Srathan and Moriarty (Child support)
[2025] ARTA 935
•15 April 2025
Srathan and Moriarty (Child support) [2025] ARTA 935 (15 April 2025)
Applicant/s: Mr Srathan
Respondent: Child Support Registrar
Other Parties: Ms Moriarty
Tribunal Number: 2024/BC028421
Tribunal: Member S Letch
Place:Brisbane
Date:15 April 2025
Decision:The Tribunal affirms the decision under review.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources – father not working for two months – mental health and medication – business continues to operate under wife and managers – more recent and better financial evidence – no material changes in circumstances – decision under review affirmed
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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.
Statement of Reasons
BACKGROUND
Mr Srathan and Ms Moriarty are the parents of [Child 1] (born 2006), [Child 2] (born 2008), and [Child 3] (born 2009). Mr Srathan seeks a review of an objection decision which “part allowed” his objection to a “change of assessment” decision of 28 May 2024.
By way of background, it is convenient to set out some extracts from the objections officer’s decision dated 8 August 2024:
…
The relevant assessments require Mr Srathan to transfer child support for the benefit of [Children 2 and 3] as follows:
-For the period 6 March 2024 to 31 January 2025, the rate of child support is $21,614 per annum, based on an adjusted taxable income for Mr Srathan of $132,936 (as determined by COA). Ms Moriarty is assessed on a 2022023 adjusted taxable income of $53,923.DECISION UNDER REVIEW
On 1 December 2023, Mr Srathan applied for change to the assessment on the basis of Reason 8A. Ms Moriarty disagreed with the proposed change. On 28 May 2024, the DM changed the assessment as follows:
-The previous Change of Assessment decision dated 25 August 2023 will cease from 30 November 2023.
-For the period 1 December 2023 to 31 August 2024, Mr Srathan s annual rate of child support will be calculated via the Fixed Annual Rate which is currently $1,632 per annum.…
Reason 8A: To establish this reason, Mr Srathan must show that his or Ms Moriarty s income,
property and financial resources make the child support assessment unfair.The evidence of each parent and other evidence available to the decision maker
Mr Srathan lodged a new application seeking a decrease to the assessment from 20 November 2023.
Mr Srathan stated he has been diagnosed with mental health issues, is currently on new medication, is no longer working and he is unsure when he will be returning to the workforce. Mr Srathan states his wife has her own business and her own income and that they are receiving FTB partner benefit which is helping then whilst he cannot work. In support of his application, Mr Srathan provided the following;-Bank statement 14 May 202 to 13 November 2023 weekly credits of $850 up until 30 August
2023 (page 1 of 3).
-[Family Health] Medical Certificate dated 18 January 2024 Mr Srathan unfit for work
18 January 2024 until 19 February 2024.
-[Family Health] Medical Certificate dated 19 February 2024 Mr Srathan unfit for work 19
February 2024 until 26 April 2024.
-[Family Health] Medical Certificate dated 24 April 2024 Mr Srathan unfit for work 24 April
2024 until 28 June 2024.
-2022-23 tax return
-[Company] Pty Ltd pay run history report (Mr Srathan) 1 June 2023 to 30 June 2024 last
pay shown 22 November 2023.In response, Ms Moriarty stated:
-While she does not dispute Mr Srathan s mental health issues and the difficulties they may impose, she would question both the claim that he is not working, and the assumption that not
working for two months would affect his ability to meet his child support obligations.
-The last assessment change conservatively re-evaluated Mr Srathan s annual income to be
$132,936 and concluded that he generates his income solely from the operation of the
businesses he shares with his wife (in his wife's name), with all of his living and lifestyle
expenses coming out of the business, with the full amount of his "declared" income goingsolely to mortgage repayments.
While Mr Srathan is intrinsic to the operation of the businesses, unlike somebody operating as an individual/sole trader, many parts of the businesses are supported by other people, and
some parts generate relatively passive income. A two month pause from working, or longer,
is therefore unlikely to impact his ability to generate income, and she believes Mr Srathan has
enough other assets to continue to meet his child support obligations beyond that, not to
mention opportunities to adjust his lifestyle if need be.
-Disputing Mr Srathan s claim that he is no longer working, there are many people whom they both know, including family, friends and community and does not align with what she has been informed. Furthermore, knowing him personally, it is very hard to believe he'd ever voluntarily stop working to support his businesses.
-The timing of this COA application comes just after their son ([Child 2]) returned to live with her, and the "From" date for when the COA period of change is requested (20/11/2023) corresponds to just after their other son ([Child 3]) returned to live with her, increasing Mr Srathan s child support obligations.
