Smithson and Smithson (Child support)

[2018] AATA 4582

Smithson and Smithson (Child support) [2018] AATA 4582 (3 November 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/HC013831

APPLICANT:  Ms Smithson

OTHER PARTIES:  Child Support Registrar

Mr Smithson

TRIBUNAL:Member A Schiwy

DECISION DATE:  3 November 2018

DECISION:

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

·         For the period 1 January 2018 to 23 April 2018, Mr Smithson’s adjusted taxable income is varied to $124,500;

·         For the period 24 April 2018 to 31 October 2019, Mr Smithson’s adjusted taxable income is varied to $78,500; and

·         For the period 1 January 2018 to 30 September 2018 Ms Smithson’s adjusted taxable income is varied to $91,425.

CATCHWORDS

CHILD SUPPORT – departure determination – no mutual intent in relation to childrens education – income, property, financial resources and earning capacity of both parents – a ground for departure exists – decision to depart – decision under review set aside and substituted

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

REASONS FOR DECISION

BACKGROUND

1. This application for review has been made by Ms Smithson who disagrees with a decision made by the Department of Human Services (‘Child Support’).

2. Ms Smithson and Mr Smithson are the parents of [Child 1] (born February 2004) and [Child 2] (born in May 2006).   A child support case has been registered since May 2015 and Child Support have determined that Ms Smithson has 77% care of [Child 1] and 74% care of [Child 2]; and that Mr Smithson has 23% care of [Child 1] and 26% care of [Child 2].  

3. A departure determination was made in August 2015 and subsequently was reviewed by this tribunal, differently constituted.  On 13 September 2016 the tribunal decided to make a departure determination as follows:

   ·         Mr Smithson’s adjusted taxable income is varied to $85,889 for the period 9 July 2015 to 1 November 2015 and then to $97,935 until 31 December 2017; and

   ·         The annual rate of child support payable is decreased by $7,116 for the period 1 January 2015 to 31 December 2015; and by $7,448 for the period 1 January 2016 to 31 December 2016 (50% of school fees).

4. The administrative assessment following on from the above departure determination is that for the period 1 January 2018 to 30 November 2018 Mr Smithson is assessed to pay the ‘fixed annual rate’ of child support ($2,780 for two children) based on his 2016-17 adjusted taxable income of nil and Ms Smithson’s 2016-17 adjusted taxable income of $68,288.

5. On 13 October 2017 Ms Smithson applied to Child Support for an increase to the rate of child support payable on the grounds that in the special circumstances of this case:

   ·         the costs of maintaining the children are significantly affected by the costs of educating them in the manner that was expected by the parents; and

   ·         the administrative assessment results in an unjust and inequitable level of child support because of Mr Smithson’s income, property, financial resources and earning capacity.

6. On 14 December 2017, a senior case officer, acting as a delegate of the Child Support Registrar, considered the departure application and determined that for the period 1 January 2018 to 30 November 2019 Mr Smithson’s adjusted taxable income is varied to $100,000 (original decision).   

7. On 15 January 2018, Ms Smithson objected to this decision on the basis that she is now paying the school fees and Mr Smithson has not been required to contribute.  On 9 March 2018 the objections officer decided to affirm the original decision.

8. On 9 April 2018 Ms Smithson lodged an application with the Administrative Appeals Tribunal (the tribunal) seeking a review of the Child Support decision.

9. The tribunal and the parties had access to the statement and documents provided by Child Support under subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975 (the AAT Act) (folios 1 to 312).

10. The matter was heard on 11 October 2018. Both Ms Smithson and Mr Smithson attended the hearing by conference telephone and gave evidence on affirmation.

11. The tribunal deferred making a decision and directed Ms Smithson and Mr Smithson to provide further documents to the tribunal by 22 October 2018.  Both parties provided documents and these were exchanged between the parties on 24 October 2018 and they were given until 2 November 2018 to provide any further comments.  No further submissions were received.

LEGISATION

1. The statutory provisions relevant to this review are found in the Child Support (Assessment) Act 1989 (the Assessment Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account such factors as the number of children, the level of care provided, the income of each parent and the costs of the children.

