar amount to that in previous years.
In his submissions to the Tribunal, Mr Searle also stated that he considers that Ms Welch’s asset position should be considered and taken into account in the child support assessment. Paragraph 117(7A)(a) of the Act provides that in having regard to the income, property and financial resources of a parent of a child, regard must be had 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.
In relation to her asset position, Ms Welch’s statement of financial circumstances lists the following assets:
·Property in [Town 3], ACT, valued at $985,000;
·Property in [Town 1], Queensland, valued at $580,000;
·Property in [Town 2], Queensland, valued at $470,000;
·Superannuation of $599,000;
·Motor vehicle, household contents and savings account balances totalling approximately $42,400.
Ms Welch also lists significant liabilities as follows:
·Home loan on the [Town 3] property of $621,303.16;
·Mortgage over the two rental properties in [Town 1] and [Town 2] of $147,219.97;
·Credit card debts totalling $108,832;
·NILS loan from [Agency 2] of $2,977, which is noted as having been taken out to cover medical expenses for Ms Welch and [Child 1];
·Loan from [Business 1] of $10,500, which is noted as a car loan;
·Personal loans from family members totalling $11,000.
Ms Welch provided home loan statements for five separate home loan accounts, with balances as follows:
·[Bank 2] home loan account #3328, balance $297,273;
·[Bank 2] home loan account #3336, balance $53,909;
·[Bank 2] home loan account #3379, balance $270,119;
·[Bank 2] investment loan account #3352, balance $55,886;
·[Bank 2] investment loan account #3344, balance $91,333.
In her written submissions to the Tribunal Ms Welch submitted that it would not significantly improve her financial position to sell her rental properties, and also that it would remove her primary source of income as well as her source of income protection. Ms Welch demonstrated the position in table form as follows:
Scenarios for selling of rental Property [Town 1] or [Town 2], includes Capital Gains Taxes, costs, [Bank 2] Mortgage payouts and net positions with three options.

[Town 1]	[TOWN 2]
Original Purchase Price	$140,000	$167,500
Purchase Date	25-Sep-94	11-Feb-98
Estimated Sale price from market valuations	$580,000	$470,000
less tax write down value to 31.3.2023	-$9,001	-$675
Sale Proceeds applicable for Capital Gain	$570,999	$469,385
CAPITAL GAIN	$423,968	$368,337
Less General 50% discount on Cap Gain	-$211,981	-$184,169
Less Selling costs	-$17,400	-$14,100
Less Original Investment Mortgage [Bank 2]	-$57,242	-$93,549
Less Mortgage from [Town 3] #3379	-$274,339	-$274,339
NETT IN HAND TO PAYOUT DEBTS if either sold	-$10,037	-$96,772
If BOTH Properties sold NETT in HAND	$187,604
Remaining loans on [Town 3] are:
[Town 3] Mortgage [Bank 2] #3328	-$302,263.64
[Town 3] Mortgage [Bank 2] #3336	-$54,820.99
Total Mortgages owing on [Town 3]	-$357,084.63
Residual mortgage debt on [Town 3] if both properties sold	-$169,480.63