-Mr Srathan continues to demonstrate that he has little interest in maintaining a fair and equitable child support arrangement. Mr Srathan has yet to make a single child support payment
and in her opinion has no intention to. It's her belief that Mr Srathan will continue to attempt to reduce his child support obligations in any way possible.…
COA decision dated 25 August 2023 set Mr Srathan s adjusted taxable income at $132,936 for the period 15 May 2023 until 31 October 2026. There is no record of either parent lodging an objection to that decision. In making that decision, the DM examined Mr Srathan s submission that he was merely an employee of his wife s business however noted there was information available to show he was listed as a point of contact for the business and various media articles report he was the owner. The DM concluded Mr Srathan had not made a full and frank disclosure of his true financial position and concluded that I am of the view that Mr Srathan continues to have a connection to his wife s business and that he is being compensated financially for his involvement in the business . I note the decision also states that in discussing the application, Mr Srathan stated that he will quit his job and the agency cannot say he has anything to do with his wife s business. In setting Mr Srathan s adjusted taxable income, the DM considered Mr Srathan s taxable income of $52,396 and added on $80,000 based on transactions through a bank account.
It must be pointed out at this time that when considering Mr Srathan s current application, this process is not available as an avenue of appeal against a previous decision. When a previous decision exists, Child Support is only able to consider a subsequent application when there has been a significant change in circumstances for the parents or child in a way that renders the previous decision unfair; or new evidence is now available which must demonstrate that the actual circumstances of the parents or child are significantly different to the circumstances portrayed by the evidence available to the original decision-maker. If neither of the above two conditions is present, the applicant will be unable to demonstrate that a special circumstance exists, and their application must be refused. Furthermore, a DM is not able to change an existing decision by re-interpreting existing evidence or circumstance. It is also not within the scope of this decision to determine whether mistakes or omissions were made in the original decision. It should also be noted that the findings of any decision maker in a Change of Assessment, objections or any appeals process are able to be relied upon as fact by subsequent DMs.
Mr Srathan states that the above assessment is now unfair as he is unable to work due to mental health concerns and provided medical certificates from his GP. With his application, Mr Srathan provided one bank account as evidence being the account his wages were going into which were then transferred to his home loan. I note Mr Srathan only provided page 1 out of 3 for that account. By providing only one statement, it appears Mr Srathan was not in receipt of a wage from November
2023.On objection, Mr Srathan was asked to provide further information about his financial circumstances. However as at the date of this decision, no evidence has been provided.
Legal notices pursuant to section 161 of the Child Support (Assessment) Act 1989 were forwarded to Mr Srathan s financial institutions to obtain pages 2 & 3 of the statement he provided. These notices require the financial institution to provide information regarding all accounts in the names of the parents, any business entity in which they have an interest and also any other accounts for which they may be a signatory.
Bank statements obtained under notice for the period 14 May 2023 to 13 November 2023, being page 1 provided by Mr Srathan with his application, show wages of $850 per week and transfers to the home loan of the same amount. Page 2, which was not provided by Mr Srathan shows his wages and the payment of the home loan continuing until 13 November 2023. Statements from 14 November 2023 until 9 July 2024 continue to show wages being paid to Mr Srathan and that amount being paid to the home loan. Perusal of home loan statement for the period 9 July 2023 to 9 July 2024 show weekly payments of $850 being made from Mr Srathan s account. When this was discussed with Mr Srathan, he advised that when he stopped working, the $850 were his wife's wages / mortgage payments and that they thought the account was in joint names not in his name solely.
In considering Mr Srathan s current application, and whilst I acknowledge the medical certificates he provided, whilst he may not have been working, on balance, it seems he has continued to receive the same income into his account as was considered in the previous COA decision dated 25 August 2023. Mr Srathan states that when he stopped working the $850 transfer was for his wife s wages. In reviewing the mortgage statements, prior to Mr Srathan advising his circumstances had changed, it shows credits for $850 and other credits that I am satisfied are likely to be Mr Srathan s wife s payments. The statements from after Mr Srathan advises his circumstances changed, continue to show payments of $850 and then other bulk payments from his wife. Therefore whilst I have considered Mr Srathan s explanation about the continuing payments into his bank account, it strains credibility to suggest that this can be the complete explanation.
Therefore on balance, and in the absence of the information being provided by Mr Srathan as
requested, I cannot be satisfied there has been a significant change in his actual financial
circumstances since the previous COA decision was made. I note this is a prerequisite before I can consider a change to the assessment.The income currently used in the assessment is $132,936. Based on the above information I am not satisfied special circumstances exist. I also do not find Mr Srathan s current financial resources, income and property is significantly lower, and I am not satisfied the child support assessment is unfair because he has a lesser capacity than the child support assessment currently indicates.
