Sergeant and Sergeant (Child support)

[2023] AATA 3749

Sergeant and Sergeant (Child support) [2023] AATA 3749 (21 September 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC026205

APPLICANT:  Mr Sergeant

OTHER PARTIES:  Child Support Registrar

Ms Sergeant

TRIBUNAL:Member S Letch

DECISION DATE:  21 September 2023

DECISION:

The decision under review is varied so that Mr Sergeant’s adjusted taxable income is  varied to $160,000 for the period 8 September 2022 to 31 December 2024.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the child are significantly affected – a ground for departure established - decision under review varied

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 Sergeant and Ms Sergeant are the parents of [the child], born April 2010. [The child] is recorded as being in the 95% care of Ms Sergeant. Mr Sergeant seeks a review of an objection decision by Child Support which “partly allowed” an objection by him to a “change of assessment” decision of 19 January 2023. 

2. By way of background, it is convenient to set out some extracts from the objections officer’s decision dated 23 May 2023:

   …

   The assessment

   At the time Mrs Sergeant lodged her change of assessment application the following assessments
   were in place:

   For the period 1 September 2022 to 31 January 2023, Mr Sergeant was assessed to pay Mr Sergeant $1,855 per annum. This was based on Mr Sergeant’s 2022-2023 estimated income of $30,519 and Mrs Sergeant’s 2021-2022 adjusted taxable income of $178,727. The annual rate payable has been set under a prior change of assessment (COA) decision. On 6 June 2022 Decision Maker [A] found Reason 2 established and made the following decision:

   For the period 1 February 2022 to 31 January 2023, the annual rate otherwise payable by Mr
   Sergeant shall increase by $1,855.

   It is noted that at the time of Mrs Sergeant’s COA application, errors were found to have occurred
   across multiple periods. These matters were escalated and have now been addressed. The
   assessments currently in place are accurate.

   …

   The decision as set by DM [B] dated 16 December 2020 is not varied under this process and is to remain in place.

   On 19 January 2023, Decision Maker (DM) [C] found Reasons 3 and 8A in Mrs Sergeant's
   application established and changed the assessment as follows:

   The decision as set by DM [B] dated 16 December 2020 is not varied under this process and is to remain in place.

   The decision as set by DM [A] dated 6 June 2022 is not varied under this decision and is to remain in place.

   For the period 1 January 2023 to 31 December 2023, the rate of child support payable by
   Mr Sergeant shall be increase by $11,983 per annum by way of his contribution towards [the child]'s school fees.

   For the period 1 Janua1y 2024 to 31 December 2024, the rate of child suppo1t payable by
   Mr Sergeant shall be increased by $13,975 per annum by way of his contribution towards [the child]'s school fees.
   For the period 8 September 2022 to 31 December 2024, the adjusted taxable income for Mr Sergeant shall be set to $120,000 per annum.

   For the period 8 September 2022 to 31 December 2024, the cost of children in case 926437482 shall be set to $0.

   …

   The prior AAT decision made on 26 November 2019 indicated the following:

   11. At the time of separation [the child] was a primary school student in Year One at [School]. In a previous departure decision made by the CSA on 12
   May 2017 it was determined that [the child]’s attendance at [School]’s was consistent with
   the parents’ mutual expectation that she would each be educated in that manner. Neither
   party sought review of that decision. However, Mr Sergeant sought to revisit this issue in this
   review application.

   At point 13 of this decision the following was documented:

   The tribunal notes that Mr Sergeant earlier admitted to having signed the enrolment forms,
   telling the decision maker of the 12 May 2017 decision that he had been lured into doing
   so. In either event, Mr Sergeant must have expected that, once [the child] began at [School]’s,
   she would be educated there. She began her preparatory year in 2015 and the parents did not
   separate until mid-2016, some 18 months later. Mr Sergeant stated that he had agreed to pay
   half of the school fees for 2017 before the property settlement was finalised, and stated that
   it was his silly mistake not to object to the decision requiring him to contribute to those fees for both the 2017 and 2018 years. However, the tribunal finds that, whilst Mr Sergeant
   may be dissatisfied with the notion of ongoing contribution to [the child]'s private primary
   education, it is nonetheless the manner of education that each of the parents expected for
   her.

