Shirley and McLean (Child support)

[2023] AATA 3400

Shirley and McLean (Child support) [2023] AATA 3400 (30 August 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC025823

APPLICANT:  Mr Shirley

OTHER PARTIES:  Child Support Registrar

Mrs McLean

TRIBUNAL:Member E Kidston

DECISION DATE:  30 August 2023

DECISION:

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

• for the period 8 August 2022 to 30 June 2023, Mr Shirley’s adjusted taxable income is varied to $79,000;

• for the period 1 July 2023 until a terminating event in relation to [Child 1], Mr Shirley’s adjusted taxable income is varied to $69,000; and

• for the period 27 January 2024 until a terminating event in relation to [Child 1], Ms McLean’s adjusted taxable income is varied to $113,000.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – a ground for departure established – 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

1. This review concerns an application made by Mr Shirley on 22 March 2023 in relation to a change of assessment objection decision made by Services Australia – Child Support (Child Support) on 24 February 2023. 

BACKGROUND

1. Mr Shirley and Ms McLean are the separated parents of [Child 1] (born 2006). A child support case was registered with Child Support in December 2006.  Child Support’s records show that for the relevant period Ms McLean has primary care of [Child 1] of 83% and that Mr Shirley has 17% care and is the parent liable to pay child support. 

2. In July 2022, Mr Shirley was in contact with Child Support and first objected to an assessment made by Child Support on 12 July 2022.  He subsequently withdrew the objection and instead made an application for a change in the administrative assessment of child support on 17 August 2022 following Child Support’s decision of 8 August 2022.  A number of grounds for departure were noted in Mr Shirley’s application including his high contact costs and various payments made directly to [Child 1].  Ms McLean disagreed with Mr Shirley’s application.

3. For the purpose of this review, the administrative assessment of child support relevantly in place at the time of Mr Shirley’s application for departure was as follows:

   From 1 August 2022 to 7 August 2022 an annual rate of $6,469 based on 2022 ATI [adjusted taxable income] of $91,410 for Mr Shirley and $87,395 provisional ATI for Ms McLean.

   From 8 August 2022 to 30 June 2023 an annual rate of $3,741 based on an estimate income of $70,783 for Mr Shirley. Ms McLean is assessed on 2021/2022 adjusted taxable income of $88,113.

4. On 28 September 2022 Mr Shirley contacted Child Support to inform he had ceased employment.  Accordingly, the assessment for child support was updated on and from that date, as follows:

   From 28 September 2022 to 30 June 2023 an annual rate of $1,521 based on an estimate income of $0 for Mr Shirley. Ms McLean is assessed on a 2021/2022 adjusted taxable income of $88,113.

5. On 21 October 2022, Ms McLean provided a response to Mr Shirley’s application and also cross-applied based on changes in Mr Shirley’s income for the 2021/22 year.

6. On 18 November 2022, a delegate of Child Support considered the applications and determined reasons were established to depart from the assessment that was in place in the 2021/22 year.  The assessment was changed for the period 1 August 2021 to 31 July 2022 by increasing the annual rate of child support payable by Mr Shirley by $4,000.  Thereby creating arrears of about $4,000. 

7. Mr Shirley objected to the decision and, on 24 February 2023, an objections officer of Child Support partly allowed the objection and decided to change the assessment to the following:

   From 1 August 2021 to 31 July 2022, the annual rate of child support is set at $3,600;

   From 1 December 2022 until [Child 1] ceases to be an eligible child for the assessment of child support, Mr Shirley’s adjusted taxable income is set to $75,000.

8. On 22 March 2023, Mr Shirley applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for review of the objection decision dated 24 February 2023.  

10.  The Tribunal conducted a directions hearing concerning the substantive matters under review on 10 July 2023, and then a full hearing on 21 August 2023. Mr Shirley and Ms McLean participated in the hearings by conference telephone and each gave evidence on affirmation.

11.  Following the hearing, the Tribunal deferred making a decision and requested Mr Shirley provide further information that had not successfully been included in the documents exchanged prior to the hearing. Mr Shirley provided this material to the Tribunal by 22 August 2023. The Tribunal distributed a copy of the additional information (Exhibit A pages A46 to A76) to all parties but did not require additional information from them.