Ms Welch’s contention is, in essence, that if she were to sell the rental properties it would leave her in a worse income position than she is in currently, as she stated that the rent from the rental properties currently represent her primary source of income.
I note in relation to the above table submitted by Ms Welch that it seems to assume that capital gain cost will be equivalent to the whole of the taxable capital gain amount on the properties, which appears to be incorrect. I also note that the loan amounts set out in that table had decreased slightly by the time Ms Welch provided her mortgage account statements.
According to the information that Ms Welch has submitted, the two rental properties are currently valued at a total of $1.05 million. The total of the original purchase prices is $307,500. If Ms Welch were to sell the two properties, she has estimated she would have costs associated with the sales of $31,500. She has estimated that the taxable capital gain amount would be approximately $396,000 across the two properties – assuming a marginal tax rate of 45%, this would result in capital gains tax to be paid of $178,200. After those costs, Ms Welch would therefore be left with proceeds of approximately $840,000.
Presumably, if the rental properties were sold, Ms Welch would be required to discharge at least the two investment loans, so approximately $147,000. Ms Welch’s evidence is that she would also be obliged to discharge the home loan #3379, which is a further amount of approximately $270,000. If all of those mortgages were discharged, and allowing a further $5,000 for costs associated with discharging the mortgages, this would leave Ms Welch with an amount of approximately $418,000. Of course, this amount may be higher depending on the actual sale price of the properties. Invested even at a moderate interest rate of 3%, that sum could return an income of approximately $12,000 per year, which seems comparable to the income that Ms Welch may have made from the rental properties, after expenses, in the 2022/23 financial year. It would, of course, also decrease her ongoing expenses in mortgage repayments, leaving her only with a mortgage of approximately $350,000 on the family home in [Town 3].
Ms Welch has stated in her submissions to the Tribunal that requiring sale of the properties would be asking her to rescind over $500,000 equity in the two properties, and she is not prepared to do that as neither time nor her health would enable her to rebuild that equity. While that is of course entirely a matter for Ms Welch, I note that the case law makes it clear that the preservation of assets by a parent does not take priority over the current needs of the children (Dwyer and McGuire (1993) FLC 92-420, Bassingthwaite and Leane (1993) FLC 92-410).
I am satisfied on balance that, given that Ms Welch does receive income from the rental properties that is above the amount of the expenses she incurs and therefore does receive income from the properties which is available to contribute to the needs of the children, that her retention of her rental properties does not mean that it would be just and equitable to infer a higher income than she actually has for the purposes of the child support assessment. However, I also note that Ms Welch is incurring significant ongoing costs in maintaining the rental properties, and the purpose of her incurring those costs is to improve her asset position in the future. Those costs cannot take priority over her contribution to the current needs of the children.
Mr Searle submitted a statement of financial circumstances in which he declares a current weekly income of $3,846.
Mr Searle’s evidence is that he had three employers in the 2022/23 financial year. His total gross income from the three employers, before any salary sacrificed amounts were deducted, was $189,471.
Mr Searle’s oral evidence is that his previous contract ended on 30 June 2023. He received his final payment under that contract in early July 2023, but did not receive any lump sum or termination payment. He had a brief period when he was not employed, during which time he was required to use his savings to meet his living expenses. His current contract commenced in August 2023 and he expects that contract to continue at least until the end of the 2023/24 financial year. According to the payslip submitted by Mr Searle, under his current contract he receives a gross income of $20,937.50 before any salary sacrifice amounts are deducted, equating to an annual income of approximately $250,000 per year. There are pre-tax deductions from his monthly income of a pre-tax vehicle lease of $834.23 and superannuation of $2,359.80. I note that those deductions would be reportable fringe benefits amounts, and so should be included as part of Mr Searle’s adjusted taxable income for child support.
Mr Searle pointed out in his evidence that although his taxable income is higher than Ms Welch’s income, his asset position is much worse. He does not own a property and has no significant assets other than superannuation funds of approximately $768,260. While he did have a small amount of savings his evidence is that he had to use that during July 2023 when he was without work for a short period, and he also has a $16,000 credit card debt accrued during that period.
I am satisfied that while Mr Searle did have a short period of unemployment at the beginning of the 2022/23 financial year, he is now employed and his gross income since August 2023 is approximately $250,000.
Ms Welch’s statement of financial circumstances lists total weekly household expenses of approximately $2,010. This includes weekly expenses for herself of $647, comprising:
·Food – $100
·Mortgage – $350
·Gas – $5
·Electricity – $20
·Water charges – $10
·Telephone – $30 per month (equivalent to $7 per week)
·Council rates and levies – $40
·Motor vehicle – $81 per fortnight (equivalent to $40 per week)
·Petrol – $40
·Car maintenance – $5
·Car registration – $5
·Medical/Dental/Optical – $20
·Hairdressing/Toiletries – $5
Ms Welch submitted to the Tribunal that particular regard should be had to her own high medical costs. I accept from the evidence provided that Ms Welch suffers from a number of medical conditions. Her oral evidence at hearing was that in particular her costs in relation to her conditions are:
·Total right hip replacement in July 2020 at an out-of-pocket cost of $5,500;
·Shoulder surgery in July 2021 at an out-of-pocket cost of $3,300;
·Colonoscopy in March and September 2022, with an out-of-pocket cost including pathology of about $500 each. Ms Welch advised that she will need a further colonoscopy at a similar cost in December 2023;
·She sees an osteopath every 3–4 weeks at a cost of $110 per session and a chiropractor every 8 weeks at $95 per session to help manage her [medical condition 2]. She has not had those treatments for about 6 months as she hasn’t been able to afford them, but she does need them;
·She also sees a psychologist regularly at a cost of $270 per hour, but there is a Medicare rebate. She sees her psychologist about every 8 weeks, but if things get stressful it can increase to once a week.