   …
   Overall, based on the evidence provided during this process, and supported by the prior multiple
   processes considered, I am satisfied [the child] is being educated in a manner both parents intended. The first threshold requirement under this Reason is met.

   With regards to the second threshold requirement, Mrs Sergeant provided details of fees for the 2022 and cm1·ent 2023 for [the child] at [School]. The evidence provided for the 2022 yea indicated tuition fees of $25,360 for [the child] in Year 7. The statement also indicated a bursary of $3,170 credited on 1 October 2022. This reduces the 2022 h1ition fees to $22,190 total. At the time of Mrs  Sergeant's COA application, the cost of child for [the child] in the assessment was $21,195. The net 2022 tuition fees therefore constitute 104% of the cost of child. I am satisfied the costs incurred to educate [the child] significantly affect the costs of maintaining [the child] overall.

   With regards to the 2023 fees, Mrs Sergeant has provided evidence indicating that the term 1 h1ition fees are $6,784. The statement of account also shows a bursa1y discount equivalent to 25% of the tuition fee. As Mrs Sergeant has not advised whether this is for the first te1m only or for the full year, I will consider there to be a 25% discount for the full year. This is often the case when granted but as only the first term had been invoiced, no additional credits show in the account provided.

   Based on a term fee of $6,784, the annual costs for [the child] would be $27,136. Applying a 25%
   discount across the year, this would give the account a credit of $6,784. For the 2023 year, I am
   therefore satisfied that the total h1ition fees for [the child] will be $20,352. I am also satisfied the 2023
   costs incurred to educate [the child] significantly affect the costs of maintaining [the child] overall.

   Reason 3 is established.

   …

   The assessment at the time of Mrs Sergeant’s COA application utilised a 2022-2023 estimated income of $30,519 for Mr Sergeant. The estimated income was based on Mr Sergeant’s advice of gross income from self-employment.

   Whilst this may be accurate based on what Mr Sergeant was receiving from his employment income, Reason 8A covers a multitude of factors, inclusive of income, property and financial resources available to a parent.

   The ATO records indicate that Mr Sergeant has a company, of which he is the sole director. The
   evidence provided indicates that Mr Sergeant is also the person who contracts and earns the income for the company. As such, I am satisfied the company, whilst a separate legal entity for taxation purposes, is an extension of Mr Sergeant. Any income being derived by the company can
   reasonably be attributed to Mr Sergeant under this Reason, being an additional financial resource
   available.

   The ATO records for Mr Sergeant’s company shows a profit of $83,182 for the 2021-2022 financial
   year. Based on the evidence it is reasonable to consider the company started around October 2021.

   On this basis, the company made a profit equivalent to $9,242 per month ($83,182 total profit / 9
   months = $9,242.44 per month average). Annualised this equates to $110,909 per annum.

   As there has not been a full 2022-2023 financial year at this time, Business Activity Statements
   (BAS) have been reviewed for the first 9 months of the current 2022-2023 financial year, being 1
   July 2022 to 31 March 2023. The BAS indicated the following amounts:
   …

   Based on the available evidence up to March 2023, there has been $175,663 in total sales, after GST is removed from the initial total amounts. By annualising this amount, the total of $234,217 results. The total sala1y/wages paid during the 9 months equates to $3 1,460.

   Based on the 2022 financials for the company, there was a total of $104,305 in sales in 9 months.

   Based on the 2022-2023 figures available, there is an equivalent increase in sales by over 120%
   when compared year on year. As Mr Sergeant has not provided any financial details, whether there
   has been a significant increase in any business expenses that would reduce the 2022-2023 profit
   when compared with that for the 2021-2022 financial year, I will make some reasonable
   adjustments.

   In the 2021-2022 taxation return for the company there were business expenses of $21,123. This
   included salary/wages expenses of $16,599 and superannuation of $1,660 (10% of sala1y/wages
   paid). This equates to 20.3% of the total sales for the 2021-2022 financial year. Given it is
   reasonable to consider there has been an increase in costs in most items over the last 12 months, I will increase the expenses for the 2022-2023 year to 30% when annualised. This is an increase in  the 2021-2022 expenses by almost 50%.

