Sheadman and Andean (Child support)

Sheadman and Andean (Child support) [2024] AATA 2545 (4 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/MC026642
APPLICANT:  Mr Sheadman
OTHER PARTIES:  Child Support Registrar
Ms Andean

TRIBUNAL:Senior Member J Longo,
Member R Anderson

DECISION DATE: 04 June 2024
DECISION:

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

The annual rate of child support payable by Mr Sheadman to Ms Andean is varied to $2,300 in respect of the period 30 January 2019 to 19 July 2020.
From 20 July 2020, the child support liability is to be calculated in accordance with the administrative assessment.

CATCHWORDS

CHILD SUPPORT – departure from the administrative assessment – income, property, financial resources and earning capacity – provisional adjusted taxable income used for father because no tax returns lodged for two years – no updated information provided – sessional work and sole trader business, impacts of COVID and now studying full-time – regular money transfers from parents and Austudy – major purpose of reducing working hours not to affect administrative assessment – decision under review set aside and substituted

REASONS FOR DECISION

BACKGROUND

Mr Sheadman and Ms Andean are the separated parents of [the child]. According to records of Services Australia – Child Support (Child Support), the child support assessment was registered on 18 August 2015. Child Support has been responsible for the collection of child support from the liable parent from the outset.
The child support liability is generally calculated in accordance with the administrative assessment, as provided in the Child Support (Assessment) Act 1989 (the Act). The calculation is based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO), or the most recent estimate accepted by Child Support.
As Mr Sheadman was yet to lodge his relevant tax return, the child support liability was initially calculated using a provisional adjusted taxable income (ATI) in respect of Mr Sheadman, based on two-thirds of the male total average weekly earnings (MTAWE) of $47,504 and the 2014/15 ATI for Ms Andean of $47,790. Commencing 1 September 2016, Ms Andean’s 2015/16 ATI was used in the administrative assessment in the amount of $54,363.
It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent. Ms Andean lodged a change of assessment (departure) application on 30 January 2017. A delegate of the Child Support Registrar decided to depart from the administrative assessment in respect of Mr Sheadman on 13 June 2017, varying his ATI from 30 January 2017 to 29 January 2019 to $71,750. This resulted in the annual rate of child support payable by Mr Sheadman increasing from $1,746 to $4,552.
On 19 July 2018, Child Support wrote to both parents and provided the child support assessments for the new child support period from 1 September 2018 to 31 October 2019. At that time, as Mr Sheadman had not lodged a tax return since the child support assessment was registered, when the assessment reverted to the normal administrative assessment for the period commencing 30 January 2019, the ATI for Mr Sheadman was based on two-thirds of the 2018 MTAWE of $49,071. The 2017/18 ATI in respect of Ms Andean was $71,915. This resulted in the annual child support payable by Mr Sheadman decreasing from $3,051 to $1,051.
In the meantime, on 10 August 2018, Child Support received details from the ATO in respect of Mr Sheadman’s ATI for the 2012/13, 2013/14, 2014/15, 2015/16, 2016/17 and 2017/18 financial years. This impacted on the administrative assessment from 30 January 2019, following cessation of the previous departure determination, such that the child support liability was now calculated on a 2017/18 ATI for Mr Sheadman in the amount of $2,048 and a 2017/18 ATI for Ms Andean in the amount of $71,915. This resulted in Ms Andean being the parent liable to pay child support to Mr Sheadman at the annual rate of $1,961.
On 17 January 2019, prior to cessation of the departure decision of 13 June 2017, Ms Andean lodged a departure application on the basis that the administrative assessment produced an unfair outcome due to the income, property and financial resources available to Mr Sheadman (Reason 8A) and his earning capacity (Reason 8B).
On 28 May 2019, a delegate of the Child Support Registrar found that a ground was established to warrant a departure from the administrative assessment and decided to vary the ATI of Mr Sheadman to $74,064 in respect of the period 30 January 2019 to 29 January 2021. This resulted in Mr Sheadman being the parent liable to pay child support to Ms Andean in respect of [the child] in the amount of $3,805 per annum.
On 30 January 2021 calculation of the child support liability reverted to being based upon the ATIs recorded on each parent’s most recently lodged tax returns. As Mr Sheadman had not lodged a tax return since 2017/18, his ATI was based on two-thirds of the 2020 MTAWE of $51,151 and the 2019/20 ATI of Ms Andean in the amount of $82,968. This resulted in an annual rate of child support payable by Mr Sheadman in the amount of $759.
Following a change in the registered care of [the child] which reduced Mr Sheadman’s care percentage from 16 April 2021, based on the same ATIs set out in paragraph 9 above, the annual rate of child support payable by Mr Sheadman increased to $890.
On 18 July 2021, Child Support wrote to both parents and provided the child support assessments for the new child support period from 1 September 2021 to 30 November 2022. The annual rate of child support payable by Mr Sheadman to Ms Andean in respect of [the child] was assessed at $890 until 31 August 2021. From 1 September 2021 the administrative assessment used a provisional ATI for Mr Sheadman in the amount of $21,017 (noting that he commenced receipt of austudy from 20 July 2020) and a 2020/21 ATI for Ms Andean in the amount of $86,560, resulting in no child support payable by either parent.
On 9 August 2021, Ms Andean lodged a departure application on the basis that the administrative assessment produced an unfair outcome due to the income, property and financial resources available to Mr Sheadman (Reason 8A) and his earning capacity (Reason 8B). She sought a departure from January 2021.
Following a change in the registered care of [the child] which increased Mr Sheadman’s care percentage from 27 September 2021, based on the same ATIs set out in paragraph 11 above, Ms Andean became the parent liable to pay child support to Mr Sheadman at the annual rate of $3,046. From 31 March 2022 following a reduction in the care of [the child] attributed to Mr Sheadman, the child support assessment became nil.
On 9 December 2021, a delegate of the Child Support Registrar decided not to depart from the administrative assessment. While it was found that Mr Sheadman’s ATI significantly reduced from 20 July 2020, based on the circumstances of both parents, the delegate was not satisfied that it was just and equitable to depart from the administrative assessment and create an overpayment position where Ms Andean would incur a debt. Consequently, the administrative assessment continued to be based on a derived ATI for Mr Sheadman because he had not lodged a tax return since 2017/18 and an ATI for Ms Andean based on her most recently lodged tax return.
