Severin and Severin (Child support)

[2021] AATA 1291

Severin and Severin (Child support) [2021] AATA 1291 (17 February 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC019744

APPLICANT:  Ms Severin

OTHER PARTIES:  Child Support Registrar

Mr Severin

TRIBUNAL:Member M Martellotta

DECISION DATE:  17 February 2021

DECISION:

The decision made on 6 August 2020 is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – not just and equitable to depart – decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Ms Severin and Mr Severin are the parents of a child born in August 2005 who is a child for the purposes of the administrative assessment of child support subject to this review. The child is in the primary care of Ms Severin.

2. On 30 October 2019 Ms Severin lodged a change of assessment application with the now Services Australia (Child Support) (the Agency). The Agency considered whether there were grounds to depart from the administrative assessment on the basis that the other parent’s income, property and financial resources and earning capacity make the administrative assessment unfair. [1]

   [1] Grounds of application were Reasons 8A and 8B.

3. At the time of Ms Severin’s change of assessment application according to the Agency the relevant assessment had been in place:

   ·For the period 1 August 2019 to 30 June 2020 the annual rate of child support was $6,736 based upon Mr Severin’s income estimate of $54,324 and Ms Severin’s 2018/2019 adjusted taxable income (ATI) of $4,505.

   ·For the period 1 July 2020 to 31 October 2020 the annual rate of child support was $6,341 based upon Mr Severin’s 2018/19 ATI of $52,609 and Ms Severin’s 2018/2019 adjusted taxable income (ATI) of $4,504.

4. On 12 February 2020 the Agency decided that Reasons 8A and 8B had been established and in October 2021 Mr  Severin’s ATI was varied to $107,666.[2] On objection lodged by Mr Severin the Agency decided, on 6 August 2020, that Reason 8A was established but decided to set aside the decision under review and instead  the normal administrative provisions of the assessment were to apply.

   [2] Mr Severin did not participate in that review process.

5. Ms Severin lodged an application seeking independent review by the tribunal.  The parties participated in a telephone direction hearing and the tribunal issued directions.[3] On 27 January 2021 the parties participated in a hearing conducted by conference telephone. Ms Severin was assisted by an interpreter of the Hindi language. Evidence was given under affirmation.  The following documents were also considered; documents provided by the Agency (302 pages) and Ms Severin (A1-A21) and Mr Severin (B1-B56).

   [3] Dated 18 November 2020

6. The tribunal deferred making a decision in order to seek some additional information from Mr Severin however no response was received to that request.

ISSUES

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

2. Child support legislation is interpreted by the Agency with the aid of the Child Support Guide (the Guide). The tribunal is not bound by law to apply the policy as set out in the Guide but provided the policy is consistent with the legislation, it is required to have regard to it and in the ordinary course follow it.[4]

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

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

   ·     Does a ground for departure exist? if so,

   ·     Would it be just and equitable as regards the child, the liable parent, and the carer entitled to child support to depart from the administrative assessment of child support?

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

CONSIDERATION

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

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income, which is worked out using section 43 of the Act. The general approach is that the Child Support Registrar (the Registrar) will utilise a parent’s ATI as assessed by the Australian Taxation Office (ATO) for the last relevant year of income.

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

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Only one ground is required in the special circumstances of the case to depart from the administrative assessment and thereby satisfy the requirements of subsection 117(2) of the Act.[5] In this matter the only ground contested at hearing was whether a ground for departure is established pursuant to reason 8A.

   [5] The phrase “special circumstances of the case” is not defined in the Act. However the Family Court has held that “it is intended to emphasise that the facts of the case must establish something special or out of the ordinary” (Gyselman and Gyselman (1992) FLC 92-279). Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

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

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of either parent.

Ms Severin

1. Ms Severin provided the following evidence:

   a)Mr Severin’s income should be set higher for child support purposes.

   b)She believes that he is working in two jobs and not properly declaring his income.  She believes this to be the case because her daughter has told her that she is aware of this when she sees her father.

   c)Mr Severin previously worked two jobs and she has no reason to think he is not still doing this.  He should be paying at least $500 a month in child support.

   d)Mr Severin sends money to his family [overseas] which also suggests that he is earning more money.

2. According to written submissions prepared on her behalf which were submitted to the Agency as part of her change of assessment application, Ms Severin says that:

   a)She does not think Mr Severin’s estimate of income used in the administrative assessment of $53,020 reflects his actual income. Due to economic and physical abuse experienced in the marriage she is unable to provide any evidence in support of her submissions but notes that the estimate provided by Mr Severin is well below his 2017 year-end taxable income of $105,000 and that following separation his income has fallen.

   b)She believes that Mr Severin is subletting rooms as another source of income.

3. In relation to her own circumstances Ms Severin told the tribunal that:

   a)She works as a [Occupation 1] two days a week and probably earns about $172 per week.

   b)She is not able to access any government benefits due to her visa conditions.

   c)Her only other source of support is assistance she receives from [a charity] who are currently meeting her rental expenses of $1,300 per month.

   d)She does not otherwise own any assets or have any savings.

4. Ms Severin did not fully complete the Statement of Financial Circumstances apart to note that she has retirement savings of $26,000. At hearing she said that her main expenses are rent, which as noted the [charity] is currently meeting, and household costs of food (about $100 per week for herself and her daughter); transport costs ($50 per month), bills and utilities of about $350 per month for her and her daughter. As the tribunal understood her evidence Ms Severin said that her daughter also asks her to buy personal items from time to time (vitamins, body creams etc) but she did not indicate a cost for those items. She said that she would like her daughter to have a private tutor but is not able to meet that expense.

5. According to the information provided as part of her application for a change of assessment Ms Severin declared that she had income of $100 per week and living costs of $790 per month (which included rent of $700), utilities of $40 per month and transport costs of $40 per month.

6. Documents provided by Ms Severin confirm financial assistance being provided by [charity] and receipt of some Covid-19 relief payments of $100 per month and income from [Occupation 1].

Mr Severin

1. Mr Severin told the tribunal that he agreed with the objection decision.  He provided the following evidence:

   a)He earns his income as a [Occupation 2].  He had previously been working two jobs but that had to stop when his visa conditions changed, and he had to work for a sponsor employer. He previously worked for [Employer 1] and [Employer 2].

   b)In May 2018 he worked only for [Employer 1] on a full-time basis as they were sponsoring him. He stopped working there due to health issues and took up some other employment.

   c)In April 2020 his work ceased, and he started receiving jobseeker.

   d)Since about December 2020 he has recommenced employment on a part time basis. He receives income from that employment and from jobseeker.  He suffered a head injury and has diabetes which currently limits his ability to work full time. He has no other income.

2. According to information provided by the Agency:

   a)Mr Severin was previously the office bearer of a private company [Company 1], but his role ceased as of 1 January 2018. ASIC documents confirm that Mr Severin had a brief relationship with the company.

   b)In April 2019 his 2017/18 tax return was amended by the ATO to reflect income earned from two employers ([Employer 1] and [Employer 2]) resulting in a taxable income of $107,666.

   c)Following a change to his visa conditions as from May 2018 he solely worked for [Employer 1] until 10 December 2019. He advised the Agency he quit his work due to his medical condition. A medical certificate dated 4 March 2020 notes that Mr Severin has type 2 diabetes and has been experiencing stress.  He was working two jobs but had to cease this due to back strain.

   d)His 2018/19 ATO assessed return shows a taxable income of $52,609.

   e)The 2019/20 ATO assessed return shows a taxable income of $46,529 earned from working for two employers.

   f)In June 2020 he advised the Agency that his casual employment had ceased due to Covid-19 in about April 2020.

   g)Since April 2020 he was in receipt of jobseeker payments. He has since recommenced employment on a part time basis from about December 2020.

3. In response to questions asked by the tribunal Mr Severin said that:

   a)He has credit card debt and has received some financial loans from a friend ([Mr A]) and his brother.

   b)In relation to a deposit of $10,000 into his account made by [Mr A] on 19 October 2020 he repaid $9,000 to [Mr A] the next day by withdrawing that amount in cash. As the tribunal understands his evidence, Mr Severin said that he did this because he decided that he did not want to borrow that much money from his friend.

   c)The tribunal asked what other cash deposits made into his bank accounts related to – Mr Severin said that these were amounts he redeposited after making withdrawals from his own accounts.  He said that he would withdraw money to pay bills and then when he had cash left over, he would re-deposit the cash into his account.

   d)He had sent some payments to his mother [overseas] but has ceased to do that due to his financial circumstances.

   e)He rents a house with four other people and pays $500 per month in rent.  He was living with his brother rent free for a period, but that arrangement has ceased.

   f)His brother has provided financial assistance from time to time including purchasing items for the child.

   g)His assets, apart from personal jewellery, include a 2014 [car] which he values at about $25,000.

   h)He has a lot of credit card debt. He has entered a hardship plan with the banks.

4. At hearing Mr Severin updated his Statement of Financial Circumstances which previously stated his only source of income was jobseeker. According to payslips provided by [Company 1] he receives $660 gross per week and has an annual salary of $34,320 working 24 hours a week.

5. The tribunal noted that Mr Severin is employed by the company of which he was formerly an office bearer. At hearing the available evidence was that he ceased to hold any office with that company as of 1 January 2018.  Post hearing the tribunal noted that further changes to the company office bearers had occurred in May 2020 and asked Mr Severin to further clarify his current involvement with the company. Mr Severin did not respond to the tribunal’s request. In this regard the tribunal notes authorities regarding the duty of parties to provide full and frank disclosure regarding their financial affairs.[6] It is open to the tribunal to draw adverse inferences from a party’s failure in this regard.

   [6] Humphries & Berry [2008] FMCAfam 409

6. In this matter the tribunal notes that for a period of time in 2020 Mr Severin’s income was derived from jobseeker payments and more recently part time employment.  There was some evidence before the tribunal that suggests that Mr Severin also had access to additional financial resources whether that was by receiving some financial support form his brother or from friends. His failure to respond to the tribunal’s request for further clarification regarding his relationship with his current employer also potentially leaves it open to the tribunal to draw an adverse inference.

7. However, on balance taking into account all the available evidence, the tribunal concluded that the most reliable evidence is that Mr Severin’s income is derived from part time work and some  jobseeker payments and that for child support purposes financial resources are not a relevant consideration in this particular matter..[7]

   [7] According to Services Australia jobseeker payment reduces to $0 once their fortnightly income reaches $1,257.50 per fortnight which means given Mr Severin is currently earning gross $660 per week it is unlikely he would continue to be receiving social security payments.

8. On the presented evidence the tribunal made the following findings of fact in relation to Ms Severin.

a)Ms Severin earns income as a [Occupation 1], on average she earns about $150 per week.

b)She otherwise meets her costs through financial support provided by the [charity].

c)In 2017/18 her tax return reported a taxable income of $2,400.

1. On the presented evidence the tribunal made the following findings of fact in relation to Mr Severin:

   a)Mr Severin is a [Occupation 2]; he derives his income mainly from working in that occupation.

   b)His adjusted taxable income in 2017/18 was $107,666; in 2018/19 it was $52,609 and in 2019/20 it was $46,529.

   c)From April 2020 he was unemployed and from about July 2020 was in receipt of jobseeker, since December 2020 he is employed on a part time basis on an annual salary of $34,320.

