Soulsby and Soulsby (Child support)

Soulsby and Soulsby (Child support) [2022] AATA 4988 (24 November 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/BC024557
APPLICANT:  Mr Soulsby
OTHER PARTIES:  Child Support Registrar
Ms Soulsby

TRIBUNAL:Senior Member K Dordevic, Presiding
Deputy President K Synon

DECISION DATE: 24 November 2022
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that post-separation income of $8,287.71 should be deducted from Mr Soulsby’s 2021/22 adjusted taxable income, with effect from 1 August 2022.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether post separation costs should be excluded from the adjusted taxable income for the last relevant year – additional income was earned not in the ordinary course after separation – a partial amount should be excluded - 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 omitted 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

Ms Soulsby (the mother) and Mr Soulsby (the father) are the parents of two children. There has been a child support assessment in place with Services Australia – Child Support (the Agency) since 18 April 2020.
On 21 April 2022 the father made an application to the Agency to exclude his post-separation income of $25,000 from his 2022 adjusted taxable income for the purposes of the child support assessment.
On 17 May 2022 his application was accepted, whereby his post-separation income of $25,000 was excluded from his 2021 adjusted taxable income for the period 12 August 2021 to 30 June 2022.
The mother objected to that decision on 4 June 2022. On 4 August 2022 an objections officer allowed her objection.
On 30 August 2022 the father sought review to the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT).
On 21 October 2022 the Tribunal issued directions to the father, directing him to provide all payslips from employment for the period 1 April 2021 to 30 June 2022 by close of business on 7 November 2022. The father complied with the direction in a timely manner and the documents (marked folios A1 to A66) were provided to the mother and Agency.
The matter was heard on 24 November 2022. The mother and father appeared before the Tribunal by conference telephone. The Tribunal took into account the documents provided by the Agency (folios 1 to 203) and additional documents provided by the father (folios A1 to A66).

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The issues which arise in this case are:
· Should part of the father’s post-separation income be excluded from his adjusted taxable income for all or part of the relevant child support period? And, if so,
· How much is to be excluded and from what date?

CONSIDERATION

The provision relevant to this review is outlined in section 44 of the Act, where a parent may apply for post‑separation income to be excluded from their adjusted taxable income:
Post-separation costs
Application for post-separation income to be excluded
(1)    A parent (the applicant) of a child may apply to the Registrar to amend an administrative assessment of child support payable by or to the parent for the child for part of a child support period if:
(a)the applicant and the other parent of the child lived together on a genuine domestic basis for at least 6 months; and
(b)the separation, following that 6 month period, of the applicant from the other parent occurred:
(i)within the last 3 years; and
(ii)before the application for administrative assessment of child support for the child was made under section 25 or 25A; and
(c)at the time of the application under this section, the applicant and the other parent remain separated; and
(d)in the last relevant year of income, or in the application period for an income election (if such an election has been made by the parent), the applicant earns, derives or receives income:
(i)in accordance with a pattern of earnings, derivation or receipt that is established after the applicant and the other parent first separate; and
(ii)that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events.
(2)    If the applicant makes an application under this section, the Registrar may determine that the applicant’s adjusted taxable income for the child for a day in the child support period is a specified amount that excludes the income referred to in paragraph (1)(d).
(3)    However, the Registrar may make a determination under subsection (2) only if the determination:
(a)reduces the applicant’s adjusted taxable income for the child for a day in the child support period by 30% or less; and
(b)applies in respect of a day in the child support period, being a day that is less than 3 years after the last separation referred to in paragraph (1)(b).
…
At the time the father lodged his application he was assessed to pay $15,688 in child support during the period 1 August 2021 to 2 January 2022, based on the parents’ 2021 adjusted taxable incomes of $112,036 (the father) and $39,361 (the mother). His annual rate of child support increased to $17,238 from 3 January to 31 July 2022 after [Child 1’s] 13th birthday.
The father relied on his increasing adjusted taxable incomes to demonstrate that he had increased his earnings as a consequence of the breakdown of the marriage:

Financial year	Gross income	Ordinary Time Earnings[1]	Adjusted taxable income
2019	$81,671	Unknown	$77,148
2020	$87,544	$79,395	$84,130
2021	$116,574	$92,492	$112,036
2022	$135,210	$108,128	$130,605

[1] Includes ordinary income and penalty rates and excludes overtime and on-call allowance: type="1">

The father’s application to exclude his post-separation income from the assessment of his child support liability was lodged with the Agency on 21 April 2022. In his written application he states that additional income was received from 12 August 2021 the date from which his 2021 adjusted taxable income was applied to the administrative assessment; he confirmed the same at hearing. In this application he stated that his adjusted taxable income prior to separation was $81,839 and his income after separation was $112,036 and so he seeks to exclude $25,000 from his adjusted taxable income. It is apparent that in reaching this conclusion, the father compared his 2019 adjusted taxable income with his 2021 adjusted taxable income, though he and the mother separated late in the third quarter of the 2020 financial year. The Tribunal notes that the original decision was to grant the father’s application, and so decreasing his adjusted taxable income by $25,000 in respect of his 2021 adjusted taxable income, was apparently on the basis of the father’s application alone, without any analysis of his pre- and post-separation income.