From 1 September 2022, the administrative assessment used a derived ATI for Mr Sheadman in the amount of $17,343 (noting that he continued to receive austudy) and a 2021/22 ATI for Ms Andean in the amount of $99,117. From 1 September 2023 the ATIs for Mr Sheadman and Ms Andean used in the administrative assessment were $18,168 and $112,747 respectively. The child support assessment continued to be nil.
Mr Sheadman lodged an application to Child Support for an extension of time to object to the decision of 28 May 2019 on 1 July 2022, on the basis that he did not receive notification of the change of assessment application of 17 January 2019, nor did he receive a copy of the decision of 28 May 2019. The Tribunal notes that Mr Sheadman did not have an opportunity to discuss the matter with the decision-maker, as he was unable to be contacted by Child Support about the application. His extension of time request was refused.
Mr Sheadman also lodged an application to Child Support on the same day for an extension of time to object to the departure decision of 13 June 2017 and the decision of 10 August 2018 in respect of the application by Child Support of his lodged tax returns for 2015/16, 2016/17 and 2017/18 financial years. These two requests were also denied by Child Support.
Mr Sheadman lodged an application to the Administrative Appeals Tribunal in respect of an extension of time to object to the decisions of 13 June 2017, 10 August 2018 and 23 May 2019. The matters were heard together by a differently constituted Tribunal and a decision made on 16 February 2023 not to allow an extension of time to object to the decision of 13 June 2017. A decision was made that the notice of the decision of 10 August 2018 was to be served on Mr Sheadman. A decision was made to allow an extension of time to object to the decision of 28 May 2019. It is this decision that is the subject of this review.
On 26 July 2023, an objections officer decided to allow Mr Sheadman’s objection to the decision of 28 May 2019. As a result, Mr Sheadman’s ATI was varied to $72,492 in respect of the period 30 January 2019 to 29 January 2021. The corresponding annual rate of child support payable by Mr Sheadman was $3,639, reducing to $3,224 following use of Ms Andean’s 2018/19 ATI of $80,892 from 1 September 2019. The annual rate of child support payable by Mr Sheadman reduced further to $3,114 from 1 September 2020 to 29 January 2021, following use of Ms Andean’s 2019/20 ATI of $82,968.
Mr Sheadman then lodged an application to this Tribunal on 22 August 2023 for an independent review of Child Support’s decision of 26 July 2023. The directions hearing was conducted by telephone with Mr Sheadman on 20 February 2024. Ms Andean chose not to participate in either the directions hearing or the full hearing. Following this hearing, directions were made to both parties requiring them to provide further information and documents.
In response, Mr Sheadman wrote to the Tribunal on 23 February 2023 seeking “valid reason for the purposes of the orders seeking documentation outside the relevance to these proceedings.” The Tribunal wrote to Mr Sheadman on 4 March 2023, reiterating what had been stated at the directions hearing as follows:
This Tribunal is a merits review Tribunal. Provisions in relation to applications for a departure from the administrative assessment are set out in Part 6A of the Child Support Assessment Act 1989 (the Act).
You are referred to section 98H of the Act whereby it is a statutory requirement of the decisionmaker (the Registrar or the Tribunal standing in its shoes) to act on the information and documents accompanying the application and may also conduct any inquiry or investigation into the matter. In particular, subsection 98S(2) of the Act provides that the decisionmaker is not limited by the terms of the application.
Furthermore, subsection 98H(4) of the Act provides that the decisionmaker is to conduct any inquiry or investigation as it sees fit and is not bound by any rules of evidence.
While subsection 98S(3B) of the Act provides that a decisionmaker may only consider making a determination in relation to a period commencing not more than 18 months earlier than the date of the application, the legislation leaves it open to the decisionmaker to consider the length of any departure determination under consideration as it thinks appropriate in the circumstances.
You have been issued with written directions with a compliance date of 12 March 2024. It is open to you to comply with these directions, noting the consequences of non-compliance discussed at the directions hearing and set out with the written directions. These directions included a general direction to allow you to also provide any other evidence that you wish to bring before the AAT or any written submissions you wish to make by close of business on 12 March 2024.
As neither party fully complied with the directions, on 15 March 2024 a letter was sent to Mr Sheadman from the Registrar seeking submissions as to why his application should not be dismissed for failure to comply with the directions. A letter was also sent to Ms Andean advising that her failure to comply could result in the Tribunal drawing adverse inferences against her.
The hearing was scheduled to be held on 5 April 2024 and Mr Sheadman was directed to appear in person. On 3 April 2024, Mr Sheadman requested a reschedule of the hearing as he did not have sufficient time to review the recent documentation he had received and he had university exams and assessments unfolding. The documents were those received by the Tribunal from Mr Sheadman, Ms Andean and Child Support. The Tribunal granted Mr Sheadman’s request and rescheduled the hearing for 4 June 2024.
On 3 June 2024, Mr Sheadman requested a reschedule of the hearing as he did not have sufficient time to review the recent documentation he had received and he had university exams and assessments unfolding. The documentation was the most recent submission received by the Tribunal from Mr Sheadman. He maintained that relevant attachments had been removed from his evidence. As discussed at hearing, the evidence removed from Mr Sheadman’s ‘A’ documents by the Registrar were letters from the Tribunal that had already been provided to all parties and remained on the record. Furthermore, despite being directed in writing to participate in person in the directions of 20 February 2024, Mr Sheadman maintained that he thought it was via video link and stated that attending in person was inconvenient. On this occasion the Tribunal refused Mr Sheadman’s reschedule request.
The hearing proceeded on 4 June 2024 and Mr Sheadman participated in person, giving oral evidence on affirmation to the Tribunal. Ms Andean chose not to participate; however, she remains a party to the proceedings.
The Tribunal considered information in the documents provided by Child Support in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 567, documents lodged by Mr Sheadman numbered A1 to A173, documents lodged by Ms Andean numbered B1 to B36, additional information from Child Support numbered C1 to C565 and information received from Centrelink, numbered D1 to D9. All of the documents were provided to all parties prior to the hearing and Mr Sheadman confirmed receipt of all such documents, albeit he did not bring all of them to the hearing.