12. In considering the application, the Tribunal took into account the submissions as well as the documentary material in evidence as provided by Child Support in accordance with subsection 37(1) of the Administrative Appeals Tribunal Act 1975 comprising folios 1 to 331 (marked Exhibit 1) as well as the additional documents provided by Mr Shirley prior to and after the hearing (marked Exhibit A pages A1 to A76) and additional documents provided by Ms McLean prior to the hearing (marked Exhibit B pages B1 to B57).

13.  During the hearing, submissions were made regarding certain matters that are not relevant to the issues before the Tribunal and therefore are not mentioned in these Reasons. As canvassed at the hearing, the Tribunal is required to consider the issues before it based on the relevant facts and application of the law; it is not the role of the Tribunal to adjudicate on other areas of dispute that may exist between the parties. However, in stating that, the Tribunal does not disregard or diminish the importance of other matters in any way, merely that the Tribunal is limited to considering the relevant issues concerning the decision under review.

CONSIDERATION

14.  From Mr Shirley’s submissions and evidence, he challenges Child Support’s decision principally on the grounds that he disagrees with the income amounts used in the assessment and that he was not afforded procedural fairness in the process with Child Support as they have not taken other factors into account including his personal circumstances in caring for family members with disability and medical/health conditions, payments he had made directly to [Child 1] and the high contact costs that he has had to incur.

15.  It is convenient for the Tribunal to immediately address Mr Shirley’s first point concerning Child Support’s conduct and procedural fairness. The Tribunal acknowledges Mr Shirley’s concerns regarding his interactions with Child Support; however, the Tribunal is required to consider the issue before it based on the facts and application of the law and it is not the role of the Tribunal to adjudicate on how Child Support has conducted itself or what processes it has undertaken. Further, the Tribunal does not have jurisdiction to consider procedural fairness, notwithstanding this, the Tribunal considers that Mr Shirley’s concern is essentially addressed in any event by the fact the Tribunal conducts a full merits review of Child Support’s decision.

16.  The substantive submissions made by Mr Shirley to the Tribunal related to Child Support’s assessment of Ms McLean’s income based on her 2021/22 adjusted taxable income (ATI) of $88,113. At the hearing Mr Shirley contended that Ms McLean has not provided full and frank disclosure of her financial position over the past few years for child support purposes and considers the Child Support objection decision to be unfair as Ms McLean’s ATI takes into account a salary reduction plan that spans four years and she ought to be assessed on her earning capacity as a full-time [Occupation 1], which is more than $100,000 a year.    

17.  Mr Shirley also submitted at the hearing that consideration was not given by Child Support to his personal circumstances that have impacted his financial circumstances including his wife’s medical condition as she has, and continues to be, undergoing [cancer] treatment.  Other circumstances that he considers have not been properly considered by Child Support included the changes to his employment in 2022, as well as the high contact costs and payments made directly to [Child 1]’s benefit in 2021 and 2022.   Mr Shirley further asserted that following Child Support’s decision, he was faced with approximately $5,000 of debt for child support arrears and he will be unable to continue the repayment given his earnings will be significantly reduced due to his recent acceptance of the permanent part-time position with [Employer 1] as shown in evidence in Exhibit A, folio A48.

18.  Ms McLean told the Tribunal that at the time she negotiated a sabbatical with her employer, [Employer 2] in 2018, she had agreed to be paid 80% of her salary for the next four years and work full-time (2019/2022) and then have the following school year as sabbatical leave (2023).  Ms McLean said the sabbatical was to enable her to continue with study and professional development, to have time to fully support [Child 1] during her penultimate year of high school, and to undertake renovations in updating the kitchen, bathrooms and general painting of their family home.  Ms McLean confirmed that she will return to full-time employment as a [Occupation 1] with [Employer 2] on 27 January 2024 earning about $113,000 gross per annum, as shown in her payslips in Exhibits B13 and B14. Ms McLean explained that at the time she negotiated the sabbatical in 2018, Mr Shirley was paying nil child support and her decision to undertake a change in her employment had no bearing on the amount of child support Mr Shirley paid, and in fact did not have any bearing on Mr Shirley for 2019, 2020 and 2021 as child support assessment was based on his then lower income and Ms McLean acknowledged it was at a time when Mr Shirley was caring full-time for his mother. 