2. The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the administrative assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. In the first instance, a ground for departure from an administrative assessment must be established. The grounds are set out in subsection 117(2) of the Assessment Act and the tribunal may make one of the determinations prescribed in section 98S of the Assessment Act if satisfied that:

   ·         a ground or grounds exist (step one); and

   ·         that it would be just and equitable (step two); and

   ·         otherwise proper to make a particular determination (step three),

3. Section 98S permits a range of determinations, including varying the annual rate of child support payable and/or the adjusted taxable income of a parent.

4. To deal with Ms Smithson’s application for review, the tribunal stands in the shoes of the Child Support Registrar.

CONSIDERATION

Does a ground exist to depart from the administrative assessment?

Costs of child being educated in the manner expected by her parents

1. Ms Smithson and Mr Smithson used to live overseas.  On separation Ms Smithson moved back to Australia with the children and they were enrolled in Catholic schools.  Mr Smithson is [an Occupation 1] and he remained working overseas.  He was in [Country 1] until he returned to Australia in around May 2017.

2. It is not disputed that both parties were in agreement about the children being educated in Catholic schools in Australia.

3. [Child 2] continues to be educated at a Catholic school and the parents have paid half each of the tuition fees since 2017 (around $6,000 per year in total).  Both parents are happy with this arrangement.

4. Ms Smithson has sought a departure from the administrative assessment on the ground that, in the special circumstances of the case, the costs of maintaining [Child 1] are significantly affected because she is being educated in the manner that her parents expected. This ground for departure is found in subparagraph 117(2)(b)(ii) of the Assessment Act.

5. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) the Full Court of the Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

6. In deciding this matter, the tribunal needs to consider the type of education intended by both parents for [Child 1], rather than any particular school intended by the parents (Wild and Ballard (1997) FLC 92-771). The tribunal will need to consider and determine whether both parents agreed to [Child 1] being educated privately at [School 1] rather than at a Catholic school.

7. As noted by the Court in Mabry & Mabry (SSAT Appeal) [2010] FMCAfam 388 the first step for the tribunal is to determine whether the child is ‘being … educated … in the manner that was expected by his or her parents.’  Whether the fees can be met (and the proportions in which the parents must contribute), must be determined having regard to the parents’ actual financial positions, and is a matter to consider under ‘just and equitable’.

8. [Child 1] won a scholarship to [School 1], a private school with significantly higher tuition fees than the Catholic school she was attending.  The scholarship covered 25% of tuition fees for Grades 5 and 6.  [Child 1] attended [School 1] for these grades in 2015 and 2016.  Mr Smithson paid all of [Child 1]’s fees (not covered by the scholarship) in those years and this was taken into account in the tribunal decision made on 13 September 2016; the decision resulted in the parents effectively paying for half of [Child 1]’s fees when she was in Grades 5 and 6.  During the hearing held on that day the parents agreed that they did not want the tribunal to consider school fees for 2017 or beyond.

9. [Child 1] commenced high school at [School 1] in 2017 but she did not obtain a scholarship. 

10. It is not disputed that Ms Smithson has paid [Child 1]’s tuition fees in 2017 and 2018.  Ms Smithson provided evidence of the fees paid during 2017 and 2018.   The tuition fees for [School 1] were $4,150 per term in 2017, however Ms Smithson obtained a bursary on the basis of financial hardship for $3,112 per term.  Her net costs were therefore $1,038 per term or $4,152 for the year.  In 2018 the net costs were $4,640.  

11. There were additional costs for music tuition, instrument hire, book room and donations to a building fund.  The tribunal has not taken these into account, as payment of items of that nature is common to both public and independent schools. The tribunal considered that these costs are usual expenses of children’s education which are adequately addressed by the administrative assessment of child support. Payment of such items does not amount to special circumstances justifying a departure from the administrative assessment.

12. Ms Smithson stated that:

    ·         [Child 1] attended an International Baccalaureate (‘IB’) school when they were living [overseas] and this type of education suited [Child 1] ([School 1] is an IB school).

    ·         Mr Smithson agreed for [Child 1] to go to [School 1] and as it is a school that goes through to Year 12 it is implied that [Child 1] would continue at [School 1] until the end of Year 12.

    ·         When [Child 1] won the scholarship she was not aware that the scholarship ended at the end of Grade 6.

    ·         She thought that Mr Smithson had agreed to pay half of the fees in 2017 but he did not provide any assistance.  She approached the school and claimed for financial hardship; she was granted a 75% bursary.