ISSUES

Mr Sheadman’s oral and written submissions were centred around his assertion that the decision of 28 May 2019 is unlawful and therefore null and void. Therefore, he maintained that the Tribunal is unable to review an unlawful decision.
Mr Sheadman’s submission was on the basis of claims of a breach of procedural fairness by the Child Support decision-makers because he was not served with notice of the change of assessment application and was therefore not given an opportunity to respond. Mr Sheadman submitted that an application dated 17 January 2019 that was not served until 24 June 2022 could not have any reasonable validity.
Furthermore, he submitted that the change of assessment application is “masquerading as an out-of-time decision” because Ms Andean was aware of his 2017/18 ATI on 21 September 2018 through a discussion with Child Support. Consequently, her change of assessment application is a late objection to the decision of 10 August 2018 when Child Support accepted his 2017/18 tax return information.
Mr Sheadman went on to submit that the departure decision of 26 July 2023 is also unlawful because it is outside of legislative time limits. In his view, in accordance with section 112 of the Act, Child Support is prohibited from considering a day any further than 18 months prior to a valid application regarding a change of assessment application. As he did not receive the application until 24 June 2022, 18 months prior is limited to December 2020 and therefore Child Support and the Tribunal are unable to consider the period prior to December 2020.
The Tribunal acknowledges the issues raised by Mr Sheadman in respect of the lack of procedural fairness afforded him by Child Support. Child Support acknowledged that Mr Sheadman was unable to be contacted to advise of the initial application or to discuss it. However, according to Child Support records, a notice of the decision regarding change of assessment was sent to Mr Sheadman on 29 May 2019. While this may not have been to the correct address, Child Support is to use the most recent address provided to it for a parent and it is Mr Sheadman’s obligation to ensure that Child Support is advised of his correct address (Regulations 34 and 35 of the Child Support (Registration and Collection) Regulations 2018).
The Tribunal accepts that Mr Sheadman did not have the opportunity to respond to the application of Ms Andean before the decision of 28 May 2019 was made. Accordingly, the Tribunal (differently constituted) granted him an extension of time to object to that decision. Mr Sheadman then had the opportunity to respond prior to the objections officer making the decision of 26 July 2023. Furthermore, Mr Sheadman has had the opportunity to respond and make submissions both orally and in writing to the Tribunal in respect of the same change of assessment application.
As discussed at the directions hearing and at the full hearing, the process before the Tribunal is a merits review of the Child Support decision. As Mr Sheadman correctly points out in his written submission of 12 March 2024, “unlike judicial review, which is concerned with the lawfulness of a decision, including legal error and/or whether the rules of procedural fairness were complied with, a merits review involves considering the facts, law and policy underlying the original decision and substituting a fresh decision where the new decision is correct and preferable”. The decision of Child Support is not under judicial review, it is under merits review. The Tribunal has no authority to review the behaviour or processes of Child Support officers, as referred to by Mr Sheadman in his submissions. This means that the Tribunal considers the application of 17 January 2019 with fresh eyes, as if it were being considered for the first time. The Tribunal acknowledges the issues that arose during Child Support’s review of the original decision, however it is unable to consider these in the context of this review. The hearing before the Tribunal affords Mr Sheadman the opportunity to now be heard on all relevant aspects of the decision under review and to respond to all of the evidence before the Tribunal.
In relation to the departure application of Ms Andean, in accordance with section 98B of the Act, it is open to a parent to lodge a written application requesting the Registrar to depart from the administrative assessment at any time when an administrative assessment is in force, if the parent considers that special circumstances exist. As such it was open to Ms Andean to lodge the change of assessment application on 17 January 2019. The only limitation, as imposed by subsection 98S(3B) of the Act, is that the decision-maker is limited to consideration of a period no earlier (emphasis added) than 18 months prior to the date of the application. This is the departure application date and not the date that Mr Sheadman received notice of that application. While the departure decision commenced on 30 January 2019, following cessation of the previous departure decision, as Ms Andean lodged the application on 17 January 2019, it was open to the decision-maker to depart from as early as July 2017, if appropriate.