Following the hearing, Ms Welch also submitted an invoice from [Health Service 7] dated 6 December 2023 for a total amount of $1,711.25, an invoice from [Doctor F] for surgery assistance dated 7 December 2023 in the amount of $280 and an invoice from [Doctor G] for anaesthesia services for an out-of-pocket amount of $410.

100.Ms Welch has submitted that her self-support amount in the child support assessment should be increased to take account of her high medical costs. I accept that Ms Welch has had, and continues to have, high medical costs. Some of those costs were incurred outside of the period I am able to consider in this review, in particular costs associated with her hip replacement in 2020.
101.Mr Searle’s statement of financial circumstances lists total weekly household expenses of approximately $1,460, and weekly expenses for himself of $1,430, comprising:
·Food – $370
·Mortgage – $460
·Gas – $25
·Electricity – $25
·Telephone – $10
·Council rates and levies – $40
·Motor vehicle – $250
·Petrol – $100
·Car maintenance – $40
·Car registration – $25
·Fares/car parking – $25
·Clothing/shoes – $10
·Medical/Dental/Optical – $20
·Entertainment/Hobbies – $10
·Gardening/Lawn mowing – $5
·Repairs – furnishings and appliances – $10
·Gifts – $20
·Hairdressing/Toiletries – $10

102.Mr Searle did not raise any issues in relation to any special needs for himself.
103.Taking into account all of the information provided in evidence, I am satisfied that in relation to the incomes of the parents it would be just and equitable to depart from the administrative assessment of child support as follows:
·For the period from 1 September 2022 to 30 June 2023, Ms Welch’s adjusted taxable income is to be set at $200,000;
·For the period from 1 September 2022 to 30 June 2023, Mr Searle’s adjusted taxable income is to be set at $251,197;
·For the period from 1 July 2023 to 30 June 2024, Mr Searle’s adjusted taxable income is to be set at $229,166.