19.  Ms McLean told the Tribunal that although she considers Mr Shirley had been under-assessed for child support in the 2021/22 period given his 2021/22 ATI of about $91,000, and that for many years prior Mr Shirley had paid either nil child support or the minimum child support given his personal circumstances in his caring for his elderly mother, she ultimately agrees with the objection decision as determined by Child Support.

The legislative framework

20.  The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act). The Assessment Act provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ ATIs and their percentages of care for the children. It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Assessment Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent. This is a process commonly known as a “change of assessment”.

21. Section 98C of the Assessment Act provides that Child Support may make a determination to depart from the formula assessment where the following three elements are established:

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

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

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

1. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether the ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” present.

23. The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (1992) FLC 92-279, the Full Court of the Family Court of Australia held that the term “special circumstances” is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. Further, the intention of the legislature is that the Court will not interfere with the administrative formula in the ordinary run of cases. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that principle.

24. If satisfied that there are “special circumstances” and that a ground or grounds exist, subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply and the Child Support Registrar (and therefore, the Tribunal) must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

ISSUES

25.  The issues that must be considered by the Tribunal in this matter are:

·     Whether a ground exists to depart from the administrative assessment? If so,

·     Whether it just and equitable to depart from the administrative assessment? And if so,

·     Whether it otherwise proper to depart from the administrative assessment?

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

26. Although there are a few grounds put forward as being the reason for departing from the administrative formula, the Tribunal is only required to establish one ground for the application to change an assessment to be considered further. Accordingly, for this application, the Tribunal has considered the legislative grounds corresponding to subparagraphs 117(2)(c)(ia) and (ib) of the Assessment Act, commonly referred to by Child Support as “Reasons 8A and 8B”. They provide:

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

…

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

(ib) because of the earning capacity of either parent…

27. The matters which must be taken into account when assessing a person’s earning capacity (Reason 8B) are contained in subsection 117(7B) of the Assessment Act, which provides the following:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a) one or more of the following applies:

(i)the parent does not work despite ample opportunity to do so;

(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

(iii)the parent has changed his or her occupation, industry or working pattern; and

(b) the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i)the parent’s caring responsibilities; or

(ii)the parent’s state of health; and 

(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

1. Simply put, to establish Reason 8A and/or 8B, it must be shown that either parent’s income, property and financial resources or earning capacity make the child support assessment unfair. That is, whether the changes in Mr Shirley’s income or earning capacity and/or Ms McLean’s sabbatical is a significant change which affects the rate of child support payable and ought to be considered special circumstances, so as to depart from the existing assessment.

2. It is relevant to understand the chronology of changes in the assessment from the time Mr Shirley lodged a departure application with Child Support in August 2022:

• Just prior, the child support assessment for the period 1 August 2021 to 31 July 2022 was based on Mr Shirley’s 2020/21 ATI of $33,474 and Ms McLean’s 2020/21 ATI of $84,932 (83% care percentage to Ms McLean) amounted to $0 payable by Mr Shirley.

• On 12 July 2022 the assessment period for 1 August 2022 to 31 October 2023 was updated based on Mr Shirley’s tax return that verified his 2021/22 ATI as $91,410 and calculated a provisional ATI for Ms McLean of $87,395.  This rendered Mr Shirley liable to pay Ms McLean an annual child support amount of $6,469 (about $539.08 per month). 

• Later in July 2022, Mr Shirley contacted Child Support to inform of the changes to his work circumstances, concerning injury, WorkCover and intention to return to work.

• On 8 August 2022 Child Support amended Mr Shirley’s income amount to $70,783 which reduced the child support rate to $315.50 per month for the period 8 August 2022 to 30 June 2023.

• On or about early August 2022, Ms McLean lodged her 2021/22 tax return with the ATO and Child Support updated the assessment by replacing the provisional amount of $87,395 with the assessed 2021/22 ATI of $88,113.  The child support rate was reduced again to $311.75 per month for the period 8 August 2022 to 30 June 2023.