   Based on the annualised sales for the company for 2022-2023 of $234,217, I am satisfied this
   amount will be reduced by around 30% for expenses. This will leave an amount of $163,952
   rounded. This is approximately a 100% increase on the 2021-2022 overall profit.

   In the 2021-2022 financial year, the profit of $83,182 required taxation payable of $20,795. Given
   the annualised profit for the company for the 2022-2023 financial year is approximately double that of the 2021-2022 financial year, I am satisfied it is reasonable to double the amount of taxation payable by the company in the 2022-2023 financial year. This equates to $41,590.

   By deducting this amount from the annualised profit of$163,952 results in an amount of$122,362.
   This amount will be considered when making this decision as it is a financial resources available to Mr Sergeant. Whilst he may chose not to attribute any additional income to himself via his personal income, the profit in his company is available to be distributed accordingly and needs to be considered under this Reason.

   The salary/wages amounts paid out up to March 2023 equate to $31,460. There is no evidence that shows any additional employees for the company. It is noted that Mr Sergeant advised during the COA process that he was the only employee of the company. By simply dividing the total amount of $31,460 by the amount of fortnights in the 9 months, the fortnightly amount equates to around $1,500 -$1,600. Taking the average amount, being $1,550 per fortnight, this annualises to $40,300.

   The bank statements provided by Mr Sergeant' s financial institution show fortnightly deposits from
   wages in the vicinity of a net amount from a gross amount of$1,500 - $1,600 per fortnight. I am
   satisfied the sala1y/wages paid to March 2023 shall also be attributed to Mr Sergeant.

   …

   The bank statements also indicated credit entries of $203.46 from [Financial services provider]. As Mr
   Sergeant has indicated he is at an age whereby he may be seeking to transition to retirement, I am
   satisfied this amount being paid to Mr Sergeant on a regular fortnightly basis can be considered as
   income, or at least, an additional financial resource. Annualising this amount equates to $5,299
   rounded. This amount will also be considered when determining Mr Sergeant’s adjusted taxable
   income for child support purposes.

   I have no additional evidence that would support Mr Sergeant has any subsequent income, property or financial resources that would require consideration through this process.

   Given the available evidence, I am satisfied Mr Sergeant’s overall annualised income, property and
   financial resources available can be shown as follows:

   Prior to 1 April 2023
   $40,300 from salary/wages from the company.
   $122,362 available as financial resources via his company.
   $5,299 from [Financial services provider].
   $167,961 total.

   From 1 April 2023
   $122,362 available as financial resources via his company.
   $5,299 from [Financial services provider].
   $127,661 total.

   It is noted that as no additional evidence has been provided by Mr Sergeant regarding whether he
   continues to earn from his contracting, whether he has any income protection insurance payable
   (which is general terms is often the case either via his superannuation or private policy as he is
   self-employed) or if he is drawing funds from the company for his support. If he is continuing
   contracting but simply not drawing a salary/wage, the annualised profit for the company may be
   higher from 1 April 2023 as the salary/wages would not be a deduction for the company. Without
   any evidence to indicate the current circumstances, I am satisfied consideration of the above is
   reasonable.

   By utilising these amounts in the corresponding period assessments, there is a significant increase from the current $nil assessment payable by Mr Sergeant. As such, I am satisfied the current assessments are unfair.

   The income currently used in the assessment is $30,519. Based on the above information I find Mr Sergeant’s current income, property and financial resources available are significantly higher which makes the child support assessment unfair because he has a greater capacity than it currently indicates.

   …

   Reason 3 in Mrs Sergeant's application is also established with regards to [the child] 's private school
   education costs.

   In regards to Mr Sergeant' s income, I intend to vary the income for him to reflect earnings of
   $167,961 per annum for the period 8 September 2022 until 31 March 2023. This considers the
   evidence available from all sources. This is the date which Mrs Sergeant lodged her COA application,

   From 1 April 2023 onwards, I am satisfied an adjusted taxable income of $127,661 shall be utilised as Mr Sergeant 's adjusted taxable income for child support purposes. As I am satisfied the lodgement of Mr Sergeant' s personal taxation return will not accurately reflect his overall income, property and financial resources, I am satisfied the decision shall be set until 31 December 2024.