Reason 8A is not established.
…
[Child 2] continues to live full-time with Ms Moriarty who is likely to be continuing to provide
everyday support. Therefore whilst I am satisfied [Child 2] is in receipt of a wage which enables him to support himself to some extent, I am not satisfied his income is sufficient to enable him to be entirely self-sufficient. I am satisfied however that the income received by [Child 2] reduces his need for parental support and that this represents special circumstances in this case which are not taken into account within the current formula-based child support assessment. The annual rate payable for [Children 2 and 3] based on an adjusted taxable income for Mr Srathan of $132,936 is $21,614. As [Child 2] is working, I will reduce his costs in the assessment by 50%. This results in a reduction in the annual rate payable by Mr Srathan to $16,211.In considering a date from which to commence a change to an assessment, it is a requirement of the child support legislation that I consider carefully any decision that may have the effect of placing a carer parent into a situation where they may have been overpaid, or a liable parent into significant arrears. This is because either situation can create circumstances where the ongoing financial support for the children may be placed in jeopardy. This would be contrary to the object of the child support legislation.
Ms Moriarty advises [Child 2] commenced employment on 11 March 2024 with Mr Srathan s
application under Reason 4 being received on 28 June 2024 as part of this objection process. I will therefore commence the change to take into account [Child 2] s income from 1 June 2024 being the beginning of the month I which Mr Srathan lodged his application.In comparing my proposed determination to that of the original decision, I have found Reason 4 established and determined the following:
-The previous COA decision dated 25 August 2023 is re-instated. This decision sets Mr Srathan s adjusted taxable income at $132,936 for the period 15 May 2023 to 31 October 2026.
-For the period 1 June 2024 until [Child 2] ceases to be an eligible child, the annual rate payable by Mr Srathan is set at $16,211.…
Mr Srathan, and his legal representative, Mr Matthew McCormick, and Ms Moriarty participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the oral evidence of both parties, the Child Support materials, and the additional materials submitted by both parties.
CONSIDERATION
The legislative framework
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.
Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters 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)).
Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2) of the Act.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.
Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by Child Support as Reason 8A, provides as a ground for departure:
(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 …
The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. While it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
The hearing
10.Mr McCormick submitted that the original assessment is flawed. It included an additional $80,000 over and above Mr Srathan’s wage from the business; the August 2023 deposits labelled “loans” were trading deposits. For example, various deposits to the account ending in number 422 were assessed by Child Support as assessable income when they were used for trading and to pay for expenses such as fuel and supplies. Those payments were not for personal expenses. Mr McCormick submitted that an adjournment would be appropriate to procure further evidence from the accountant to confirm the validity of the expenses. Mr McCormick referred to folio 531 and folios that followed highlighting payments into the mortgage; he said Mr Srathan had been “dipping into the mortgage” to keep the businesses afloat. The sums assessed by Child Support were “far from income”.
11.Mr McCormick referred to the financial statements for [the Trust] for 2022/23 and submitted the businesses are running at a loss. Mr Srathan had not derived an income until more recently from the [product] shop he established on his own in August/September 2024 and from which he has drawn some monies and is looking to draw $1,000 per week at some point in the near future. Mr McCormick told the Tribunal that the financials for 2023/24 have not been done.
12.Mr McCormick told the Tribunal that Mr Srathan was not involved with the Trust operations following becoming unwell over the course of 2023; he conceded that Mr Srathan had been very actively involved during the years in which his wife had been raising their four young children.
13.Ms Moriarty observed that the Trust had expenses of $1.8 million; this is a very significant operation. When she and Mr Srathan were together, they operated similar businesses; upon separation, Mr Srathan changed business names but continued to operate the same, or similar, businesses. Ms Moriarty said Mr Srathan’s lifestyle, including holidays and his capacity to meet a substantial mortgage, were not at all consistent with the very low wage he claims as his sole source of income; she questioned how he could possibly meet his expenses on such a limited income.
14.Both parties accepted the adjustment made in relation to [Child 2] on the basis of [Child 2]’s income and raised no issue with that aspect of the decision.
15.Ms Moriarty told the Tribunal that she is “only asking what is fair”. She said that because of her limited income, the children have had to miss out on things. Ms Moriarty accepted that in the same way she made some contribution to the business when she was together with Mr Srathan, Mr Srathan’s wife is likely making some contribution. She said that but for Mr Srathan, the businesses would not exist. Ms Moriarty accepted that Mr Srathan was suffering from some mental health issues; however, she said that Mr Srathan has set the businesses up in such a way that they generate passive income even without his involvement. She said he “physically does not have to be there”.