The Tribunal makes the following findings. The mother and father lived together on a genuine domestic basis for at least six months. They both nominate 7 March 2020 as the date of separation and that the father left the former marital home on 18 March 2020. Therefore, their separation occurred within three years of the father’s application and their consistent testimony is that they remained separated at the date of the father’s application to the Agency for his post-separation income to be excluded. Paragraphs 44(1)(a), (b) and (c) of the Act are satisfied.

In respect of paragraph 44(1)(d) of the Act, at the time of the father’s application the last relevant year of income was the child support period commencing on 1 August 2021, where the parents’ 2021 adjusted taxable incomes were applied to the administrative assessment. However, it is clear that the father’s application lodged on 21 April 2022 was in respect of income earned in the 2022 financial year[2], whereby he declared that he had started to earn the additional (post-separation) income from 12 August 2021. It is apparent that the Agency has misinterpreted the father’s application as pertaining to an application for a reduction of the father’s 2020/21 adjusted taxable income, which is incorrect. Thus, in relation to the matter under review, the application related to a “last relevant year of income” of the 2022 financial year, and was therefore an application to adjust the assessment for the child support period commencing on 1 August 2022. The Tribunal finds accordingly.

[2] At folio 45

The Tribunal next considered whether the father earned income in accordance with a pattern of earnings established after he and the mother formally separated, pursuant to subparagraph 44(1)(d)(i) of the Act.

Consideration is next given to subparagraph 44(1)(d)(ii) of the Act and in particular the meaning of the term “in the ordinary course of events”. The Tribunal finds that there is no definition of this term in the legislation, and that this phrase in the context of section 44 has not been considered judicially. In the absence of judicial consideration the Tribunal has had regard to the relevant policy, although it is not bound by the policy if there are cogent reasons not to apply it: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In the recent case of G v MIBP [2018] FCA 1229 the Federal Court observed that it is clear from earlier authorities, that in the absence of any statutory indication to the contrary, any lawful executive policy enacted to guide the exercise of a statutory power is a relevant factor for the Tribunal to take into account in performing its review task.

The Child Support Guide (the Guide) (version 4.59) relevantly states at Chapter 2.5.2:

2.5.2 Additional income earned post separation

Context

A parent can apply to have extra income earned following separation excluded from their child support assessment.
…
A parent can apply to have additional income that was earned after separation excluded from their adjusted taxable income for child support purposes in certain circumstances. A parent may apply to have additional income excluded, regardless of whether they pay or receive child support.
The exclusion of additional income post separation is limited to the first 3 years after the parents last separated before the start of the child support case.

…

Additional income

Parents may earn additional income from a variety of sources, including for example, from overtime, a second job, a career change to a higher paying job, or from investment income. For a self-employed person, additional income may be earned, derived or received through extending the opening hours of their business, increasing production or developing new markets or new products (to a greater extent than before separation). The parent must be able to show that the change that resulted in the additional income being earned happened after separation (section 44(1)(d)(i)).

The ordinary course of events

Not all additional income that is earned, derived or received after separation will qualify for exclusion from a parent's adjusted taxable income. The new pattern of earnings must have been established after separation and would not have been reasonable to expect that income in the ordinary course of events (section 44(1)(d)(ii)).
Income that parents would have been reasonably expected to earn in the ordinary course of events cannot be excluded from their adjusted taxable income. For example, it is within the ordinary course of events that parents will earn additional income through regular pay rises, or seasonal variations in income.
However, income that parents earn outside the ordinary course of events is able to be excluded from their adjusted taxable income. This could include, for example, income from overtime or second jobs taken on after separation, a cashing out of leave entitlements, promotions or a shift to a higher paying job. However, moving from an unemployment benefit to employment is considered to be within the ordinary course of events. Any income to be excluded must have been earned, derived or received in a pattern established after separation. [Tribunal’s emphasis]