   With regards to the school fees for [the child], I note that DM [B]'s decision of 16 December 2020 included school fees for Mr Sergeant until 31 December 2022. I do not intend to make any
   changes to that decision.

   Instead, to accurately reflect the bursary discount applied in Term 4 of 2022, which was not
   considered in DM [B]’s decision, I am satisfied a reduction in the school fees equivalent
   to the discount of $3,170 for the 2023 year will be applied. Based on the 2023 amounts as advised by Mrs Sergeant, I am satisfied [the child]’s net school fees for 2023 (after current discounts of 25%) will consider through this process is $17,182.

   Based on the somewhat limited evidence of each parents overall financial situation, I am satisfied it is reasonable to share the net 2023 school fees between the parents. As Mr Sergeant is not currently contributing towards [the child]’s school fees, I am satisfied that the assessment payable by Mr Sergeant shall be increased by $8,591 for the period 1 January 2023 to 31 December 2023.

   To alleviate the need for a subsequent COA application regarding [the child]’s school fees, I am
   satisfied an increase of 5% shall be considered for the 2024 fees when compared with the 2023 fees.

   The current fees for 2023 prior to any discounts is $27,136. By increasing this amount by 5%
   equates to $28,493. As the current status shows Mrs Sergeant receives a 25% discount on tuition fees, I will also apply this to the 2024 fees. This will result in a decrease of $7,123. The net fees that will be considered for [the child]’s 2024 fees will be $21,370. Similar to above, I am satisfied these costs shall be shared equally. Hence, the assessment payable by Mr Sergeant will therefore increase by $10,685 for the period 1 January 2024 to 31 December 2024.

   With regards to DM [A]’s decision of 6 June 2022, there will be no changes to that decision. The assessments accurately reflect the increase in liability for Mr Sergeant’s contribution to [the child]’s orthodontics costs.

   In consideration of the decision made by DM [C], he opted to vary the assessment from 8
   September 2022 with an increased amount for [the child]’s schooling costs and a higher income amount for Mr Sergeant.

   As my decision varies to that of DM [C], Mr Sergeant’s objection is part allowed.

   In comparing my decision to that of DM [C], the assessments will vary as follows:
   8 September 2022 to 31 December 2022, from $17,602 per annum to $20,117 per annum.
   1 January 2022 to 31 January 2023, from $17,305 per annum to $16,248 per annum.
   1 February 2023 to 14 February 2023, from $15,540 per annum to $14,573 per annum.
   15 February 2023 to 26 March 2023, from $21,393 per annum to $20,516 per annum.
   27 March 2023 to 31 March 2023, from $23,126 per annum to $22,299 per annum.
   1 April 2023 to 7 April 2023, from $23,126 per annum to $20,219 per annum.
   8 April 2023 to 30 June 2023, from $25,866 per annum to $23,079 per annum.
   1 July 2023 to 30 November 2023, from $23,706 per annum to $20,894 per annum.

   The decision will have the overall effect of reducing Mr Sergeant’s maintenance liability by
   approximately $235 (up to and including 14 May 2023) with the exact amount to be determined
   upon finalisation of the decision. Based on the evidence available, I am not satisfied the changes
   will place either parent into a situation of serious financial hardship.

   On the basis of the information before me, I consider this a fair and reasonable outcome.

   …

   Should Mr Sergeant's financial situation significantly change prior to the end of this decision, it is
   open to either parent to lodge a fresh change of assessment application to have their new situation taken into consideration…

   DECISION

   I have found special circumstances exist in this case and that it would be just and equitable and
   otherwise proper to make a change. The change to be made to the assessment is:

   The objection is part allowed.

   The decision by DM [B] dated 16 December 2020 is not changed via this decision.

   The decision by DM [A] dated 6 June 2022 is not changed via this decision.       

   For the period 8 September 2022 to 31 March 2023, the adjusted taxable income for Mr Sergeant
   shall be set at $167,961.

   For the period 1 April 2023 to 31 December 2024, the adjusted taxable income for Mr Sergeant shall be set at $127,661.

   For the period 1 January 2023 to 31 December 2023, the annual rate of child support otherwise
   payable by Mr Sergeant shall be increased by $8,591.