16.Mr McCormick told the Tribunal that the Trust operated at a substantial loss in 2022/23 and there is a large tax debt; money from the mortgage has been “pulled” and directed to the business. Mr McCormick said [Business] had been running at a loss at the old premises and it was closed (a retail store operated under the Trust structure has now been started in its place). Mr Srathan re-opened a [business] using the same name under his own company structure at a new premises in September 2024. Mr Srathan told the Tribunal that he had seen a psychologist in December 2023 when he was advised he needed to step away from the businesses. Mr Srathan said he lost his friend in March 2023 to an accident on his property which affected him very badly. There were a number of other incidents involving staff at his businesses which also impacted on him. He deteriorated over 2023 and was in a “very bad way” – he said “everyone around him was either sick or dying”, and that he was suicidal. On top of this, he fell off a ladder in January 2024 and “was not able to work”. Mr Srathan said his wife was on the verge of leaving as he was angry all the time. He stepped away and his wife stepped in to manage the operations with the assistance of two managers. Mr Srathan said his wife comes from a very business-minded family. Mr Srathan said that his wife would travel away and he would look after the children. Mr Srathan said he was advised by his psychologist that he should become more active and he decided to start the [product] venture on his own. He said “[product] is his thing”. Mr Srathan said he does not read or write very well and the only job he can do is to work for himself. Mr Srathan said his wife is now doing some casual [job task] to “top up” the businesses which are “not doing great”. He did not object to the original change of assessment decision as he did not know he could appeal and because he is not able to read; he did become aware of his rights from Child Support correspondence.
17.In response to the Tribunal’s questions, Mr Srathan did not know what the likely figures for 2023/24 for the Trust were likely to be; he does not communicate with the accountant.
18.In relation to his Statement of Financial Circumstances, Mr Srathan said he has managed by selling some assets such as a trailer. He said he lives frugally; he grows his own cows and pigs. He [eats] at the shop. He said his wife’s family had provided financial assistance for a family holiday. Mr Srathan did not identify any particularly noteworthy expenses. Ms Moriarty observed Mr Srathan’s capacity to meet Catholic education expenses and [activity/sport] related costs, and that Mr Srathan had not recorded private health insurance costs. Mr Srathan said his wife handles health insurance; he denied that [activity/sport] expenses were high given the young age of the children. Mr Srathan confirmed that the two oldest children are now in private schooling; the younger children are still in day care. Mr Srathan said he had flown to Brisbane for one appointment in relation to a heart murmur.
19.Ms Moriarty confirmed there has been no change to her income as a full-time wage earner. She earns a negligible amount doing some occasional [task]. She did not identify any notable expenses. She said she lives “week to week” and remains in a difficult financial position.
20.In terms of an assessment going forward, both parties generally suggested a longer period would be preferred (the case is due to end in May 2027).
Consideration
21.I observe that there is an interest in finality in these sorts of decisions. Mr Srathan did not object to the original change of assessment decision of 25 August 2023 for the reasons he has outlined; the starting position is that the decision (at least so far as it related to his income) ought to have been left to run its course.
22.This was the view taken by the Child Support objections officer; that was a justifiable position. The business structures Mr Srathan was inextricably attached to in an operational and financial sense continued to operate.
23.I accept Mr Srathan’s evidence that he was in a “bad way” as a result of events in 2023 and that by late 2023, he had “stepped back” from the business operations to a material extent; the shortfall was picked up by his wife, with the assistance of two managers.
24.I also consider that the original methodology adopted by Child Support in examining bank statement transactions was somewhat “blunt” and inexact; however, that analysis was understandable given the absence of better evidence.
25.Better evidence is now available in the form of financial statements for the Trust in respect of the 2022/23 financial year (statements and returns for 2023/24 are yet to be lodged). I had some difficulty reconciling the profit and loss report for the 2022/23 financial year (folios A36 to A38) with the financial statements starting at folio A43; however, ultimately, I concluded that the financial statements represented the most accurate financial information for the 2022/23 financial year.
26.I note that the “Statement of Profit and Loss and Other Comprehensive Income” for 2022/23 records a net loss of $38,917 across all business entities (folio A47). However, that includes a very significant loss of $247,548 in respect of [Business] which I understand stopped trading and was “wound up” by, or shortly after, the end of the 2022/23 financial year (and I note Mr Srathan made his fresh application for a change of assessment on 1 December 2023).[1]
[1] The last Facebook post for the [Business] prior to the announcement of the re-opening in September 2024 was made in May 2023.