In respect of Section 112 of the Act, the Tribunal notes, it relates to the power of the court to grant leave to amend an administrative assessment that is more than 18 months old.. There is no evidence before the Tribunal to indicate that a court has granted such leave. The relevant legislation is subsection 98S(3B) of the Act, which provides that a determination made under Part 6A of the Act (the departure determination provisions), may only be made in respect of a day that is more than 18 months earlier than either the day on which the application for the determination is made under section 98B of the Act, which in this case is 17 January 2019, or the day on which the Registrar notifies the relevant parties under subsection 98M(1) when a court has granted leave under subsection 112(6) of the Act for an earlier determination to be made.
As discussed at the directions hearing and the hearing, the Tribunal is therefore limited to consideration of a period commencing no earlier than 17 July 2017, 18 months prior to lodgement of the departure application by Ms Andean on 17 January 2019. In saying that, the Tribunal is also cognisant that a previous departure determination was in place from 30 January 2017 to 29 January 2019 and Mr Sheadman was not granted an extension of time to object to that decision. Furthermore, the Tribunal must consider whether there has been a significant change in circumstances compared with those upon which the decision of 13 June 2017 was made and consideration must also be given to the impact on the parents in respect of any arrears or overpayments.
The Tribunal also explained at the directions hearing that the legislation does not limit the Tribunal in respect of an end date for any departure decision. The Tribunal explained that evidence to date may be relevant and is particularly relevant if the Tribunal were to make a departure decision, regarding the impact of any arrears or overpayment positions that may arise as a result.
As noted above, consideration in respect of errors of law or breaches of procedural fairness are reserved for judicial review. The objections process proceeded at Child Support and Mr Sheadman pursued his further rights of review to the Tribunal for a merits review. There is an objections officer’s decision before the Tribunal and an application under subsection 89(1) of the Child Support (Registration and Collection) Act1988 by Mr Sheadman for the Tribunal to review that decision considering the facts, law and policy underlying the original decision made on 28 May 2019 and the Tribunal proceeded to do so.
When calculation of the rate of child support is based on the usual administrative formula it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. It is these issues that are directly relevant to this review. Contrary to Mr Sheadman’s submission that his 2017/18 tax return must be applied from the day of its receipt, section 98C of the Act allows for a decision-maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:
·         whether a ground exists to depart from the administrative assessment; and if so
·         whether any proposed departure is fair to Mr Sheadman, Ms Andean and [the child]; and if so
·         whether any proposed departure is fair to the public.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case.” The meaning of this expression is not defined in the Act. However, the Tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are “out of the ordinary” and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC
90-433).

Reasons 8A and 8B – the earning capacity, income, property and financial resources of each parent

Subparagraphs 117(2)(c)(ia) and 117 (2)(c)(ib) of the Act provide a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by either parent because of the available income, property and financial resources available to either parent or because of the earning capacity of either parent.
The Act goes on to state in subsection 117(7A) that the decision-maker must have regard 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” and disregard “the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child”. The Tribunal notes that the partner of Ms Andean has no legal duty to contribute to the costs of [the child]. Similarly, Ms Andean has no legal duty to provide for her partner’s child.
As discussed above, prior to the hearing, Mr Sheadman provided detailed written submissions in regard to the validity of the decision before the Tribunal. However, he provided little in respect of why he considered the decision of Child Support to be unfair, other than his commencement of austudy in July 2020 and the assessment of his expenses based on the three months of bank statements available to Child Support at the time. He has not lodged a tax return since 2017/18 and chose not to comply with the Tribunal’s direction to provide bank statements for the period from May 2019, the last date of bank statements in the hearing papers. Child Support responded to a request from the Tribunal to access the [bank] statements relating to Mr Sheadman for the remainder of the relevant period under review.
Ms Andean fully complied with the directions, albeit the record of her assets and liabilities was unclear. She lodges her annual tax returns in a timely manner and her ATI is recorded and applied to the relevant child support period by 1 September each year. It is evident that her ATI has gradually increased each year. She also provided information in respect of her more recent financial circumstances, including a Statement of Financial Circumstances, payslips and updated average weekly expenses.
The Statement of Financial Circumstances completed by Ms Andean on 24 September 2023, did not record receipt of any government benefit. Information received from Centrelink confirmed that Ms Andean has not been in receipt of family tax benefit since September 2022. In the 2018/19, 2019/20, 2020/21 and 2021/22 years, Centrelink records indicate that Ms Andean was in receipt of FTB Part A and Part B. In any event, pursuant to subparagraph 117(7)(b)(ii) of the Act, for child support purposes FTB is not considered to be a part of Ms Andean’s ATI. FTB is an income-tested benefit and is not taxable. FTB is not defined as a tax-free benefit under section 5 of the Act to be included in ATI (paragraph 43(1)(e) of the Act). Therefore, as FTB is not required to be included in ATI, it is to be disregarded as income, as clarified at 2.6.17 of the Child Support Guide.
According to her tax returns, Ms Andean’s ATI is as set out in the table below.