   For the period 1 January 2024 to 31 December 2024, the annual rate of child support otherwise
   payable by Mr Sergeant shall be increased by $10,685.

   For case number 926437482, for the period 8 September 2022 to 31 December 2024, the cost of

   child shall be set at $nil.

   …

3. Mr Sergeant and Mrs Sergeant participated in the Tribunal’s hearing by conference telephone.  In making its decision, the Tribunal took into account the sworn evidence of both parties, the Child Support materials, and the additional materials submitted by both parties.

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

1. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

2. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

3. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

1. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …

   (ii)    because the child is being cared for, educated or trained in the manner that was expected by his or her parents …

2. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to as Reason 8A, provides as a ground for departure:

   (c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   …

   (ia)      because of the income, property and financial resources of either parent; or

   (ib)       because of the earning capacity of either parent

10.The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.

The hearing

11.Mr Sergeant told the Tribunal he finished work in late 2021. He had been paying child support through his salary when he was an employee. He supplied an estimate of some $35,000 for his taxable income, which was accepted by Child Support. Mr Sergeant said that Child Support simply “disregarded” his 2021/22 income tax return. Initially they came up with a figure of around $120,000, then $127,000. He said this is “wrong” – his company is a completely separate entity and is “nothing to do with child support”. His income should only be reflected by the wage he is paid, without company profits.

12.Mr Sergeant said the matter of school fees has been a “long issue”. He said Ms Sergeant was always the decision-maker when it came to schooling; she made decisions without telling him, or consulting him. Child Support have based their decision on one document from [School]. He only recently discovered Ms Sergeant was receiving a bursary from the school; the school has not provided him with information about any historical bursaries. He said he has applied to Child Support under “FOI”.

13.In summary, Mr Sergeant contends his income should be recorded as around $35,000, with no addition for school fees as there was no “mutual expectation”.

14.Ms Sergeant told the Tribunal that she agrees with the Child Support decision. The matter of school fees has been dealt with in two previous Tribunal decisions. Ms Sergeant said if Mr Sergeant – who she said should be earning up to $200,000 if he was an employee – decides to pay himself a low wage, “that is his problem”. All of the income of his company should be attributed to him. She agrees with the calculation by Child Support concerning her out of pocket costs for school fees.

15.Mr Sergeant reiterated there was no agreement to share the cost of school fees. He said that Child Support “always favours mothers and swings decisions in their favour”. He had not been aware of the 25% discount on fees received by Ms Sergeant, and asserted they had not been taken into account by Child Support, notwithstanding the analysis provided by the objections officer that the discount had clearly been applied in calculating Ms Sergeant’s “out of pocket” cost. Mr Sergeant said Child Support does not clearly identify what is child support, and what is “school fees”.   

16.Mr Sergeant indicated that the company and personal tax returns for 2022/23 have been completed (he supplied those materials following the hearing). He reiterated that the company is “separate” and that his income requires recalculation. He said Ms Sergeant is “trying to get him to pay more and more”. He said he was paid a wage of around $40,000 for 2022/23. He said Child Support garnished his entire $4,000 refund.

17.In relation to his Statement of Financial Circumstances, Mr Sergeant indicated he is planning on “transitioning” to a “semi-retirement” or “retirement” stage. He said he “needs to keep a buffer” for health issues; he said his superannuation was depleted by $250,000 following the end of the relationship. He says he has “lost everything” from the property division. Mr Sergeant indicated he should already have stopped work as he is beyond retirement age.  

18.Ms Sergeant indicated she is still employed and earning around $2,300 per week. She receives a “base salary” plus commission depending upon performance. Ms Sergeant did not identify any unusual or notable expenses. Mr Sergeant suggested Ms Sergeant failed to disclose money in bank accounts, which Ms Sergeant denied.

19.In terms of going forward, Mr Sergeant indicated his future “working time” is limited, and suggested a shorter period would be preferred for any “change of assessment”. Ms Sergeant expressed a preference for a longer period in the interests of promoting certainty.

Consideration

20.Mr Sergeant continues to agitate against being required to make any contribution towards school fees. He suggests there was no “mutual agreement”. However, two previous decisions of this Tribunal have concluded that both parents expected [the child] to be educated privately.