The Tribunal understands that the Explanatory Memorandum and the Guide reflect the legislative intent to quarantine income from the administrative assessment of child support where the applicant parent takes action to ameliorate the financial effects following separation that would not have been reasonable to expect would have occurred had the parents not separated, that is, in the ordinary course of events. The ordinary course of events is in reference to whether the income would have been earned, derived or received irrespective of whether separation occurred. The implicit reasoning is that had the applicant parent not separated (and so not have experienced a change to their personal and financial circumstances) it would be reasonable to expect they would not have taken the action to secure the additional income. Conversely, if the additional income would still have been earned, derived or received irrespective of whether there was a change to the applicant parent’s relationship status, it is reasonable to find that an increase in income was in the ordinary course of events.
The mother’s position is that, prior to the breakdown of the marriage, the father had always worked available overtime and had spoken of his ambitions when joining [Agency 1] to move into senior roles and therefore any additional income was earned in the ordinary course of events. Furthermore, she submits that the father relocated to [Town 1] simply because the position came with a house[3] and not to secure additional income.
[3] At folio 118
In his written submissions[4] attached to his application the father stated that he was [an occupational level 1] at pay point Level 2.1 as at the date of separation (January 2020). He explained that he had the opportunity to relieve in higher duty roles due to staff shortages and retirement in the 2022 financial year, specifically in 12 to 29 August 2021, 13 to 24 December 2021 and 26 February to 20 May 2022. His normal wage was $3,252.10 per fortnight, with an average of three shifts attracting afternoon penalties, and one each attracting Saturday and Sunday penalties, as well as two hours per fortnight in overtime. In the period that he was acting as [occupational level 2] (pay point 3.1) he received a wage of $3,800.00 per fortnight, as well as [a manager’s] allowance of $330.30, with an average of four to five hours in overtime. He requested that his income for child support purposes be based on his 2021 income, which he stated was a fair representation of his actual income when disregarding his relieving periods.
[4] At folio 47
The father also provided evidence of the rejection of his subsidised housing application in [Town 2] on 9 July 2020 whereby he was told that only [limited] style accommodation could be provided. He then responded by stating[5]:
Ill (sic) have to look at a lateral transfer outside of the district which will give me some other options to share a place with family
[5] At folio 20
On 9 June 2022 the Agency record indicates that the father advised[6]:
I couldn’t afford to stay in [redacted] so I looked to move to another area where I would be able to access [employee] housing.
I did try to locate [employee] housing in [redacted], but was unsuccessful.
I moved to [Town 1] (sic) to be able to financially recover from the settlement.
….
In January of this year the [occupational level 3 there] retired, and I have been relieving in this role
The role has not been filled permanently by someone else and I am no longer performing this role.
I took on this temporary role to help recover financially.
Moving forward my role will be my normal position – the same position that I was employed in when I was married to Ms Soulsby.
[6] At folio 89
In support of his position, the father provided a letter dated 16 June 2022 from [Mr A][7] which relevantly states:
At [Town 1] he has had relieving opportunities at higher rank and an increase in overtime which would be outside of his normal pattern of earnings in [Town 2] and he would not have earned during the normal course of events while [working] (sic) at [Town 2]
[7] At folio 91
In his written submission to this Tribunal the father stated[8]:
I transferred from [Town 2] to [Town 1] at my current rank of [occupational level 1] and not seeking promotion. I transferred specially to earn additional income as I could no longer afford to live in the vicinity of [Town 2]. I actively seeked (sic) local subsided (sic) employee housing in the [Town 2] metropolitan before making a decision to relocate.
In February 2022 the [occupational level 2] of [Town 1] retired and I as (sic) offered an opportunity to relieve in the role temporarily until a permeant (sic) replacement had been appointed. I accepted this temporary role in order (sic) recover financially and pay off debts left to me in the settlement process and recontribute to my superannuation which also formed part of the financial settlement.
A permanent officer has since taken on the role and I continue to work at the same rank as when Ms Soulsby and I were still married. I would not of (sic) had this opportunity to relieve at this level for this duration at [Town 2] and is well outside my normal pattern of earning.
I expressly discussed with Ms Soulsby my intention not to return to a country [position] such as [Town 1] following my previous posting to [Town 3]. My intention was to remain at [Town 2] and continue to develop my skills and experience and seek promotion in the long term. Relocating to a country [position] has decreased promotion opportunities not increased them.
[8] At folio 11
The father’s testimony at hearing, whilst consistent with the above, was that he also relocated to secure additional income, over and above any relieving opportunities that would present themselves. He explained at [Town 2], rather than receiving penalty rates and weekend and public holiday loading, he received a blanket 15% operation allowance in recognition of the shift work inherent in the role and was required to work 19 days each fortnight with a paid day off (PDO). However, at [Town 1] he received afternoon and evening penalty rates as well as an on-call allowance and more overtime opportunities than were available at [Town 2]. He estimates that he now works about three hours a fortnight in overtime, whereas he would work only about one hour a month of overtime in [Town 2]. It was on the basis of his afternoon and weekend penalties and the additional overtime that he estimated that $25,000 should be excluded from his adjusted taxable income. He believes that this is a conservative estimate of his post-separation income.
As outlined above, there is no evidence before the Tribunal that the father has lodged an application with the Agency in respect of income earned in the 2021 financial year. In any event, even if he has made such an application, the Tribunal is of the view that, despite the change in arrangements from a metropolitan to a rural [position] including the change from receiving an additional 15% in recognition of shift work and public holidays with a PDO every four weeks, to a situation where an on-call allowance and penalties were paid, his increased income in the 2021 financial year was in the ordinary course of events. Whilst he received benefits at different rates, given the different locales, the Tribunal is satisfied that the payment of these allowances were in the ordinary course of events. In reaching this conclusion the Tribunal acknowledges that in both roles the father had access to overtime payments, though he stated that the possibility of overtime was higher at [Town 1]. Certainly, the father’s evidence is such that it was in the ordinary course of events that he would be directed to work outside of his usual rostered hours, notwithstanding his submissions that this increased upon relocating to [Town 1] and when acting up in the [occupational level 2] role.