Financial Year	ATI - $
2018/2019	80,892
2019/2020	82,968
2020/2021	86,560
2021/2022	99,117
2022/2023	112,747

According to the most recent payslips of Ms Andean her current annual salary is $131,473. This aligns closely to the estimated 2023/24 gross income, based on year-to-date gross income on the 8 March 2024 payslip of $91,944. Mr Sheadman had no comment in respect of the income of Ms Andean and raised no issue in relation to the Tribunal relying on her ATI as an accurate reflection of her available income and financial resources.
The Tribunal considered the assets and liabilities of Ms Andean who shares a residence with [the child] and her partner and his child. Ms Andean’s written evidence is that she and her partner contribute equally to the weekly costs of the household. Ms Andean does not record any ownership of a property or any liability of a mortgage. While Ms Andean has not selected rent or mortgage payment, given that council rates are paid, it is a reasonable assumption that the payment of $375 each per week is not in relation to rented premises. Mr Sheadman gave oral evidence that at court hearings Ms Andean submitted that the home is owned by her partner and debt free. It is unclear to the Tribunal who owns the property or whether the $375 recorded by Ms Andean is a contribution to a mortgage or akin to “board”.
According to her Statement of Financial Circumstances, completed on 24 September 2023, Ms Andean’s assets consist of funds in the bank ($1,500), a motor vehicle ($14,000) and household contents ($10,000), totalling $25,500. She records no liabilities, despite providing a written submission that she is repaying a significant legal debt. Based on the limited evidence available in respect of assets and liabilities, the Tribunal is satisfied that Ms Andean likely has a positive net asset base.
According to her revised average weekly expenses provided to the Tribunal on 12 March 2024, the household costs are estimated at $2,637, or $137,124 per annum. Of this, $1,008 per week, or $52,416 per annum, relates to Ms Andean’s costs of self-support. This includes discretionary expenses such as, entertainment, holidays, gifts, books and magazines in the amount of $25 per week. Furthermore, it is unclear whether or not she contributes to a mortgage or board. Regardless, the costs are significantly higher than the self-support amount allowed in the formula in 2024 of $28,463. Ms Andean has not submitted, nor is there any evidence to suggest that Ms Andean is unable to meet the weekly expenses of her and [the child], both necessary and discretionary, and the Tribunal so finds.
Mr Sheadman has not lodged a tax return since 2017/18, which was lodged in August 2018 together with all of the prior years commencing from 2011/12. With the exception of the 2015/16 year in which the ATI of Mr Sheadman was $35,479, all of the ATIs recorded to 2017/18 were less than the relevant self-support amount and either below or close to the relevant tax-free thresholds, after allowance for the low income offset. His 2017/18 ATI was $2,048, which according to Child Support records consisted solely of bank interest earned. Mr Sheadman submitted that he was not required to lodge a tax return since commencing the receipt of austudy on 20 July 2020. At the time of writing, his 2018/19 and 2019/20 tax returns remain outstanding.
In response to a question from the Tribunal relating to his income and financial resources during 2019 and 2020, Mr Sheadman stated that he was [doing a job task] at [Employer] as a sessional [occupation] and also setting up a sole trader business that provided [a service] for [work sector]. While an [occupation] he would travel regularly to [Country] to promote the [program]. He further stated that he had consistent online work in his sole trader business until COVID-19 hit, at which point things did not go well. When asked for more detail in regard to income from his role as an [occupation] and from his sole trader business, Mr Sheadman stated that he could not really recollect that long ago and was unaware that the Tribunal would be asking questions about that period. As such, he could not tell the Tribunal what his earnings were in 2019/20.
Mr Sheadman told the Tribunal that as a sessional [occupation] he had no entitlement to jobkeeper and he survived by spending his savings from the sale of his [Suburb] property in 2016. The property sold for $1,320,000. In accordance with property settlement orders, Ms Andean received a payment of $148,000. Mr Sheadman was unable to answer the Tribunal’s question as to how much money he received from the sale after payment of the corresponding mortgage.
The bank statements from Mr Sheadman’s three [bank] accounts were before the Tribunal for the period from February 2019 to date. In respect of his savings account (…3469) Mr Sheadman confirmed that the balance in February 2019 of $92,663 consisted solely of funds received from sale of the [Suburb] property. He gave oral evidence that he also gave $30,000 to $40,000 to his parents from the sale funds and used at least $30,000 to set up his sole trader business. It is evident that regular transfers occur between all accounts. By 30 June 2019, the use of savings to meet the costs of Mr Sheadman and [the child] had reduced the balance to $41,509 and the savings were exhausted by late 2019. The costs included monthly rent of $2,759, which continued until March 2020. In addition, the Tribunal observed that all necessary and discretionary expenses were met from the savings. Mr Sheadman agreed and stated that he has never really thought about spending money in relation to the needs of [the child], both necessary and discretionary, even if he cannot afford it.
Lack of evidence prevents the Tribunal from accurately quantifying the income and financial resources available to Mr Sheadman prior to July 2020. However, given that he was meeting rental expenses of around $33,000 per annum, when combined with average household expenses such as utilities, food and clothing, the Tribunal is satisfied that Mr Sheadman’s income and financial resources to meet the necessary expenses of himself and [the child] likely exceeded a post-tax amount of $50,000 per annum.
While Mr Sheadman had access to his savings, the Tribunal is also cognisant that Ms Andean had access to an amount of savings as a result of the [Suburb] sale and property settlement, albeit a lesser amount than Mr Sheadman. Accordingly, the Tribunal is not satisfied that it is appropriate to determine an ATI for Mr Sheadman based on his spending pattern which in 2019/20 included significant discretionary spending for him and [the child]. However, given his level of spending and his evidence of receiving income from [occupation work sector] and the operation of a sole trader business, to assess Mr Sheadman on the basis of his 2017/18 ATI of $2,048 is also not appropriate.
Mr Sheadman gave oral evidence that he commenced full-time studies in July 2020. He could not recall exactly when he moved in with his parents. Although the last rental payment was in March 2020, the rent was impacted by COVID-19 and he told the Tribunal that it was some time after he commenced his studies that he moved to live with his parents.
According to Centrelink records, Mr Sheadman received austudy and COVID-19 payments commencing 20 July 2020 to 30 June 2021 of around $23,500; in 2021/22 he received austudy payments of around $17,832; and in 2022/23 he received austudy payments of around $18,500. The payments were deposited into the …3469 savings account. Based on Centrelink information to date, the Tribunal estimates that Mr Sheadman will receive austudy payments of around $20,500 in 2023/24. In addition, according to Centrelink information and the [Bank] statements he received student start-up loans of $3,496, which he used to purchase a new computer.
According to [bank] statements of Mr Sheadman’s visa debit account, …1778, in the six months prior to commencement of austudy he was in receipt of regular deposits at least on a monthly basis that, although sometimes varied, were mainly $1,000 or $2,000 at a time and totalled $15,000. These deposits have continued to date.
In response to a question from the Tribunal, Mr Sheadman stated that the deposits were from his parents, noting that he gave them $30,000 to $40,000 from the property sale. In July 2022, Mr Sheadman also received a back payment from [Employer] in the net amount of $575 and in November 2023 he received a payment from [Financial services] in the amount of $6,798, as a result of his share of fees refunded to him from an investment he held many years earlier.
The meaning of “financial resource” was considered in Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39 where the Court stated:
‘Financial resource’ refers to ‘something which is not property but from which financial benefit is or may be gained. In light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
Therefore, based on the bank statements, from 1 July 2020 the Tribunal calculates that Mr Sheadman received deposits from various sources as a financial resource, in addition to his austudy payments as income as set out in the table below.