• On 28 September 2022, Mr Shirley contacted Child Support and advised he had ceased employment.  This caused Child Support to recalculate the child support assessment for the period 28 September 2022 to 30 June 2023 using an estimate of $0, with ongoing child support as $126.75 per month (annual child support amount reduced to minimum of $1,521).

1. The usual administrative provisions in calculating child support allows for the application of a parent’s income based on their ATI which is taken from their most recently lodged tax returns.  The use of a parent’s most recent ATI in the child support formula is usually the best evidence of the likely projection of income for that parent going forward into the next care period (usually 12 months).  Each parent is entitled to rely on the administrative assessment of child support to roll on and be updated automatically upon lodgement of tax returns, particularly when their only source of income is from their employment as PAYG employees. However, circumstances may change and what is projected as a person’s income may not actually eventuate and when that occurs, a parent may notify Child Support to review the assessment.  This is effectively what occurred in August 2022 and September 2022 concerning Mr Shirley’s circumstances.

2. While the Tribunal is required to consider the financial circumstances of the parents in a child support assessment, the necessary costs of self-support in respect of each of them and the needs of [Child 1], the Tribunal’s objective is to provide a mechanism of review that is fair, just, economical, informal and quick.[1] Therefore, the Tribunal is not placed in this application to undertake a detailed accounting exercise as to a parents’ incomes, properties and financial resources but is to make the correct or preferrable determination based on the available evidence, bearing in mind the objectives of the child support law.[2]

   [1] Section 2A of the Administrative Appeals Tribunal Act 1975.

   [2] Shearer & Benson & Anor (SSAT Appeal) [2011] FMCAfam 623.

Ms McLean’s income and earning capacity

1. At the hearing Mr Shirley asserted Ms McLean had been under-assessed for child support as the previous assessment failed to take into account her financial resources including her property, superannuation and other assets.  Mr Shirley said that he considers Ms McLean’s election to reduce her income over four years so as to take one year off should be disregarded and Child Support ought to apply her full earning capacity which he considers to be more than $100,000 per annum.

2. In evidence is Ms McLean’s payslips for 2023 and statement from her employer regarding the terms of the sabbatical.  From the available evidence, the Tribunal is satisfied that at all relevant times Ms McLean is employed by [Employer 2] and did not derive or receive income from any other source.  It is appropriate that her income as verified by tax returns is used in the child support assessment formula. That meant for child support periods over the 2019/20, 2020/21 and 2021/22 years, despite Ms McLean working full-time, she received 80% of her wages and continues to receive 80% of her earnings for the current school year.  The Tribunal accepts Ms McLean will return to full-time work and receive 100% of her earnings from 27 January 2024.

3. Mr Shirley argued that 100% of Ms McLean’s full-time wages should be considered for the four years she received reduced salary, as Ms McLean elected to reduce her earnings and he should not be made to pay more child support as a result of an election she made that impacts the formula and has nothing to do with her capacity to work full-time.

4. In relation to the rebuttable presumption of the third criterion stated in paragraph 117(7B)(c) of the Assessment Act, Ms McLean’s evidence is that her decision to undertake a sabbatical was not motivated in any way by the effect it may have on the assessment of child support because Mr Shirley was at that time not paying child support. The Tribunal had regard to when Ms McLean’s sabbatical had effect from the start of 2019; the change in her income to 80% of her wages had no direct impact on child support assessments and continued to have no direct impact until Child Support’s reassessment was made in November 2022 with retrospective effect from 1 August 2021. Furthermore, in the Tribunal’s view the consideration of full-time employment takes into account certain fluctuations and degree of flexibility with workplace structures to allow for continued professional development.

5. As the change in Ms McLean’s income on the amount of child support liability payable by Mr Shirley had no impact on the provision for her to maintain support for [Child 1], that she had been paying on her full-time [Occupation 1]’s income or otherwise, indicates that she has rebutted the presumption that the change to terms of employment within her occupation in electing to take a sabbatical was not substantially motivated by the effect it would have on the child support assessment and the Tribunal so finds.  Therefore, Reason 8B is not established and the Tribunal considers the assessment from 1 August 2021 was correctly based upon Ms McLean’s ATI as verified in her tax returns and not her earning capacity.