27.The period of the departure commenced on 15 May 2023 when Ms Moriarty made her application for a change of assessment. Given the loss-making business ceased to trade not long after, in my assessment, I consider it appropriate to only take into account the remaining profitable businesses in terms of assessing financial capacity.
28.Removing the loss of $247,548 results in a net loss turning into a net profit of some $208,631 for 2022/23. Whilst it is likely that Mr Srathan enjoyed some (at least indirect) personal benefits for motor vehicle and telephone usage and the like for example, a non-cash amount by way of depreciation of $62,134 was claimed in 2022/23. In the ordinary course, such “non-cash” expenses are added back and regarded as an available financial resource. Adding that back gives an adjusted net profit of $270,765. I consider this figure the best evidence of the profitability of the business structures Mr Srathan remains inextricably connected to.
29.I accept that Mr Srathan’s wife has made a material contribution to the operation of the various businesses established by Mr Srathan. I note that Mr Srathan’s wife has spent a number of years looking after four young children (all about one year apart in age). She is also presently working as an employee [occupation] on a casual basis. I accept that gradually over the course of 2023 and into 2024 Mr Srathan was temporarily incapacitated as a result of genuine mental health issues and that he took a “backseat”; I consider it fair to conclude his health had improved significantly come around August 2024 when he “re-started” [Business] under a different structure at a different premises. Whilst it is in Mr Srathan’s interests to deny any continuing active involvement in the Trust businesses, I consider it unlikely that now his health has improved that he is not taking any role in at least overseeing those operations.
30.If the proceeds of the business operations were divided equally between Mr Srathan and his wife, an estimate of those proceeds on the basis of 2022/23 figures would be in the range of $135,000 each.[2] If, at the time of Mr Srathan’s application on 1 December 2023, his true financial capacity was to be assessed as that amount, this is very close to the income of $132,936 being assessed under the administrative assessment set by the earlier departure and does not make a material difference to his child support liability.
[2] I note Mr Srathan’s taxable income for 2022/23 was $54,221; I expect this was included in the total wages bill for the Trust in the total sum of $178,870. I have adopted a beneficial approach to Mr Srathan and have not “added back” that sum to the notional profit for 2022/23 – I accept Mr Srathan was not drawing a wage at the time of his application on 1 December 2023 and have assumed that the Trust would incur the same or similar wage bill regardless of whether it was paid to Mr Srathan or to another person.
31.I accept Mr Srathan’s evidence that the [product] shop is not currently profitable and whilst he has drawn some money from the business, he hopes to draw a wage of $1,000 per week at some stage. I note the submission from Mr McCormick of a lack of profitability, and that withdrawals have been made from the mortgage to help fund the businesses. This might be a genuine downturn in the profitable businesses identified in the statement at folio A47; it might demonstrate a temporary cashflow issue and not demonstrative of underlying profitability. I consider the benefits of certainty in setting Mr Srathan on a certain level of income for a period into the future to outweigh the possibility Mr Srathan’s wage and share of profits from the business might exceed (or indeed be less than) the figure set by Child Support.
32.I note that I do not think any adjustment is required to Ms Moriarty’s adjusted taxable income; her financial capacity is adequately reflected under the rolling formula assessment. Neither party raised any notable expenses for themselves or the children which require further adjustment, in my view. I note that neither party raised any issue in respect of the adjustment made by Child Support for [Child 2] by amending the “costs of the child”; I agree that adjustment provides a ground for departure in the special circumstances of the case on the basis the child support assessment is rendered unfair. That adjustment was just and equitable and otherwise proper and I do not intend to modify that aspect of the decision.
33.However, I do not consider it just and equitable to make an adjustment to Mr Srathan’s adjusted taxable income as I do not accept there has been a material change in circumstances given my relatively conservative assessment of Mr Srathan’s financial capacity. I consider his capacity is adequately represented by the figure of $132,936 in place at the time of his fresh application for a change of assessment on 1 December 2023.
34.In terms of going forward, I consider it appropriate that level of income be applied to the assessment until 31 October 2026; this gives the parents certainty for an extended period and will permit a reassessment taking account of any material changes on the basis of up-to-date information following the end of the 2025/26 financial year. With appropriate budgeting, I consider Mr Srathan will be placed to meet his child support liability.
35.As I have reached the same conclusion as the objections officer, the decision under review will be affirmed.
DECISION
The Tribunal affirms the decision under review.
| Date(s) of hearing: | Wednesday, 19 March 2025 |
| Representative for the Applicant: | Mr Matthew McCormick |
| Representative for the Other party: | Self-represented |
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