Period	Source	$	Income and financial resources
01/07/2020 – 30/06/2021	Deposits from parents	15,150
Austudy	23,500	38,650
01/07/2021 – 30/06/2022	Deposits from parents	16,200
Austudy	17,833
[Employer]	575	34,608
01/07/2022 – 30/06/2023	Deposits from parents	13,000
Austudy	18,408	31,408
01/07/2023 – 15/02/2024	Deposits from parents	6,900
Austudy	13,878
[Financial services]	6,798	27,576

From 16 February 2024, assuming the deposits from his parents continue on a monthly basis of conservatively $1,000 per month ($4,000) and receipt of austudy in the amount of $822 per fortnight ($7,398), the Tribunal estimates the income and financial resources of Mr Sheadman in 2023/24 to be around $39,000.
According to the Statement of Financial Circumstances, completed by Mr Sheadman on 13 September 2023 and his oral evidence, his assets consist of a minimal bank balance, a motor vehicle ($11,000) and household contents ($10,000). He confirmed to the Tribunal that he has no liabilities. Therefore, the Tribunal is satisfied that he has a negligible asset base from which to draw upon.
The courts have made it clear that in assessing whether a ground is established in respect of Reason 8, a change in income is not necessarily sufficient consideration. The Tribunal must also consider the person’s commitments to be met by that income before being in a position to determine whether or not the resulting child support liability is fair (Ross & McDermott [1998] FamCA 134).
In respect of his current commitments, despite being directed to provide an updated average weekly expenses page in respect of all members of the household, Mr Sheadman failed to do so. The recorded commitments in his Statement of Financial Circumstances after allowance for the $80 relating to [the child], records commitments of $261 per week, which equates to $13,572 per annum. Mr Sheadman submitted that “it is tough to survive on his income.” The Tribunal notes that Mr Sheadman does not incur the average household costs of rent/mortgage, utilities and the like. His costs are limited to food, clothing, motor vehicle and insurance. Based on his own evidence his estimated weekly costs are less than half of the costs of self-support allowed for in the administrative formula in 2024 of $28,463.
Overall, the Tribunal is satisfied that Mr Sheadman has had access to income and financial resources to meet his self-support costs and those of [the child] since commencement of the child support assessment. In doing so there is no evidence of any creation of liabilities.
Following cessation of the previous departure decision on 29 January 2019, the ATIs used in the administrative assessment in respect of Mr Sheadman and Ms Andean, and the corresponding child support liability based on the care percentages recorded by Child Support, are as set out below.