Mr Shirley’s income and earning capacity

1. Mr Shirley explained at the hearing that from about 24 May 2021 he was working as a [Occupation 2] for [Employer 3].  In February 2022 he suffered an injury to his [finger] at work.  He was off work and received periodic workers’ compensation payments for about six months (from date of injury to about August 2022 when he returned to work). When he returned to work in August 2022, he found it difficult to perform his job and soon thereafter resigned.  A separation certificate in evidence confirms last date of employment as 28 September 2022.  Mr Shirley told the Tribunal he received some final payments of annual leave entitlements which supported him and his wife for about six weeks from the end of September 2022; however, for the period he was unemployed (September to December 2022) he also borrowed money from his mother, which he said is evidenced by the Afterpay receipts in Exhibit A, totalling about $8,400.  

2. Mr Shirley said soon after he resigned from his job as a [Occupation 2], he applied for a new job with[Employer 1] as a [Occupation 3] and was offered casual part-time work.  He started in this new role on or about 1 December 2022 and has continued with this employment, working casual part-time and earning about $2,700 gross per fortnight (which varied from fortnight to fortnight). Mr Shirley told the Tribunal he has since been offered a permanent part-time role and from 28 August 2023 he will be on a set roster of 72 hours per fortnight with no overtime.  Mr Shirley said this change in employment from 28 August 2023 will have a significant impact on his take home pay as his current casual role included a significant amount of over-time paid at a much higher rate per hour whereas, the permanent part-time role will not include over-time hours and he expects his gross income to be capped at about $2,396 per fortnight. 

3. Mr Shirley told the Tribunal that he had advised Child Support of the changes in his employment and that a fair reflection of his financial capacity for the 2022/23 financial year is $75,000, which takes into account that he was employed by [Employer 3] from 1 July 2022 to 27 September 2022, unemployed from 28 September 2022 to 30 November 2022, and then employed with [Employer 1] from 1 December 2022 to present. 

4. In relation to Mr Shirley’s income for the 2021/22 financial year, the Tribunal notes that Mr Shirley’s income had been based on the previous year’s ATI of $33,000.  It is clear from the better financial information in evidence that a significant increase in his income for the 2021/22 financial year was due to his employment as a [Occupation 2] from August 2021 and the periodic WorkCover payments he received from February 2022 until his return to work in August 2022. 

5. There is no dispute that there was a significant change in Mr Shirley’s income from the 2020/21 financial year of about $33,000 to the 2021/22 financial year of about $91,000 and again to the 2022/23 financial year of about $75,000. The use of $33,000 as his income for the administrative assessment from 1 August 2021 to 30 July 2022 as well as the use of an income estimate of $0 from 28 September 2022 to 30 June 2023, renders the child support assessment unfair, and in the special circumstances of the case, the ground provided for in subparagraph 117(2)(c)(ia) of the Assessment Act is established. The Tribunal finds there is a ground to depart from the administrative formula.

6. Subparagraph 98C(1)(b)(i) of the Assessment Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found one ground for departure is established, it is not necessary to determine whether any of the other grounds relied upon by Mr Shirley are established. As noted above, the issues raised in respect of the other grounds will be fully considered when determining whether it would be just and equitable to make a departure determination.

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

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment, the next step is to consider whether it is just and equitable to depart from the administrative assessment. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the proper needs of the children of the assessment, the parents’ financial circumstances and commitments and any hardship that would be caused if the Tribunal increased or decreased the amount of child support payable by determining a departure from the formula.

2. In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. The Tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application.[3]

   [3]Gyselman and Gyselman [1991] FamCA 93.

3. The Tribunal first considered what is just and equitable in the circumstances of both parents. As a fundamental principle, a person’s financial capacity is reflected by ATI on an annualised basis; this avoids multiple assessments over the course of a year based on fluctuations. This effectively “smooths out” an assessment, ensuring some continuity and certainty.

Ms McLean

1. At the time of the application Ms McLean’s 2021/22 ATI was $88,113.  Mr Shirley’s income was adjusted on a number of occasions which changed the annual rate payable as follows:

Assessment Period	Mr Shirley’s income	Ms McLean’s income	Annual Rate of Child Support payable
1 August 2022 to 7 August 2022	2022 ATI $91,410	2022 ATI $88,113	$6,418
8 August 2022 to 27 September 2022	Income est $70,783	2022 ATI $88,113	$3,741
28 September 2022 to 30 June 2023	Income est $0	2022 ATI $88,113	$1,521

1. Mr Shirley asserted that Ms McLean made choices regarding her employment and has the ability to work full-time as a [Occupation 1].  Although it is not the role of the Tribunal to determine if a parent could or should be working more than they are, the Tribunal has determined (for reasons stated above) that Ms McLean’s decision to undertake a sabbatical was not with the intention to affect the child support assessment and is in line with usual employment practices.  As Ms McLean has lodged her tax returns on time and the Tribunal accepts her evidence that she does not derive income from any other source, the Tribunal is therefore satisfied that Ms McLean’s income is fairly represented in the assessment as $88,113 to 30 June 2023 and further to at least the end of 2023.  Going forward, the Tribunal considers it appropriate to accept the income estimate of $113,000 from 27 January 2024, as Ms McLean confirmed she will resume her [employment] duties from 27 January 2024 and anticipates her gross wages to be that shown at the higher end of the salary range in Exhibit B14.

2. The child support assessment under review assumes that Ms McLean meets any further needs for [Child 1] from her own earnings and Ms McLean stated this includes [Child 1]’s private school tuition fees. The Tribunal notes that Ms McLean must meet those additional needs, together with her own costs of self-support. Ms McLean provided an updated Statement of Financial Circumstances in which she had identified her regular expenses. Included in the Statement were expenses concerning repairs to her residence.  Ms McLean informed the Tribunal that, in addition to undertaking professional development opportunities during this year’s leave, she has spent time renovating their home and accepts that those expenses listed as repairs of $150 per week are discretionary.  Other than additional fuel expenses in driving [Child 1] to her various [sport] commitments, including away games, Ms McLean told the Tribunal that her expenses are adequately met and she is not in financial hardship.  The Tribunal accepts this evidence.

Mr Shirley

1. Mr Shirley asserted that the amount set as his income by Child Support from 1 August 2022 of $75,000 was a figure he had suggested to Child Support and which he accepts as being an accurate reflection for the 2022/23 financial year.  Mr Shirley said he based this figure on the fact that he earned about $63,000 in his current role with [Employer 1] from December 2022 to 30 June 2023 and added to that amount about $12,000 for the income he earned in August 2022 and September 2022 at his previous job with [Employer 3] before he resigned on 27 September 2022.  As Mr Shirley’s evidence to the Tribunal was that upon making the decision to resign from his employment as a [Occupation 2], he immediately applied for work with [Employer 1] and was offered and started new employment some eight weeks later. The Tribunal accepts Mr Shirley’s evidence.  Therefore, the Tribunal finds Mr Shirley was exercising his full earning capacity during the relevant period in review.

2. In evidence before the Tribunal was Mr Shirley’s workers’ compensation notice of assessment dated 2 September 2022 which depicted a DPI of 6% for the injury he sustained in February 2022 and a lump sum compensation offer of $21,000.  Mr Shirley’s oral testimony was that he did not accept the DPI of 6% and did not accept the final compensation amount.  Mr Shirley told the Tribunal that he is contesting this offer and has engaged lawyers to appeal it.  Mr Shirley spoke of the further medical assessments he has since undertaken and is awaiting a review hearing. The Tribunal accepts Mr Shirley’s evidence in this regard and no adjustment is made in relation to the lump sum compensation offer.

3. Mr Shirley also spoke of the added difficulties with his wife, [Ms A], who had and continues to undergo [cancer] treatment.  Mr Shirley told the Tribunal that his wife’s mental health and physical health along with the time spent with ongoing treatment has severely impacted her ability to earn.  Notwithstanding, she continues to work part-time at [Company 1] when she can and earns about $150 per fortnight.  Mr Shirley said his wife does not receive any Centrelink benefits or payments.  Mr Shirley explained that his wife’s medical condition not only increases his caring responsibilities, it also puts a strain on their financial circumstances.

4. Section 3 of the Assessment 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.[4] Mr Shirley provided corroborating medical evidence concerning his wife’s health and personal circumstances. The Tribunal has no basis to question it; however, the Tribunal considers its relevance goes more towards Mr Shirley’s present financial circumstances and capacity to pay any arrears that result from a change in the assessment of child support for [Child 1] and the ongoing liability for her, particularly in light of the fact that the child support case will likely end in 2024.