21.On 26 November 2019, Member Buxton concluded the following:

13. Mr Sergeant submitted during the hearing that the decision to educate [the child] at [School]’s had been made by Ms Sergeant alone, and that she had completed all the enrolment forms and forged his signature on those forms. Ms Sergeant denied doing so and submitted that the decision had been jointly made by the parents. The tribunal notes that Mr Sergeant earlier admitted to having signed the enrolment forms, telling the decision maker of the 12 May 2017 decision that he had been “lured” into doing so. In either event, Mr Sergeant must have expected that, once [the child] began at [School]’s, she would be educated there. She began her preparatory year in 2015 and the parents did not separate until mid-2016, some 18 months later. Mr Sergeant stated that he had agreed to pay half of the school fees for 2017 before the property settlement was finalised, and stated that it was his “silly mistake” not to object to the decision requiring him to contribute to those fees for both the 2017 and 2018 years. However, the tribunal finds that, whilst Mr Sergeant may be dissatisfied with the notion of ongoing contribution to [the child]’s private primary education, it is nonetheless the manner of education that each of the parents “expected” for her.

14. The tribunal is satisfied that the actions of both parents are consistent with the conclusion that [the child]’s attendance at a private primary school for girls, such as [School]’s, is the manner that they each expected. Ms Sergeant produced documents which established that the amount of the compulsory tuition fees and levies for [the child] at [School]’s in 2019 were in excess of $19,000 annually. The tribunal accepts that tuition fees of that magnitude would fall into the category of costs which parents would not have to expend in the education of a child in the public system.

22.On 1 December 2021, Member Thomson concluded as follows:

20. During the course of the hearing, the Tribunal discussed the history of the parents arrangements regarding [the child]’s education at [School]. Mr Sergeant gave evidence that although he did not personally complete the [School] enrolment forms and some of the information regarding his occupation was not accurate, he was aware prior to the parents separating in September 2016 that the child had been enrolled at [School] on or about 27 May 2014 and was to commence in the preparatory grade in January 2015. He acknowledged he had not opposed the child’s enrolment at [School], and accepted that his signature appeared on the school enrolment application form, a copy of which was before the Tribunal at pages 121 to 124 of Exhibit 1, and that he had paid the school fees for at least the child’s 2015 preparatory year.

21.The Tribunal finds the evidence, on balance, is that it was the parents’ mutual intention that [the child] receive a private education at [School].

23.In Cheung v Administrative Appeals Tribunal [2009] FCA 241, the Court observed the following:

[49] Generally speaking, there should not be relitigation without reason of the same issues before the Tribunal where the relitigation is of the same facts and issues already decided. In those circumstances, previous Tribunal decisions would generally be regarded as establishing the matters actually decided and the grounds for determination. It is open to a subsequent Tribunal to regard a previous decision as determinative of an issue and to decide that an issue should not be reopened. The Tribunal has a discretion in those circumstances to take such a course (Morales v Minister for Immigration and Multicultural Affairs (1998) 82 FCR 374 at 390).

24.I consider that I should follow the conclusions of this Tribunal and that the already litigated issue should not be revisited. In any event, I am comfortably satisfied that the evidence establishes that both parents had clearly expected [the child] to be educated in the private school system.

25.The cost of [the child]’s tuition fees are considerable and very material in the terms of the overall child support assessment. In the special circumstances of the case, the child support assessment is rendered unfair; there is a ground to depart from the formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

26.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

27.The Tribunal is obliged to conduct reviews in a way that is informal, quick and proportionate: section 2A of the Administrative Appeals Tribunal Act 1975. The Tribunal is required to do the best it can on the evidence available to it.

28.Mr Sergeant contends only his personal taxable income as assessed by the ATO should be assessed, and the income of the property he controls should be regarded as his financial resource.

29.Mr Sergeant controls the company; he generates the income and makes all decisions about it, including ultimately how much is to be distributed to him. Consistent with the usual approach in these sorts of cases, the income generated by the company is clearly a financial resource available to him and should properly be added to the wage/salary income he receives from the company.