Period	Mr Sheadman ATI $	Ms Andean ATI $	Child support liability and liable parent $
30/01/2019 – 31/08/2019	2,048	71,915	1,961 Ms Andean
01/09/2019 – 31/08/2020	2,105	80,892	2,283 Ms Andean
01/09/2020 – 15/04/2021	51,151	82,968	759 Mr Sheadman
16/04/2021 – 31/08/2021	51,151	82,968	890 Mr Sheadman
01/09/2021 – 26/09/2021	21,017	86,560	Nil child support liability
27/09/2021 – 30/03/2022	21,017	86,560	3,046 Ms Andean
31/03/2022 – 31/08/2022	21,017	86,560	Nil child support liability
01/09/2022 – 30/09/2023	17,343	99,117	Nil child support liability
01/10/2023 – 31/12/2024	18,168	112,747	Nil child support liability

Given the income and financial resources of Mr Sheadman discussed above, the Tribunal is satisfied that he had access to income and financial resources of at least $50,000 per annum before tax, prior to commencing receipt of austudy. To be treated in the same way in the child support administrative assessment as those who are PAYG employees, it is also appropriate for a parent in receipt of untaxed financial resources above the tax-free threshold, for child support purposes, to have an adjustment made for income tax. In considering an after-tax income of around $50,000, the equivalent pre-tax amount approximates $63,000 in the 2019/20 year. As such, after also considering the assets, liabilities and “necessary” costs of the parties the Tribunal is satisfied that the administrative assessment to 19 July 2020 does not produce a fair outcome in assessing Ms Andean as the paying parent and finds that special circumstances do exist in this case and finds that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.
From 20 July 2020, when Mr Sheadman commenced receipt of austudy, it is noteworthy that the administrative assessment also uses an ATI for Mr Sheadman that is significantly lower than his actual income and financial resources for most of the period However, given the increased ATI of Ms Andean and the care percentages, Mr Sheadman’s income and financial resources would need to exceed $55,000 per annum before it impacted significantly on the overall child support assessment for the period from 20 July 2020. In this case, in the years from 2020/21 to date, the additional adjustment for tax does not result in the income and financial resources available to Mr Sheadman exceeding $55,000. Accordingly, the Tribunal is satisfied that from 20 July 2020 special circumstances do not exist, as overall the administrative assessment produces a fair outcome.

Issue 2 – Is it fair or “just and equitable” in relation to Mr Sheadman, Ms Andean and [the child] to make a particular departure determination?

As the Tribunal is 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 in turn requires the Tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal does not propose to explore every matter in detail. Rather, it will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft & Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Sheadman and Ms Andean have the primary duty to financially support [the child].
In determining the proper needs of [the child], it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs (subsection 117(6) of the Act). Mr Sheadman gave oral evidence that [the child] is a healthy and happy young boy who has no special needs. There is no evidence from Ms Andean to suggest that this is not the case and the Tribunal so finds.
According to her Statement of Financial Circumstances, Ms Andean’s weekly costs for [the child] approximate to $245 ($12,740 per annum). It is noteworthy no mortgage costs have been attributed to [the child]. Furthermore, it includes discretionary costs in respect of entertainment, holidays, activities, gifts, books and magazines of more than $100 per week. Mr Sheadman told the Tribunal that he incurs costs for [the child] in taking him to [sport], clothes and sporting equipment, computer games and also for regular trips to various takeaway food outlets. He estimated the costs could be anywhere between $200 and $300 per fortnight. This includes necessary and discretionary costs.
In considering the proper needs of [the child], the Tribunal may also have regard to published guidelines as to the needs and the costs of children as used in the administrative assessment (Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275). The Tribunal turned to the Costs of the Children Table. Based on Mr Sheadman’s ATI falling below the self-support amount and Ms Andean’s current ATI used in the administrative assessment of $112,747, the costs of [the child] approximate $13,500 per annum, or $260 per week. The Tribunal observes that the estimated costs provided by Mr Sheadman and Ms Andean of around $370 ($245 + $125) per week ($19,240 per annum) are significantly higher, albeit the Costs of the Children Table does not include discretionary spending such as entertainment and holidays. Neither parent has submitted that they are unable to meet the costs of [the child] and the Tribunal observes that it seems [the child]’s needs are well met by both parents. The Tribunal also notes the financial assistance provided to Mr Sheadman from his parents, albeit he maintains it is a repayment of his own monies.