    ·         When asked on what grounds the bursary was paid, Ms Smithson said she was not aware of the school’s criteria however she has to apply each year.

    ·         She emailed Mr Smithson in December 2017 offering him the opportunity to enrol the children in public school but he did not do this.

    ·         She thinks Mr Smithson should have to pay half of the net fees she is paying.

13. Ms Smithson provided a copy of an email exchange between herself and Mr Smithson in May 2014 about the scholarship.  The email does not refer to a time frame for the scholarship.  In the email, Mr Smithson agrees to send [Child 1] to [School 1].  The evidence also includes the last page of the [School 1] enrolment form for [Child 1] that was signed by both parents in June 2014.  This does not include any information about the scholarship that was offered.

14. Mr Smithson stated that:

    ·         He has had little say in decisions about the children’s education and he had been out of the country for several years.

    ·         There was no formal discussion with Ms Smithson about [Child 1]’s scholarship and her attendance at [School 1].  He first learned of the scholarship from [Child 1].  He agrees that Ms Smithson sent him the email in May 2014 and he had agreed to [Child 1] going to [School 1].

    ·         He was misled by Ms Smithson about the scholarship; he thought it would cover 100% of the tuition fees but it was only a 25% discount.  (At hearing Mr Smithson said he thought it would cover a large percentage of the fees.)  By the time he found out it was only for 25%, [Child 1] had already commenced at [School 1].

    ·         He agreed to [Child 1] staying at the school for Grades 5 and 6 but not for high school.  When asked what thought he had given to [Child 1] moving schools for Grades 5 and 6 and then again for high school, Mr Smithson’s response was not clear.  He said he thinks [Child 1] would do well at any school and she changed school several times when they lived overseas.

    ·         He would be happy to pay half of the fees of a Catholic school.

    ·         He received an email from Ms Smithson in December 2017 about him moving the children to public school if he did not want to assist with the fees.  Mr Smithson said that as Ms Smithson was the primary carer she could arrange the changes herself.

15. The tribunal noted that both parents had agreed to educate their children at Catholic schools and the decision to send [Child 1] to [School 1] appears only due to her obtaining a scholarship there.  After considering the evidence the tribunal found that:

    ·         The parents did not have a comprehensive discussion about [Child 1]’s schooling;

    ·         The parents agreed to [Child 1] attending [School 1] on the basis of her having won a scholarship;

    ·         Ms Smithson mistakenly thought the scholarship would cover high school and may have inadvertently misled Mr Smithson about the scholarship;

    ·         There was no tacit agreement that [Child 1] would stay at [School 1] without a scholarship.

16. The tribunal decided that there was no mutual intent for [Child 1] to attend [School 1] after her scholarship ended and this was at the end of Grade 6.  The tribunal therefore decided that this ground for departure is not established.

Mr Smithson’s income

1. Ms Smithson has also sought a departure from the administrative assessment on the ground that in the special circumstances of this case the administrative assessment would result in an unjust and inequitable level of child support because of Mr Smithson’s income, property and financial resources. This ground for departure is found in subparagraph 117(2)(c)(ia) of the Assessment Act.

2. Mr Smithson is [an Occupation 1] and he worked overseas for several years.  His taxable income for 2016-17 was nil and for 2017-18 it was $42,758.  The previous tribunal decision varied Mr Smithson’s adjusted taxable income to $97,935 up until 31 December 2017.

3. When considering the current departure determination application Child Support contacted [Company 1] where Mr Smithson had been working.  They were informed that Mr Smithson worked for them as [an Occupation 2] from 19 October 2017 until his resignation on 15 November 2017 and earned $7,965 (paid at the rate of $50.60 per hour).   Child Support have recorded that they contacted Mr Smithson on 14 December 2017 and questioned him about resigning from [Company 1].  They have recorded that he said his reasons were personal.  Child Support also recorded that Mr Smithson told them that he had no earnings from June 2017 to 19 October 2017. 

4. Child Support have recorded that they contacted Mr Smithson on 1 March 2018 and he confirmed that he was working again.  They have recorded that Mr Smithson said he was not yet on full-time hours and his average income would be around $100,000.

5. Mr Smithson provided the following evidence:

   ·         He is [an Occupation 1].

   ·         He was working in [Country 1] until his contract ended in May 2017 and then he returned to Australia as the children were getting older and he wanted to be closer to them.