104.I have set Ms Welch’s 2022/23 income at a rate that I consider reflects her ongoing rental property and employment income and the amounts received from her superannuation fund from 1 January 2023 for a period of twelve months, as she received the superannuation amounts in January 2023. The amount of income does include the $56,000 untaxed component received, but does not “gross up” that amount to take account of the fact that it was not subject to tax. I consider this is reasonable in light of the fact that Ms Welch suffered a drastic reduction in her income following the termination of her employment in 2021, which has required significant financial adjustment on her part.
105.I have set Mr Searle’s income at $229,166 for the 2023/24 financial year to reflect that his ongoing income is approximately $250,000 per year, but he did have a period of unemployment during the financial year of approximately one month.
106.I acknowledge that Ms Welch has submitted that the parent’s incomes should be reassessed for a period of 18 months prior to her initial application to Child Support, in other words, to 4 June 2021. However, I am not satisfied that it would be just and equitable to make a change to the parents’ incomes for that period. I acknowledge that there was a change in Ms Welch’s circumstances from July 2021 when her employment was terminated, but Ms Welch did not apply to child support for a further change to the assessment until 4 December 2022. In that time, Mr Searle was entitled to rely on the decision that had been made, and was not on notice that there may be a further adjustment to that decision. On balance, I find that it is reasonable to reconsider the parents’ incomes only from the beginning of the child support period that was in place when Ms Welch made her application, being 1 September 2022.
107.In relation to [Child 2’s] school fees, I am satisfied that the total school fees incurred by Ms Welch for [Child 2] are $4,302 for 2022, $4,273 for 2023 and $4,410 for 2024. I am satisfied that in 2022 and 2024 it is reasonable for Mr Searle to contribute a greater share of [Child 2’s] school fees, given his significantly higher income. In 2023 I consider that the parents’ incomes were not significantly different, due to Ms Welch receiving superannuation amounts in January 2023. Therefore in respect of [Child 2’s] school fees I consider it is reasonable that the annual rate of child support payable by Mr Searle be increased by $3,200 for the period from 1 January 2022 to 31 December 2022, by $2,100 for the period from 1 January 2023 to 31 December 2023 and by $3,300 in the period from 1 January 2024 to 31 December 2024.
108.In relation to the children’s special needs, I have taken into account Mr Searle’s submission that he provides private health insurance for the children which has the result of reducing some of the medical costs pertaining to them, and which is of benefit to both parents. I find that it is reasonable that each parent contributes 50% to the increased costs due to the children’s special needs. I have found that costs in relation to the orthodontic costs for both children, and the psychological assessments for [Child 1], have been shared between the parents and so I will not make any adjustment to the child support assessment in relation to those costs.
109.I have found that up to December 2022 Ms Welch incurred costs in relation to [Child 1’s] occupational therapy of approximately $2,700. I will therefore increase the annual rate to be paid by Mr Searle by an amount of $1,350 for the period from 1 January 2022 to 31 December 2022 in respect of those costs.
110.I have also found that ongoing costs are incurred for [Child 1] to attend a psychologist and for medication. On balance I am satisfied that these costs are shared between the parents, and so I will not make any further adjustment to the child support assessment for those costs.
111.I accept that Ms Welch does have higher than usual self-support costs, due to ongoing medical issues. However, I do not find that it would be just and equitable to increase her costs of self-support at present. During the 2023 calendar year Ms Welch had the benefit of a significant and in part tax-free sum from her superannuation fund, and I consider that she had sufficient funds to absorb her medical costs. While Ms Welch may have ongoing costs during 2024, those costs cannot currently be quantified on the basis of the evidence available to me. In addition, given the other changes I have made to the assessment, it is unlikely that Mr Searle will have a reasonable capacity to make any further contribution to the costs of the children during the 2024 calendar year.
112.The effect of those adjustments on the child support assessment, according to my calculations, are as follows:
·For the period from 1 January 2022 to 31 August 2022, Mr Searle will be assessed to pay an annual rate of approximately $12,300, which includes an amount of $1,350 for [Child 1’s] special needs and $3,200 for [Child 2’s] school fees;
·For the period from 1 September 2022 to 31 December 2022, Mr Searle will be assessed to pay an annual rate of $14,358, which includes an amount of $1,350 for [Child 1’s] special needs and $3,200 for [Child 2’s] school fees;
·For the period from 1 January 2023 to 21 January 2023, Mr Searle will be assessed to pay an annual rate of $11,908, which includes an amount of $2,100 for [Child 2’s] school fees;
·For the period from 22 January 2023 (when [Child 1] turned 13) to 30 June 2023, Mr Searle will be assessed to pay an annual rate of $12,948, which includes an amount of $2,100 for [Child 2’s] school fees;
·For the period from 1 July 2023 to 31 December 2023, Mr Searle will be assessed to pay an annual rate of $31,012, which includes an amount of $2,100 for [Child 2’s] school fees;
·For the period from 1 January 2024 until the beginning of a new child support period, Mr Searle will be assessed to pay an annual rate of $32,212, which includes an amount of $3,300 for [Child 2’s] school fees.

113.I am satisfied that those assessments will not cause undue hardship to Mr Searle and are required to properly meet the needs of the children. Ms Welch’s financial position continues to be difficult, in large part due to the high debts that she is currently carrying, however given Ms Welch’s current asset position I am satisfied that the decision will not cause her undue hardship.

Issue 4 – Is it otherwise proper to depart from the administrative assessment?

114.The final step for the Tribunal is to determine whether it is otherwise proper to depart from the administrative assessment. Subsection 117(5) of the Act requires that consideration be given to the nature of the duty of a parent to maintain a child, and the effect that any change to the assessment would have on the rate of any Centrelink benefits being received by the parties or the children.
115.Ms Welch is in receipt of family tax benefit for the children. I am satisfied that a departure from the assessment will properly reflect the financial resources available to both parents and ensure that the level of financial support provided by the parties for the children is determined according to their capacity to provide that support. It is therefore otherwise proper to depart from the assessment.
DECISION:

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

For the period from 1 September 2022 to 30 June 2023, Ms Welch’s adjusted taxable income is set at $200,000;
For the period from 1 September 2022 to 30 June 2023, Mr Searle’s adjusted taxable income is set at $251,197;
For the period from 1 July 2023 to 30 June 2024, Mr Searle’s adjusted taxable income is set at $229,166;
For the period from 1 January 2022 to 31 December 2022, the annual rate of child support otherwise payable by Mr Searle is increased by $4,550;
For the period from 1 January 2023 to 31 December 2023, the annual rate of child support otherwise payable by Mr Searle is increased by $2,100;
For the period from 1 January 2024 to 31 December 2024, the annual rate of child support otherwise payable by Mr Searle is increased by $3,300.

[2024] AATA 383

9 January 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction