Shamoon and Song (Child support)

[2020] AATA 2128

Shamoon and Song (Child support) [2020] AATA 2128 (5 May 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC017082

APPLICANT:  Miss Shamoon

OTHER PARTIES:  Child Support Registrar

Mr Song

TRIBUNAL:Member C Breheny

DECISION DATE:  05 May 2020

DECISION:

The decision under review is set aside and a decision substituted that:

• For the period 1 August 2018 to 30 June 2019 Miss Shamoon’s adjusted taxable income is set at $55,551 per annum, and

• For the period 1 July 2019 to 31 December 2020 Miss Shamoon’s adjusted taxable income is set at $101,000 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – earning capacity of liable parent not found - income, property and financial resources of both parents – a ground for departure established for liable parent – decision to depart - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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. Miss Shamoon and Mr Song are the separated parents of [Child 1], [born] February 2009. A child support case has been registered with the Department of Human Services – Child Support (the Department) since 1 September 2015 and registered for collection from 21 October 2015. Departmental records indicate that Miss Shamoon is liable to pay child support to Mr Song.

2. For the period 29 July 2018 to 30 September 2018, Miss Shamoon’s child support liability was administratively assessed as being $606 per annum based on her 2016/17 adjusted taxable income of $27,856 and Mr Song’s 2016/17 adjusted taxable income of $74,059.

3. From 1 October 2018, Miss Shamoon’s child support liability increased to $1,416 per annum (the fixed annual rate) based on her 2017/18 adjusted taxable income of $16,671 and Mr Song’s 2017/18 adjusted taxable income of $68,658.

4. On 31 July 2018, Mr Song lodged a change of assessment application, indicating that the administrative assessment was unfair due to Miss Shamoon’s income, property, financial resources and earning capacity. Miss Shamoon lodged a cross-application on the ground that her child support liability for the 2017/18 financial year should be reduced to the minimum annual rate. This application referred to Miss Shamoon’s income estimate election for 2017/18, which has been examined by this tribunal (differently constituted) in another decision. It is not subject to this review.

5. On 15 April 2019, decision-maker (DM) P Duck found that a ground to depart from the administrative assessment had been established in relation to Miss Shamoon’s income and financial resources and decided to set Miss Shamoon’s adjusted taxable income at $101,000 per annum for the period 5 February 2019 to 28 February 2021.

6. On 6 May 2019, Miss Shamoon objected to the decision and on 17 July 2019 an objections officer of the Department partly allowed the objection and decided to set Miss Shamoon’s adjusted taxable income at $101,000 for the period 5 February 2019 to 31 December 2020.

7. On 5 August 2019, Miss Shamoon applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) for an independent review of the Department’s decision. A hearing into Miss Shamoon’s application for review was held on 5 May 2020. Mr Song and Miss Shamoon attended the hearing by conference telephone and gave evidence on affirmation. A representative of the Child Support Registrar (the Registrar) did not attend the hearing. 

8. I had before me the statement and documents provided by the Department pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975, received on 5 September 2019 and 20 April 2020 respectively and numbered 1–383. I also considered additional documents provided by Miss Shamoon (marked A1–A122) and Mr Song (marked B1–B73) as a result of written directions issued on 11 February 2020.

LEGISLATIVE FRAMEWORK AND ISSUES

1. The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. This requires the application of a statutory formula, which takes into account factors such as the number of children, the level of care provided and the income of each parent. Either the liable parent or the carer entitled to child support 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 provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied that a ground for departure exists and that it is just and equitable and otherwise proper to make a departure determination.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Act. 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.

4. In the legislation, each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether any ground exists, the Tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279 stated that:

   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 court will not interfere with the administrative formula result in the ordinary run of cases.

5. Subsection 98C(3) of the Act provides that subsections 117(4) to (9) of the Act apply and the Tribunal must consider these when deciding whether it would be just and equitable or otherwise proper to make the departure decision.

CONSIDERATION

A ground for departure

1. On the day Mr Song lodged his change of assessment application, Miss Shamoon’s child support liability was $606 per annum based on her 2016/17 taxable income of $27,856 (folio171). Mr Song asked for a departure from the administrative assessment on the basis that the assessment did not correctly reflect Miss Shamoon’s income, property, financial resources and earning capacity (also known as “Reason 8A and Reason 8B”).

Income, property, financial resources and earning capacity of both parties

1. Subparagraph 117(2)(c)(ia) of the Act provides that, in the special circumstances of the case, a ground for departure may be established if application of the legislative provisions relating to an administrative assessment results in an “unjust and inequitable determination of the level of financial support to be provided by the liable parent” due to the income, property and financial resources of either parent.

Miss Shamoon – income, property and financial resources

1. Mr Song submitted that Miss Shamoon’s low taxable incomes ($27,856 in 2016/17 and $16,671 in 2017/18) did not reflect her actual financial resources and should not be used in the assessment. He contended that Miss Shamoon was working in her partner’s business, but did not fully declare that income. Miss Shamoon also travels overseas for extended periods of time, is able to purchase a new vehicle and pay for lawyers/barristers, which would not be possible on a low income (folio 42).

2. Miss Shamoon submitted that she could only work part-time from 2016 onwards, after Mr Song collected [Child 1] from [place] and did not return her to her (Miss Shamoon’s) care. The loss of care of her daughter affected her greatly.

3. Miss Shamoon further submitted that she commenced full-time work again from 5 February 2019. Evidence provided by [Employer 1] (folio 190) on 19 March 2019 indicates that Miss Shamoon has been an ongoing permanent employee since 5 February 2001 and her current annual salary was $102,806 or $3,940.54 per fortnight.

4. Recent payslips from Miss Shamoon (folios A48-A53) show that her annual salary increased to $105,378 from January 2020.

5. Miss Shamoon’s 2018/19 tax return indicates that she earned $60,596 from [Employer 1], her tax deductions amounted $5,045, resulting in a taxable income of $55,551 and I so find (folio A28).

6. Miss Shamoon’s payslip for the period ending 2 April 2020 shows gross “Year to date” earnings of $70,463.83 (folio A53). I have estimated that, given a fortnightly income of $4,039.05, Miss Shamoon’s 2019/20 taxable income is likely to be around $94,698[1]. I note Miss Shamoon’s current taxable income is reduced because she took 10 days leave without pay from 18 August 2019 to 30 August 2019 (folio A23) and a further 20 days leave on “half pay” from 2 September 2019 to 27 September 2019 (folio A24).

   [1] $70,463.83 (YTD) + six fortnights (to 25 June 2020) of $4,039.05 (being $24,234.30) = $94,698.13

7. Miss Shamoon’s bank account statements (folios A69-A71) indicate that she also received a total sum of $2,340.85 from “[Company 1]” (being her partner’s company “[Company 1]”) in July/August 2019. Miss Shamoon advised that her partner’s parents gave her money to pay for an overseas flight, so she could visit her very ill father-in-law in August/September 2019. Miss Shamoon said that she could not afford to pay for the tickets herself.

8. Available bank account statements do not show any additional income from any other source. I have thus concluded that Miss Shamoon’s income tax returns accurately reflect her income from her employment.

Miss Shamoon – earning capacity

1. Mr Song did not dispute that Miss Shamoon was now working full-time, but submitted that she had reduced her working hours in the past to affect the administrative assessment. Miss Shamoon’s 2016/17 and 2017/18 income was very low, even though she had greater earning capacity at that time.

2. Miss Shamoon’s 2017/18 income tax return indicates that she received $22,200 from her partner’s company and she claimed $5,650 expenses; she also received $121 from the Department of Education, resulting in a taxable income of $16,671. Miss Shamoon said that she had been working on a contract as a [Occupation 1] for “[Company 1]”. Her payslip for 17 September 2018 indicates that she worked 22.5 hours per week, earning $450 (folio 115). Miss Shamoon stated that she ended her contract on 21 September 2018 (folio 200) and commenced full-time work in February 2019.

3. Miss Shamoon submitted that she was going through an extremely difficult time, after Mr Song removed [Child 1] from her care in 2016. In a discussion with the Department on 25 September 2018 Miss Shamoon said that Mr Song removed [Child 1] from the [place] Miss Shamoon was working at and made “allegations, which got her fired” (folio 92). This occurred in late 2016 and Miss Shamoon was not working from January 2017 to July 2017. She then started earning wages from “[Company 1]” as at 5 July 2017 (folio 201).

4. Miss Shamoon said that the experience of losing care of [Child 1] was so traumatic that she suffered mental health issues and was unable to work. Miss Shamoon provided a letter from [Dr A] dated 26 October 2016 stating that Miss Shamoon was experiencing serious anxiety/depression and that she should reduce her work from three to two days per week (folio 119).

5. A letter from [Mr B] (consultant psychologist) dated 5 October 2018 states that he saw Miss Shamoon in April 2017 and October 2017 and in April 2018 for treatment. A mental health assessment conducted on 12 April 2018 showed that Miss Shamoon scored “moderate” for stress and “extremely severe” for depression/anxiety (folio 118).

6. A letter from [the employer] dated 26 September 2018 states that Miss Shamoon had been on “leave without pay” for all of 2017 and 2018 (folio 117).

7. The relevant legislative provisions for consideration of a parent’s earning capacity are provided for in subparagraph 117(2)(c)(ib) and also in subsection 117(7B) of the Act. Essentially the provision restricts the circumstances in which a person’s earning capacity can be used as a basis to depart from a formula assessment.

8. There are three essential matters to be considered in determining whether the administrative assessment should be departed from on the grounds of earning capacity. In simple terms they can be explained as follows:

   ·the parent did not work despite ample opportunity to do so, reduce their hours of work or change their occupation, industry or working pattern; and

   ·the parent’s decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern was not justified because of caring responsibilities or their state of health; and

   ·the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support.

   All three of the above criteria must be met before a change of assessment can be made to take into account whether the parent has a greater earning capacity.

9. In this case there is no dispute that Miss Shamoon left her employment as a [Occupation 2] in late 2016. She did not work for the first six months in 2017 and then worked part-time in her partner’s business. Based on the evidence, I find that paragraph 117(7B)(a) of the Act is satisfied.

10. As noted, Miss Shamoon stated that she has been suffering from stress and extreme depression/anxiety since [Child 1] was removed from her care by Mr Song in late 2016 and that she had been unable to return to her normal working pattern because of this traumatic event. Medical evidence provided by Miss Shamoon supports her statements.

11. On the basis of the evidence provided, I am satisfied that Miss Shamoon’s decision to stop working for some month and only return to part-time work until February 2019 was justified by the state of her health at the time and this means paragraph 117(7B)(b) of the Act is not satisfied in this case. As all three criteria provided for in subsection 117(7B) of the Act are therefore not met, I cannot consider Miss Shamoon’s earning capacity further.

Mr Song – income, property, and financial resources

1. Mr Song has been working in [Industry 1] for some years. Departmental record show that Mr Song’s 2016/17 taxable income was $74,059 (folio 304) and his 2017/18 income tax return indicates income from four employers of $69,973,and tax deductions of $1,315, resulting in a taxable income of $68,658 (folio138). Mr Song’s taxable income in 2018/19 was $51,245 (folio B10). His payslip to 27 June 2019 (folio B34) show “Year to date” earnings from his employer (“[Company 2]”) of $51,913.75. It also shows that Mr Song was employed on a casual basis for 27 hours per week.

2. Mr Song provided his payslips from July 2019 to 24 March 2020 (folios B35-B69).These show that he continued to work for “[Company 2]” until 2 October 2019 (final pay $13,798.75). Mr Song worked for “[Company 3]” from 7 October 2019 (37.5 hour per week) until 26 January 2020 (final pay $18,900). He then commenced working for “[Company 4]” from 12 February 2020 (38 hours per week) and his “Year to Date” pay as at 24 March 2020 was $12,560.18. Mr Song continues to work for this employer and I have estimated that he would earn about $19,162.64 in the 14 weeks to the end of the 2019/20 financial year, based a weekly gross pay of $1,368.76.

3. Based on the evidence before me Mr Song’s gross annual income for 2019/20 is likely to be $64,421.57[2] and I so find.

   [2] $13,798.75 ([Company 2]) + $18,900 ([Company 3]) + $12,560.18 ([Company 4]) + $19,162.64 (estimated income from [Company 4]) = $64,421.57

4. Mr Song’s bank account statements (folio B17-B30) show no income from any other sources, apart from Centrelink payments and I am satisfied that Mr Song’s income tax returns adequately reflect his income, property and financial resources.

Mr Song – earning capacity

1. Miss Shamoon suggested that Mr Song’s annual income has reduced over the years, from $90,355 in 2015/16 to $51,245 in 2018/19 and that he had reduced his income to affect the child support assessment (folio A11).

2. I note that Mr Song had full-time care of [Child 1] from late 2016 to early November 2018, when Court orders made on 29 October 2018 provided for Miss Shamoon to have some care of [Child 1] (folio B12). I also note that a care change decision was made on 9 September 2019 such that Mr Song had 100% care of [Child 1] since 16 August 2019 (folio 367).

3. Mr Song has been working full-time (about 37/38 hours per week) since October 2019 (folio B49), once he left his casual employment at [Company 2]. As indicated above Mr Song’s current taxable income is likely to be higher again (around $64,000) and, as such I do not consider that Mr Song has greater earning capacity than he currently exercises.

Conclusion – income, property, financial resources and earning capacity

1. When Mr Song lodged his departure application on 31 July 2018 (in the 2018/19 financial year), Miss Shamoon’s child support liability was $606 per annum based on Miss Shamoon’s 2016/17 adjusted taxable income of $27,856 and Mr Song’s 2016/17 adjusted taxable income of $74,059.

2. I have found that Miss Shamoon’s taxable income in 2018/19 was $55,551. I have estimated that Miss Shamoon’s child support liability for [Child 1], if calculated on the basis of her actual 2018/19 income, would be $4,889 per year at the time Mr Song lodged his application. This would increase to $5,099 per annum, if Mr Song’s 2018/19 taxable income of $51,245 were to be used. I do consider this increase of $212 per annum (or $4 per week to be significant). I do however find that the difference between an amount of $4,887, based on Miss Shamoon’s 2018/19 income and the annual rate of child support ($606) based on Miss Shamoon’s taxable income at the time, is so great that it gives rise to special circumstances in this particular case. I am therefore satisfied that the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act has been made out in respect of Miss Shamoon’s income, property and financial resources only.

3. Subparagraph 98C(1)(b)(i) of the Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found one ground for departure established, I will now consider whether it is just and equitable to make a departure determination.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs that my attention is turned to what is fair to the parents and their children. To do so I must have regard to a number of factors set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.

Miss Shamoon

1. Miss Shamoon provided a completed Statement of Financial Circumstances (folios A1-A9). She indicated income of $1,970 per week (or $102,440 per annum). Miss Shamoon listed total expenses of $1,809 per week (excluding child support payments), but including $100 per week for entertainment. This is not considered a necessary expense[3] and on this basis Miss Shamoon’s income exceeds her expenses by $261 per week ($1,970 income - $1,809 expenses).

   [3] The Family Court (in Mee and Ferguson (1986) FLC 91-716) has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses which can be considered to take priority over a parents’ primary duty to support their children. This includes expenses such as a reasonable amount for rent or mortgage payments, food, utilities, and some loans.

1. I therefore find that Miss Shamoon is able to meet all of her current expenses from her financial resources.

Mr Song

1. Mr Song indicated on his Statement of Financial Circumstances (folios B1-B9) an average weekly income of $1,163.74 (about $60,514 per annum). He also receives family assistance payments. Mr Song did not provide a list of all of his expenses, except that he pays $38 per week for private health insurance and $430 per week for rent. In his change of assessment application (of July 2018) Mr Song listed expenses of about $800 per week (folio 45). His most recent payslip of 25 March 2020 (folio B69) indicates net weekly earnings of $1,058.76. I appreciate that Mr Song’s expenses may have increased since July 2018, but without further evidence I will assume that Mr Song is able to meet all of his expenses.

[Child 1]

1. [Child 1] is now 11 years old and Mr Song did not suggest that she had any special needs or other out of the ordinary expenses.

2. [Child 1] attends school and has no income, property or financial resources relevant to my determination.

Otherwise proper

1. The requirement to consider whether it is “otherwise proper” to depart from the administrative assessment 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 or benefits (subsection 117(5) of the Act).

2. It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.

3. Mr Song is in receipt of family assistance payments, which are affected by maintenance payments such as child support. Any increase to child support payable would result in an appropriate decrease in these payments. Such a result would be otherwise proper.

Conclusion

1. Section 98S of the Act describes the determinations that the Registrar, and the Tribunal standing in the shoes of the Registrar, may make if it decides to depart from the administrative assessment. It is open to the Tribunal to set a rate of child support payable or set some of the variables used in the administrative assessment formula (for example, vary one or both parents’ adjusted taxable income).

2. When Mr Song lodged his departure application on 31 July 2018, Miss Shamoon was required to pay child support in the amount of $606 per annum based on her (low) 2016/17 taxable income of $27,856. Mr Song contended that Miss Shamoon’s income was much higher. I have found that Miss Shamoon’s actual taxable income was $55,551 in 2018/19 and her current (2019/20) taxable income is likely to be around $94,600.

3. I note the objections officer set an annualised income amount of $101,000 for Miss Shamoon from 5 February 2019, the date she resumed full-time employment. Miss Shamoon submitted that this was not fair, as she did not have this income in 2018/19. I will accept Miss Shamoon’s argument in this regard and I will use her actual 2018/19 taxable income of $55,551, as I am persuaded that she did not have any greater earning capacity in that year.

4. I note however that Mr Song lodged his application at the end of July 2018 and I do not believe that it is fair to commence departure determination about six months later (in February 2019). I am of the view that it is fairer to apply Miss Shamoon’s 2018/19 taxable income from 1 August 2018 (the day after Mr Song lodged his application) and that it should apply until 30 June 2019, that is until the end of the 2018/19 financial year. From 1 July 2019 Miss Shamoon’s income was higher. Her payslips show an annual income of $102,806, which increased to $105,376 from January 2020.

5. I have estimated that Miss Shamoon’s actual taxable income for 2019/20 will be reduced to about $94,600 because she took leave without pay and leave on half pay in August and September 2019 to visit her sick father-in-law. Whilst I appreciate Miss Shamoon’s decision in this regard, I do not think that visiting her father-in-law takes precedence over her duty to pay child support. I think that an annual income of $101,000 is reasonable from 1 July 2019 onwards and that this income amount should be set until 31 December 2020. By that time Miss Shamoon’s actual 2019/20 taxable income should be known. I will thus not disturb the objections officer decision in this regard.

6. I have estimated that my decision will increase Miss Shamoon’s child support liability prior to 5 February 2019, but reduce her liability after 5 February 2019 until 30 June 2019. I have estimated that the overall reduction should be about $600. I am of the view that neither parent will be in financial hardship as a result of this decision.

7. I have reached a different conclusion to the objections officer and I therefore set aside their decision.

DECISION

The decision under review is set aside and a decision substituted that:

• For the period 1 August 2018 to 30 June 2019 Miss Shamoon’s adjusted taxable income is set at $55,551 per annum, and

• For the period 1 July 2019 to 31 December 2020 Miss Shamoon’s adjusted taxable income is set at $101,000 per annum.