   ·         After about 4-5 weeks he obtained contract work with [Company 1] , as [an Occupation 2].

   ·         In November 2017 he obtained a full-time position with [Company 2] on a salary of about $140,000 per annum. 

   ·         He was on six months’ probation.  During that time he had to leave work early on some days to pick up the children.  His employer was not happy with this arrangement and he was dismissed in around late April, early May 2018.

   ·         When he lost his job he contacted Child Support to let them know and they required him to fill out about 400 pages of forms so he thought it would be easier to look for a job as soon as possible and earn what they were assessing him on.

   ·         When asked why he told Child Support he was only earning $100,000 in his new job, Mr Smithson said he did not tell them that and they have made a mistake.  When asked if he noted that Child Support based their decision on this evidence, Mr Smithson said he did not read the decision thoroughly and did not notice that they had used the incorrect amount.

   ·         He obtained further work with [Company 1] and was being paid around $60 per hour but he was not working full-time. 

   ·         He does not have many employment expenses.

   ·         When asked why his taxable income was only $43,000 when he was working full-time at $140,000 per annum for five to six months during the 2017-18 year and also received other income, Mr Smithson said his accountant prepared his tax return.

   ·         He has been trying to obtain full-time work and has had four or five job interviews.  He has found it difficult to find work in [another state] and none as [an Occupation 1].

6. Mr Smithson’s evidence at the hearing was conflicting with what he had told Child Support and the taxable income for 2017-18 appeared low given his evidence about his earnings.  Mr Smithson  was directed to provide further documentation including the following:

   ·         2017-18 income tax return;

   ·         PAYG Statements for all employment in 2017-18; and

   ·         Bank statements for the period 1 May 2017 to 30 September 2017.

7. Mr Smithson only provided bank statements from 1 September 2018 to 30 September 2018.  His reasons for non-compliance were:

   ‘I respectfully submit that presently I pay all amounts to Child Services, without any amounts owing and pay the assigned amount set by Child Support Register.

   I am not and have never avoided paying child support and have only ever requested to pay what is fair and reasonable given my income circumstances.

   I do not keep a hard copy of bank statements.’

8. The tribunal did not consider Mr Smithson had a valid reason for not providing the documents that he was directed to provide by the tribunal. He only supplied the most recent month of statements and the tribunal does not accept that he would not have been easily able to obtain copies going back to May 2017. 

9. Mr Smithson provided his income tax return which showed income from wages, interest and newstart allowance of $62,873 and he claimed deductions of $1,636.  Against this net income was applied a loss from earlier years of $20,115 giving a taxable income of $42,758. 

10. Mr Smithson’s [Company 2] payment summary shows he was employed from 11 December 2017 to 23 April 2018 and in that time he grossed $46,444 (annualised to approximately $126,000).

11. The tribunal was not satisfied that all of Mr Smithson’s income has been included in his tax return for 2017-18; in particular for the period from July 2017 to December 2017 and from May to June 2018.  However, given that a departure determination is in place until 31 December 2017 the tribunal focused on Mr Smithson’s earnings from 1 January 2018.  At the time he was employed by [Company 2] on a salary of around $126,000 per annum until 23 April 2018.   

12. At some point after this he started working part-time for [Company 1].  Mr Smithson failed to provide PAYG statements from [Company 1] as directed, stating the information was in his tax returns.  His tax return shows gross income from [Company 1] of $12,758 for the year.  [Company 1] told Child Support that Mr Smithson earned $7,965 from October to November 2017 so presumably the balance of around $5,000 was earned sometime after 24 April 2018, but the dates are unknown.  The tribunal was also not satisfied that all of Mr Smithson’s earnings are included in his 2017-18 income tax return as he has not provided his bank statements as directed.

1. Mr Smithson provided his three most recent payslips from [Company 1] which show that as at 9 October 2018 (eight pay periods) he had been paid a gross amount of $22,188.  If he has been employed all year with [Company 1] this equates to approximately $80,000 per annum.  The payslips show that Mr Smithson is paid at the rate of $60 per hour and his hours vary each fortnight. 