The earning capacity, income, property and financial resources and commitments of each parent

The Tribunal found earlier that the ATI of Ms Andean is an accurate reflection of her available income and financial resources. The Tribunal also found that the ATIs attributed to Mr Sheadman in the administrative assessment to 19 July 2019 of $49,071 and $2,048 are less than the actual income and financial resources available to him in equivalent after-tax dollars. However, in the period from 20 July 2020, the Tribunal found that the ATIs of Mr Sheadman as used in the administrative assessment are appropriate and produce a fair outcome.
A parent’s earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Act which requires the Tribunal to consider three matters in determining that the parent's earning capacity is greater than is reflected in their income used in the administrative assessment:

Whether the parent is:
onot working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
ohas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
ohas changed their occupation, industry or working pattern (subparagraph117(7B)(a)(iii)); and
If the parent’s decision about their work arrangements is not justified by either their caring responsibilities (subparagraph 117(7B)(b)(i)) or their state of health (subparagraph 117(7B)(b)(ii)); and
If 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 stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

All three of the above criteria must be met before a departure determination can be made to take into account whether the parties have a greater earning capacity. If the above criteria are satisfied then the Tribunal must determine the actual earning capacity of the parent.
The issue was not raised in relation to Ms Andean. In any event, as her income has only increased each year since the assessment and she has apparently moved from part-time hours to full-time hours, an earning capacity determination is not applicable to her.
In respect of Mr Sheadman, the Tribunal accepts his oral evidence that he was working at [Employer] in [occupation work sector] on a sessional basis and setting up a sole trader business in 2019. As a result of COVID-19, he made the decision to return to full-time study. In such circumstances, the Tribunal is satisfied that the major purpose in Mr Sheadman’s decision to reduce his working hours and return to study was not to affect the administrative assessment of child support. Furthermore, from January 2019 to August 2020, the administrative assessment assessed Ms Andean as the payable parent. Consequently, there is no reason for Mr Sheadman to make a decision to affect the child support assessment.
As the third criterion is not satisfied, all three criteria cannot be satisfied. Therefore the Tribunal is unable to take into account the earning capacity of Mr Sheadman and finds accordingly.
The current child support assessment is nil. Therefore, the Tribunal is satisfied that both parents are able to meet their own costs of self-support and their respective costs in respect of [the child] from the income and financial resources available to them. The Tribunal acknowledges that Mr Sheadman’s financial position may be less favourable at present that that of Ms Andean. However, he has not incurred any liabilities to date, has the benefit of significantly reduced costs of living, and regular and consistent assistance from his parents.

Conclusion

The Tribunal may make one of the determinations set out in section 98S of the Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support.
The Tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). Child Support commenced the initial departure decision on 30 January 2019, following cessation of the previous departure decision made on 13 June 2017.
Given that Mr Sheadman was not granted an extension of time to object to the departure decision of 13 June 2017, the Tribunal does not consider it appropriate to consider any departure prior to 30 January 2019.
After consideration of Mr Sheadman’s access to income and financial resources, the ATIs of Ms Andean, the assets and liabilities together with the commitments of both parents and the needs of [the child], the Tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Act from 30 January 2019 to 19 July 2020. The Tribunal proposes to vary the annual rate of child support payable by Mr Sheadman for that period to $2,300 per annum. From 20 July 2020, the Tribunal is satisfied that the child support liability is to be calculated in accordance with the administrative assessment; that is, based on the most recently lodged tax returns of the parents or the relevant ATIs derived by Child Support.
According to Child Support records, there are currently no outstanding arrears payable by either parent. The Tribunal calculates that this decision will result in a position of overpayment by Mr Sheadman in the period from 30 January 2019 to 19 July 2020 of approximately $3,400. In view of the delays in Mr Sheadman becoming aware of the original decision and the financial circumstances of the parents, the Tribunal considers this to be appropriate.
Subsection 117(4) of the Act requires the Tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.
Mr Sheadman submitted that in his view any decrease in the child support liability payable by him will not cause any hardship to Ms Andean and [the child]. Based on the evidence before the Tribunal in relation to her financial circumstances, the Tribunal agrees. It is open to Ms Andean to negotiate a manageable repayment plan with Child Support. Furthermore, it is open to both parents to prioritise the “necessary” costs for themselves and for [the child] in accordance with their financial capacity.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination.
In this case, while Ms Andean is no longer in receipt of FTB, she was in receipt of FTB Part A and Part B during the period 30 January 2019 to 19 July 2020. Based on her ATI during that period her entitlement to FTB Part A was only at the base rate. Therefore, this decision will likely have minimal impact on her entitlement to FTB Part A. As a single parent with an ATI of less than $100,000, the child support liability has no impact on her entitlement to FTB Part B. Therefore, the Tribunal is satisfied that it is otherwise proper to make the particular proposed determination.
The current administrative assessment results in neither parent paying child support. It is open to either party to lodge a further change of assessment application should the circumstances of the parties differ significantly from the information and assumptions upon which this decision has been based.

DECISION

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

The annual rate of child support payable by Mr Sheadman to Ms Andean is varied to $2,300 in respect of the period 30 January 2019 to 19 July 2020.
From 20 July 2020, the child support liability is to be calculated in accordance with the administrative assessment.

[2024] AATA 2545

4 June 2024

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