2. As noted the administrative assessment under review utilised an estimate of $54,324 for the period 1 August 2019 to 30 June 2020 and Mr Severin’s 2018/19 ATI of $52, 609 for the period 1 July 2020 to 31 October 2020. The tribunal has found that Mr Severin’s actual ATI is likely to be in the vicinity of $34,320 in the financial year commencing 1 July 2020 and prior to that his ATI for the 2019/20 financial year was $46,529. Utilising these figures in the assessment would result in a significant change in the amount of child support payable by Mr Severin[8]

   [8] Using the figure of $46,529 reduces the annual liability to $4,648 and using the figure of $34,320 reduces the liability to $1,480

3. For this reason, the tribunal concludes that a ground of departure exists because in the special circumstances of the case, application of the provisions of the Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of the parents.

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

1. As the tribunal is satisfied that there is a ground to depart from the assessment of child support as set out above, the next step for the tribunal is to consider whether it is just and equitable as regards the child and the parental parties to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters set out in subsection 117(4) of the Act, which is discussed in the following paragraphs.[9]

Proper needs of the child

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

1. In determining the proper needs of the child it is necessary to have regard at a broad level to the manner in which the child is being, and in which the parents expect the child to be, cared for, educated or trained, and also any other needs of the child.  Ms Severin mentioned private tuition costs for the child but also stated that these were not currently being paid.   There was no evidence presented in this regard and the tribunal was satisfied that this was not a relevant consideration.

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

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

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

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

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

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

1. In this matter the tribunal has made findings in relation to the income and financial resources of the parents and does not repeat those findings. The Statement of Financial Circumstances provided by each parent discloses that neither parent owns any assets or property apart from personal property and limited savings.

Earning capacity

1. A ground for departure exists if, in the special circumstances of the case, the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the earning capacity of either parent (subparagraph 117(2)(c)(ib)). Whilst Ms Severin asserts that Mr Severin has an earning capacity of at least $100,000 there was no evidence presented at hearing that supported this submission. 

2. The tribunal accepts that Mr Severin’s pattern of work has changed but this was the result of a change in his visa conditions and the impact of a decrease in work arising from COVID19.The tribunal is not satisfied that the relevant criteria required to establish earning capacity as a relevant consideration are satisfied in this matter. 

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

1. The tribunal is satisfied taking into account the relevant costs of self-support utilised in the assessments and based upon evidence provided at hearing and in the parties’ Statements of Financial Circumstances  and evidence presented at hearing that neither party has extraordinary costs of self-support that are relevant to the assessment.

Any hardship that would be caused

1. As noted, the tribunal can vary the rate of child support payable or it can vary some of the variables that are used in the administrative formula.  Ms Severin told the tribunal that Mr Severin should be paying more child support.  She herself is in a financially precarious situation due to her visa status and is reliant upon support she receives from the [charity] who is currently meeting a number of her expenses and she is otherwise relying upon some income she receives from [Occupation 1].

2. Mr Severin told the tribunal that he has had a period of unemployment but is now returning to work in his occupation of [Occupation 2].  In this matter whilst Mr Severin had a reduced income for a period of time, in 2020, the evidence is that this was for only part of the financial year relevant to the assessment and since then he has resumed employment.  The tribunal is satisfied that relevant income earned by Mr Severin (be it from employment or taxable social security payments) will be reflected in his income tax return.

3. The tribunal in this matter concluded that it is appropriate for the administrative assessment to continue to rely upon the income tax returns as assessed by the ATO. The administrative assessment that was in place at the time of Ms Severin’s application relied upon Mr Severin’s estimates of income.  In the usual operation of the administrative provisions theses estimates are reconciled with a parent’s actual relevant ATI once assessed by the ATO.  For these reasons the tribunal concluded that there is no basis to depart from the administrative assessment.

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

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

2. Ms Severin is not in receipt of family tax benefit and the proposed departure from the administrative assessment will have no impact on  either parents’ entitlement to government assistance. In this case the tribunal finds that the requirements under paragraph 117(5)(a) of the Act are met. 

DECISION

The decision made on 6 August 2020 is affirmed.