2. After considering the evidence that tribunal found that Mr Smithson’s earnings since 31 December 2017, after allowing $1,500 for deductions, are as follows:

   ·         From 1 January 2018 to 23 April 2018      $124,500

   ·         From 24 April 2018 onwards  $78,500

Ms Smithson’s income

1. Ms Smithson’s taxable incomes in recent years have been:

   ·         2015-16     $66,954

   ·         2016-17     $68,288

   ·         2017-18     $91,425

2. Ms Smithson is [an Occupation 3] and has been working on contract since her return to Australia.  She initially only obtained part-time work but in 2017 and 2018 she has been working full-time.  At this stage she has not been offered work in 2019 and may have to do [some work] on a casual basis.  The tribunal was satisfied that Ms Smithson’s income increased significantly from 1 January 2017 and since then she has been on an income of approximately $91,425 (as per her current taxable income).  It is possible that her income will drop dramatically in 2019 but it is too early to know with any certainty what her income will be.

Child support payable on incomes as found

1. The amount of child support payable based on the administrative assessments is $1,390 to 30 November 2018 and nil from 1 December 2018.

2. The amounts of child support payable based on the incomes as found by the tribunal are:

   ·         From 1 January 2018 to 23 April 2018      $13,168

   ·         From 24 April 2018 onwards  $6,072

Is there a reason to depart from the administrative assessment?

1. Given the significant increase in child support payable based on the parent’s incomes, the tribunal is of the view that there are special circumstances in this case that make the level of child support payable under the administrative assessment unjust and inequitable at the date of application. On the available evidence, the tribunal was satisfied that the ground for departure in subparagraph 117(2)(c)(ia) of the Assessment Act has been established in relation to the parents’ income, property and financial resources.

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

1. 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 just and equitable to make a particular departure determination. In doing so, the tribunal must have regard to a number of matters in subsections 117(4) to (9) of the Assessment Act. In summary, this requires consideration of the parents’ duty to support the children, the income, assets and financial resources of the children and of the parents, the children’s proper needs and the self-support costs of either parent. The tribunal is not limited to exploring these parameters and is required to consider the global circumstances (Gyselman).

2. The tribunal had regard to the evidence which was presented, including the evidence which has been discussed above. This evidence is further considered below.

The duty to maintain the children

1. Ms Smithson and Mr Smithson each have a duty to maintain the children. Further, the tribunal notes the statements contained in sections 3 and 4 of the Assessment Act to the following effect:

   ·         Parents of a child have a primary duty to maintain the child and this has a priority over all commitments of the parent other than commitments necessary for self-support;

   ·         The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards;

   ·         The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

Proper needs of the children and the income, property, financial resources and earning capacity of the child

1. There was no evidence that the children have significant independent income or resources.

2. Apart from the school fees, there was no evidence presented to the tribunal that the children have anything other than the usual expenses and needs of children their age, expenses that are dealt with in the administrative assessment and addressed in the Costs of the Children Table.

3. The parents are sharing [Child 2]’s school fees equally.  Ms Smithson is paying all of [Child 1]’s fees at [School 1], approximately $4,600 per annum.  Mr Smithson has indicated that he would be willing to pay half of her fees if she attended a Catholic school.  According to the [Catholic school] website the school fees in 2018 for a Year 8 student were $4,800 per annum which is only $200 more than what Ms Smithson is currently paying for [School 1] after her bursary.   The tribunal noted, however, that Ms Smithson is receiving a large discount, presumably as she has told the school she is not receiving assistance from Mr Smithson.

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

1. Given the available evidence, the tribunal concludes that neither party received money, goods or property for the benefit of the children which impacts on their respective abilities to support them.

Income, property, financial resources and earning capacity of each parent

Ms Smithson’s circumstances

1. Ms Smithson is working full-time and the tribunal was satisfied that she has no capacity to earn further income.

2. Ms Smithson is married and lives with her husband, the children and her husband’s two children.  They were living in a residence owned by Ms Smithson and this was sold for $615,000 and after repaying the mortgage she cleared around $460,000.   She and her husband jointly purchased a new house for around $640,000 and they owe $270,000.  Ms Smithson contributed all of the net proceeds from her house into the new residence.

3. Ms Smithson has around $86,000 in superannuation.

4. She listed her household expenses to be $972 per week however this has increased due to mortgage repayments going up by around $450 per week; she now pays $750 per fortnight.  Her husband earns $1,240 per week and they run their finances jointly. 