30.Mr Sergeant raised no particular issue with the arithmetic applied by Child Support (once Child Support had reached the conclusion business income should be added to his taxable income); rather, he contends there should be no business income attributed from the company to him at all. He raised no particular issue with the [Financial services provider] ($5,299) income attributed to him. Ms Sergeant told the Tribunal she accepts the figures arrived at by Child Support.

31.Following the hearing, Mr Sergeant provided the company 2022/23 income tax return, and his personal return. The taxable income for [Company name] for 2022/23 was a total sum of $119,975. [1] It appears the wage paid by the company to Mr Sergeant was at least $35,336 (Mr Sergeant’s personal taxable income for 2022/23 as per the notice of assessment for the year ended 30 June 2023).  I assume this wage or salary formed the bulk of the “all other expenses” figure of $46,917 in the company return.

[1] This includes a deducted sum of $74,885 recorded as a “deduction for decline in value of depreciating assets”. The starting approach is that non-cash deductions such as depreciation are not ordinarily allowed in arriving at the financial capacity of a parent to a child support assessment.

32.Ms Sergeant made her change of assessment application on 8 September 2022; I consider the starting position for an adjustment to be from that day. I do not consider there to be any reason to retrospectively adjust Mr Sergeant’s income.

33.From 3 September 2022 to 31 March 2023, Child Support varied Mr Sergeant’s adjusted taxable income to some $167,000. His 2022/23 income tax return has since been completed – I consider the combined financial resource of the taxable income of the company (some $120,000, allowing for a considerable deduction for depreciation, which is a potentially very material benefit to Mr Sergeant), the wage paid by the company to Mr Sergeant, and the [Financial services provider] receipts, roughly equate to $160,000 per annum, broadly equivalent to the figure Child Support arrived at for income prior to April 2023.

34.Mr Sergeant’s evidence was that he is looking to “transition to retirement” at some point in future; however, it appears that is only proposed at this stage. He received his estimated “full year wage” in 2022/23 based on his own assessment on what the company can afford of some $35,000 to $40,000. Going beyond the end of the 2022/23 financial year, I consider it fair to assume Mr Sergeant will continue to be paid a wage in the region of $35,000 to $40,000 per annum. Whilst Child Support appears to have reduced his income from 1 April 2023 on the basis of an assumption he would not receive a wage, I do not consider that appropriate. I consider an assessment of Mr Sergeant’s adjusted taxable income at a level of some $160,000 beyond 31 March 2023 to be preferable. In the interests of certainty and limiting transactional friction with Child Support, I consider extending the assessment until 31 December 2024 to be just and equitable.

35.I note that if there is a material change in circumstances at any point in future (for example, If Mr Sergeant could produce objective evidence that the income for the company had markedly reduced during the 2023/24 financial year), either parent will remain at liberty to make a fresh application for a change of assessment.

36.I consider Ms Sergeant’s financial capacity is adequately reflected in the rolling assessment of her adjusted taxable income as assessed by the ATO, and no adjustment is required. I do not consider there to be any particularly unusual expenses for the parents, or in respect of the children, warranting any further adjustment to the child support assessment.

37.In terms of going forward, I have determined that, in the interests of giving certainty, Mr Sergeant’s adjusted taxable income should be varied until the end of 2024. Similarly, I consider an adjustment for school fees should be made until the end of 2024 . I am satisfied that the adjustments made by Child Support have properly taken into account the bursary received by Ms Sergeant. Taking account of the “out of pocket” costs, I consider that Mr Sergeant’s annual child support liability should be increased by $8,591 (half of $17,182, which is $20,352 (out of pocket costs for 2023 less a 25% discount) less a bursary sum of $3,170 not previously accounted for in the decision of 16 December 2020) for the 2023 calendar year, and $10,685 for the 2024 calendar year. This is the same conclusion as the objections officer.

38.The Tribunal is satisfied that, with appropriate budgeting, Mr Sergeant will be placed to meet his assessed liability.

39.The Tribunal considers it just and equitable to make a departure in the same terms set out above.

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

40.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

41.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

1. As the Tribunal has reached a different conclusion to the objections officer in respect of Mr Sergeant’s adjusted taxable income, the decision under review will be varied.

DECISION

The decision under review is varied so that Mr Sergeant’s adjusted taxable income is varied to $160,000 for the period 8 September 2022 to 31 December 2024.