   [4] Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250.

5. Also in evidence was that Mr Shirley received some financial support towards the end of 2022, by way of a loan from his mother, which he stated he is expected to repay.  Notwithstanding the fact that Mr Shirley has received the financial support, the Tribunal notes that it is the parents, not grandparents or others, who are obliged to meet [Child 1]’s proper needs.  On this basis, the Tribunal considers it appropriate that no further adjustment is made to Mr Shirley’s income to include the additional financial support he received from his mother during the period he was unemployed. In stating that, although the Tribunal accepts Mr Shirley is expected to repay the loan to his mother, there was no evidence of immediate repayment terms and the Tribunal infers that the family arrangement will accommodate Mr Shirley’s obligations to address other pressing expenses, including child support.

6. Mr Shirley’s Statement of Financial Circumstances provides a guide to his expenses, which the Tribunal considered are not out of the ordinary and are not at a level that would justify a variation to his self-support costs in the child support formula. Moreover, the evidence of financial support from his mother and a future compensation payment from his WorkCover claim will provide Mr Shirley with a buffer for the costs associated with additional caring responsibilities for his wife.

7. Relevantly, the Tribunal noted that before the hearing Mr Shirley received an offer to work in his current role as a permanent part-time employee, working about 72 hours per fortnight at a rate of $32 per hour.  Although the Tribunal accepts Mr Shirley’s evidence that this will likely render a reduced fortnightly pay as he is presently paid overtime in his casual role, this position provides him with financial security and ought to also accommodate leave entitlements should he require leave in order to care for his wife.

8. The Tribunal’s assessment, based on the better financial evidence, is that Mr Shirley’s ATI from 8 August 2022 to 30 June 2023 is varied to $79,000[5] and from 1 July 2023 until the end of the case is varied to $69,000.[6]

   [5] Calculated as follows and rounded down:

   -Period from 8/8/2022 to 27/9/2022 including final payments and leave of about $15,782

   -1/12/2022 to 30/6/2023 gross earnings of $63,597 (over period of 30 weeks renders average weekly of $2,119.90).

   [6] Calculated as follows and rounded down:

   -Period from 1/7/2023 to 27/8/2023 estimated gross earnings of $2,119.90 x eight weeks renders $16,959.20

   -Period from 28/8/2023 to 30/6/2024 at $2,396.88 (72 hrs x $33.29) per fortnight (22 fortnights) renders $52,731.36.

Proper needs of the child

1. In determining the proper needs of [Child 1], it is necessary to have regard to the manner in which she is being, and in which the parents expected her to be, cared for, educated or trained, and any special needs (subsection 117(6) of the Assessment Act). There was no dispute that [Child 1] is in good health; however, an added issue was raised at the hearing concerning the additional payments Mr Shirley made to [Child 1] in 2021 and 2022 as well the high costs incurred by him in having [Child 1] spend time with him. The Tribunal considers those points are appropriate to consider when looking at whether arrears should be raised against Mr Shirley for the 2021/22 financial year, that is, whether it is just and equitable that a change of assessment in this case should have retrospective effect.

Date of effect

1. Mr Shirley made his application for a change of assessment on 17 August 2022.  Ms McLean made her cross-application in October 2022. The starting position is that any variation should be prospective.  Ms McLean requested that the application have at least 12 months retrospective effect to the start of Mr Shirley’s employment with the [Employer 3], from 1 August 2021.  This was granted by Child Support by both the original decision maker and the objections decision maker.

2. It is open to either parent to apply for a change of assessment to take into account the changes in their employment or other circumstances. In the Tribunal’s view, although Ms McLean may not have been aware that Mr Shirley had started new employment in mid-2021, a request 14 months later is not sufficiently compelling to give effect to retrospective adjustment to the assessment earlier than August 2022 and creating significant arrears for Mr Shirley. The general expectation is to restricting retrospective effect in a change of assessment to situations where special circumstances are present, this is to ensure some form of certainty with past assessments.  As the circumstances concerning Ms McLean’s cross-application does not rise to special circumstances, and taking into account the additional payments Mr Shirley provided to [Child 1]’s benefit in the 2021/22 financial year, the Tribunal considers it just and equitable that the proposed departure assessment commence from the start of the income estimated period of 8 August 2022. 