5. Based on her husband contributing to half of the house mortgage and running costs, Ms Smithson’s weekly expenses would be around $1,015 per week for her and the two children.  This includes $173 a week for education expenses and discretionary spending of around $60 for gifts, holidays, etc.   She also pays $710 per week in taxes, superannuation and health insurance. 

6. Ms Smithson is currently grossing $1,800 per week and after the above expenses (excluding discretionary spending) of $1,665 she is able to make ends meet despite currently meeting all [Child 1]’s education expenses.

Mr Smithson’s income, property, financial resources and earning capacity

1. Mr Smithson’s income has been discussed above. 

2. Mr Smithson is currently working part-time and the tribunal accepts that he is currently unable to find full-time employment.  It is possible he will be able to increase his hours or find full-time employment so he has capacity to earn more.

3. Mr Smithson owns his residence which he valued at $265,000 and has a mortgage of $180,000.  He has $130,000 in superannuation.  He had nearly $12,000 in credit card debts which he said was slightly higher now.

4. His weekly expenses include life and medical insurance of $54 per week and living expenses of $760 including $20 discretionary spending for entertainment.  At the time of completing his statement he was unemployed but now he would be required to pay income tax which the tribunal estimates to be around $370 per week. 

5. Mr Smithson is earning around $78,500 per annum and after non-discretionary spending he would have around $18,000 per annum left over.

Necessary commitments to support themselves

1. The self-support amount used in the administrative assessment is approximately $24,500. On the documentary evidence available to the tribunal, including the Statement of Financial Circumstance completed by both parties, the tribunal was satisfied that both Ms Smithson and Mr Smithson have sufficient funds at their disposal to meet their necessary commitments, none of which are extraordinary.

Hardship that would be caused to the parents and the child

1. If a departure determination was made to vary incomes as discussed above, Mr Smithson’s liability would increase for around four months and then decrease.  Up until 31 October 2018 this would result in arrears to Ms Smithson of nearly $2,000.   The tribunal did not consider this would cause significant hardship for Ms Smithson given her current level of income and financial resources. 

2. The tribunal considers Mr Smithson would not suffer financial hardship if required to pay ongoing child support of $117 per week given his earnings and expenses discussed above.

3. The tribunal also considers that Ms Smithson would also not suffer financial hardship, on an ongoing basis, if a departure determination was not made given her relatively high income and ability to share household costs.  However this may change if she is unable to secure a [contract] in 2019. 

Summary

1. After consideration of all of the factors in subsection 117(4), the tribunal is satisfied that it is just and equitable to depart from the administrative assessment.   The proposed change in the child support assessment will ensure that both Mr Smithson and Ms Smithson share in the ongoing costs of caring for the children at a level commensurate with their resources.   

2. The tribunal then considered what an appropriate start and end date would be for a departure determination.

3. Ms Smithson made her application for a departure determination in October 2017, just prior to the end of the departure determination put in place by this tribunal.  The tribunal decided it would be appropriate to commence the departure determination from 1 January 2018.

4. Mr Smithson’s taxable income for 2018-19 should reflect his actual income for that year; he has no further losses to carry forward.  The tribunal therefore decided that the departure determination varying Mr Smithson’s income should end on 31 October 2019 by which time his 2018-19 taxable income should be known.   Ms Smithson’s income increased to $91,425 from 1 October 2018 (following the lodgement of her income tax return) and therefore her income only needs to be varied until 30 September 2018.

5. In the event that either party’s circumstances change during the assessment period, they have the opportunity to lodge a further change of assessment application. The tribunal considers these dates to be in the best interests of the children and the parents as they promote certainty and consistency for those concerned.

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

1. The final step for the tribunal to undertake is to determine whether it is ‘otherwise proper’ to make a particular departure determination (subsection 117(5) of the Assessment Act). It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children. Neither parent is receiving any government payments. The proposed departure determination will therefore have no impact on them receiving support from the public welfare system. The tribunal concludes that it is otherwise proper to depart from the administrative assessment.

DECISION

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

·         For the period 1 January 2018 to 23 April 2018, Mr Smithson’s adjusted taxable income is varied to $124,500;

·         For the period 24 April 2018 to 31 October 2019, Mr Smithson’s adjusted taxable income is varied to $78,500; and

·         For the period 1 January 2018 to 30 September 2018 Ms Smithson’s adjusted taxable income is varied to $91,425.