The Tribunal concludes that the additional allowances (and loss of the other allowances and PDO) that the father received do not meet the definition as set out in subparagraph 44(1)(d)(ii) of the Act.
However, the Tribunal is satisfied that the father took a series of actions post-separation to secure higher income by accepting relieving opportunities from 12 August 2021 onwards. The Tribunal accepts the father's evidence that this was not in the ordinary course of event that he would be directed to act in higher duties or to be on call. The Tribunal reaches this conclusion, though accepting the mother’s submission that the father was ambitious and intended to rise in rank prior to separation.
The Tribunal finds that the father was relieving [occupational level 2] during the following periods: 12 to 29 August 2021, 13 to 24 December 2021 and 5 February to 20 May 2022[9], being a total of 132 days in the 2022 financial year. The Tribunal accepts the father’s submissions[10] that there was a fortnightly increase of $548.70 in his base rate and $330.30 in respect of the [manager’s] allowance ($62.79 per day). The Tribunal calculates that he received additional income of $8,287.71 (132 days x $62.79 per day) during the 2022 financial year.
[9] At folio 54
[10] At folio 56
For completeness, the Tribunal notes that the father states that he worked an additional two to three hours of overtime per fortnight when in the [occupational level 2] role. However, as the Tribunal was unable to quantify with any precision the father’s usual overtime hours in comparison to those when acting as [occupational level 2] it was not persuaded that any additional overtime when he was [the manager] should be quarantined from the administrative assessment. Furthermore, the payslips in evidence indicate that he received an additional $24 per hour of overtime when he worked as [occupational level 2], and so this would only have a modest impact on his adjusted taxable income.
Having established that some of the income earned by the father met all the requirements of subsection 44(1) of the Act, the next consideration is whether a determination should be made. Subsection 44(2) of the Act details that the decision maker may determine that certain income is excluded from a person's adjusted taxable income. The decision is therefore discretionary.
The Act or the Guide do not provide any specific criteria by which to consider exercise of the discretion. As the Tribunal understands it the policy behind the provision was to make provision for parents incurring additional post-separation costs. The Tribunal is therefore satisfied that the discretion should be applied.
The next question is from what date should the father’s adjusted taxable income be reduced. The Act does not prescribe how to determine the date from which a determination about the reduction of adjusted taxable income should take effect. The Guide notes that any exclusion will ordinarily be made from the date of application. In this case, the father lodged his application on 21 April 2022, before his 2022 adjusted taxable income was applied to the administrative assessment. The Agency records indicate that the father’s 2022 adjusted taxable income applied to the administrative assessment from 1 August 2022. In the circumstances, the Tribunal is satisfied that the decision should have effect on the date on which his 2022 adjusted taxable income was applied to the administrative assessment, being 1 August 2022.
As the father’s application satisfies the statutory criteria the decision is set aside and a new decision substituted. The Tribunal concludes that $8,287.71 of the father’s post-separation income is to be excluded from the child support assessment from 1 August 2022.

DECISION

Key Legal Topics

Areas of Law

Family Law
Administrative Law

Legal Concepts

Statutory Construction
Remedies
Jurisdiction
Reliance

[2022] AATA 4988

24 November 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Remedies

Jurisdiction

Reliance