3. In terms of going forward, generally a variation to the assessment is put in place for 12 months. There are competing advantages and disadvantages in setting an amount as income for the parties for an extended period of time into the future. Here, the child support case for [Child 1] will end in 2024 and as the Tribunal is mindful of the impact child support processes with Child Support can have on parents, the Tribunal favours having this set for the remainder of this child support case.

8 August 2022 to 30 June 2023	Mr Shirley’s income  $79,000	Ms McLean’s ATI $88,113	$4,852 annual rate
1 July 2023 to 31 July 2023	Mr Shirley’s income  $69,000	Ms McLean’s ATI $88,113	$3,492 annual rate
1 August 2023 to 26 January 2024	Mr Shirley’s income  $69,000	Ms McLean’s ATI $88,113	$3481 annual rate
27 January 2024 to end of case	Mr Shirley’s income $69,000	Ms McLean’s income $113,000	$2,067 annual rate

1. In considering the comparison of the proposed departure annual rates to the assessment, the Tribunal notes that the annual rate payable under the assessment as set out in the table at paragraph 46 above, was $3,741 per annum from 8 August 2022 to 27 September 2022 and $1,521 per annual for the period 28 September 2022 to 30 June 2023.  On the Tribunal’s approximate calculations, the proposed departure annual rate would be amended to:

2. Although the proposed departure will create arrears for Mr Shirley, the Tribunal has limited the retrospective effect of the change of assessment to 8 August 2022 thereby reducing the arrears as calculated by the objections officer as the Tribunal is satisfied that it is just and equitable to have the assessment start closer to the date of application.

3. There is no evidence before the Tribunal to suggest this decision will cause either parent undue financial hardship. The Tribunal is satisfied that hardship may be caused to Mr Shirley if the administrative assessment of child support is backdated by more than a few weeks before the application was made. With careful budgeting, the Tribunal considers Mr Shirley will be able to meet this increase in his liability for the remainder of the case.

4. As noted above, the Tribunal is satisfied that Mr Shirley has had the capacity to continue to meet his expenses and commitments as previously, despite changes in circumstances. Ms McLean has also had the capacity to meet her costs and additional costs for [Child 1]. Therefore, after consideration of the income, resources, benefits and assets together with the commitments and liabilities of each of them and the needs of [Child 1], 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 Assessment Act.

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

1. The third step for the Tribunal to consider is whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act.

2. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination requiring attention directed to what is fair to the community. The rate of child support should reflect the obligation of both parents to take financial responsibility for their children. Parents, rather than the community, have the primary duty to maintain their children. 

3. Ms McLean is receiving family tax benefit in respect of [Child 1]. The proposed departure from the administrative assessment of child support will result in a decrease in the child support payable in respect of the children, and a more appropriate apportionment of financial responsibility between the parents and the community. Such a result is otherwise proper.

4. It follows that as the Tribunal’s outcome is different than that determined by Child Support, the decision under review is set aside and a new decision is substituted that decreases the arrears payable by Mr Shirley.

Other matters

1. The Tribunal notes from the material in evidence that care of [Child 1] may not be following the care percentage determination recorded by Child Support.  Although this is a separate matter to the decision under review in this matter, it is important to note that the child support legislative scheme deals with any subsequent change to the likely pattern of care by requiring notification to be made to Child Support of such changes, and Child Support then is tasked with making care determinations, with review rights as appropriate attached to each further or subsequent decision.  It is open to the parents to follow up with Child Support on the notification of any such changes in care and respective determinations that may impact their child support assessments.

DECISION

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

·      for the period 8 August 2022 to 30 June 2023, Mr Shirley’s adjusted taxable income is varied to $79,000;

·      for the period 1 July 2023 until a terminating event in relation to [Child 1], Mr Shirley’s adjusted taxable income is varied to $69,000; and

·      for the period 27 January 2024 until a terminating event in relation to [Child 1], Ms McLean’s adjusted taxable income is varied to $113,000.