Stanton and Stanton (Child support)

Stanton and Stanton (Child support) [2019] AATA 4866 (6 September 2019)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2019/MC015972
APPLICANT:  Ms Stanton
OTHER PARTIES:  Child Support Registrar
Mr Stanton

TRIBUNAL:Member R Anderson
DECISION DATE: 06 September 2019
DECISION:

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

·     The annual rate of child support payable by Mr Stanton is to be varied to $8,945 in respect of the period 1 November 2016 to 30 August 2018;
·     The annual rate of child support payable by Mr Stanton is to be varied to $2,300 in respect of the period 31 August 2018 to 30 September 2019 and
·     The annual rate of child support payable by Mr Stanton is to be varied to $1,900 in respect of the period 1 October 2019 to 31 October 2021.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – 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

Mr Stanton and Ms Stanton are the parents of [Child 1] and [Child 2]. According to records of the Department of Human Services – Child Support (the Department), the child support assessment was registered on 21 September 2012. The Department has been responsible for the collection of child support from Mr Stanton since 15 August 2014.
The child support liability is generally calculated in accordance with the administrative assessment, as provided in the Child Support (Assessment) Act 1989 (the Act). The calculation is based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO), or the most recent estimate accepted by the Department. It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent.
Following cessation of a previous departure decision made on 28 August 2015, the administrative assessment reverted to the usual formula in respect of the parents’ adjusted taxable incomes on 1 November 2016 while the adjustments in respect of private school fees ended on 31 December 2016. This resulted in the annual child support liability payable by Mr Stanton reducing from around $14,000 to just over $2,000 from 1 January 2017. Consequently, on 7 February 2017, Ms Stanton lodged a change of assessment on the basis that the administrative assessment produced an unfair outcome due to the private education costs of the children impacting significantly on their overall costs (Reason 3) and due to the earning capacity, income, property and financial resources available to Mr Stanton (Reason 8).
On 31 March 2017, Mr Stanton lodged a cross-application on the basis that the administrative assessment produced an unfair outcome due to his extraordinarily high costs of self-support impacting on his ability to provide financial support for the children (Reason 7), due to the earning capacity, income, property and financial resources available to Ms Stanton (Reason 8) and due to his duty to support the soon-to-be born biological child of him and his partner.
On 28 April 2017, a delegate of the child support registrar found that a ground was established in respect of Reasons 3 and 8 and decided to vary the adjusted taxable incomes of Mr Stanton and Ms Stanton in respect of the period 1 March 2017 to 28 February 2019 to $120,000 and $115,876 respectively. This resulted in the annual rate of child support payable by Mr Stanton increasing to just over $9,000.
In September 2018, Mr Stanton lodged an extension of time request to the Department to lodge an objection to the decision of 28 April 2017. The extension of time was subsequently granted and on 25 January 2019, the objections officer allowed the objection, varying the adjusted taxable income of Mr Stanton to $202,400 per annum in respect of the period 5 June 2018 to 30 August 2018 and to $80,000 per annum in respect of the period 31 August 2018 to 28 February 2019. In addition, the adjusted taxable income of Ms Stanton was varied to $130,000 per annum in respect of the period 1 November 2016 to 30 November 2020.
On 21 February 2019, Ms Stanton lodged an application to this tribunal for an independent review of the Department’s decision. The directions hearing was conducted by telephone with both parties on 16 July 2019. Following this hearing, directions were made to both parties requiring them to provide further information and documents. The hearing was held on 27 August 2019. Both parties participated in person and gave oral evidence to the tribunal on affirmation. Ms [A] of [Accountants], Mr Stanton’s accountant, also gave oral evidence to the tribunal by telephone on affirmation.
The tribunal considered information in the documents provided by the Department in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 860, documents lodged by Ms Stanton, numbered A1 to A118, documents lodged by Mr Stanton numbered B1 to B52 and further information from the Department numbered C1 to C19. All of these documents were sent to the parties prior to hearing. However, Mr Stanton advised that he had not received any of the A, B or C documents. A copy was provided to Mr Stanton at hearing. On 27 August 2019, the tribunal decided to defer making a decision in this matter to enable additional time for Mr Stanton to consider the information in the A, B and C documents and to comment on the information therein.
Mr Stanton’s response was numbered B53 to B86. It was provided to Ms Stanton for her information as the tribunal was satisfied that no response was necessary. The tribunal then proceeded to make a decision.

ISSUES

When calculation of the rate of child support is based on the usual administrative formula as discussed above, it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. Section 98C of the Act allows for a decision maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:
·         whether a ground exists to depart from the administrative assessment; and if so
·         whether any proposed departure is fair to Mr Stanton, Ms Stanton, [Child 1] and [Child 2] and
·         whether any proposed departure is fair to the public.

CONSIDERATION

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

At hearing, both parties confirmed what was stated at the directions hearing, that the only ground being pursued was Reason 8, in respect of the earning capacity, income, property and financial resources of each parent.
The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words ‘in the special circumstances of the case’. The meaning of this expression is not defined in the Act. However, the tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are ‘out of the ordinary’ and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC 90-433).

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

Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by Mr Stanton because of the available income, property and financial resources available to him. The Act goes on to state in subsection 117(7A) that the decision maker must have regard to ‘the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of the parent that do not produce, but are capable of producing, income’ and disregard ‘the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child’. Clearly, Mr Stanton’s partner, Ms [B], has no legal duty to provide for [Child 1] and [Child 2].
At hearing, Mr Stanton submitted that given that three different decision makers have come to similar conclusions in the past in respect of the financial resources available to Ms Stanton, he considers that the most recent departure decision cannot be too far away from the truth. In response to a question from the tribunal, Mr Stanton stated that despite his understanding of why his payout from [Company A] was added to his income from [Company B] across the overlap period, he does not consider it fair that income that is not taxable is included in the child support assessment. Nevertheless, he stated that he will ‘live with it’.
In contrast, Ms Stanton submitted that her access to financial resources from her mother are not in the realm of $130,000 per annum. The tribunal explained to Ms Stanton that the decision maker found that her financial resources were equivalent to a gross income of $130,000 after allowing for tax payable if she had earned as a PAYG employee.
The tribunal considered the financial circumstances of Ms Stanton, who gave oral evidence that prior to separation she had worked in a part-time administrative role in the [company] operated by Mr Stanton. She further stated that she has not been employed since separation and relies on funds from her mother, Ms [C], to meet the expenses of her and the children.
According to her 2016/2017 tax return, Ms Stanton received income from Centrelink in the form of a reduced parenting payment (single) pension, a small amount of interest and net proceeds from a rental property in [Suburb 1]. Her taxable income was recorded at $6,988.
According to her 2017/2018 tax return, Ms Stanton no longer received income from Centrelink in the form of a parenting payment (single) pension or interest. However, she continued to receive net proceeds from a rental property in [Suburb 1]. Her taxable income was recorded at $2,576.
In this case it is not disputed that Ms [C] has provided a consistent stream of funds to Ms Stanton since separation to enable her to meet the expenses of her and the children including legal fees, the private school education costs of [School] and the monthly lease payments in respect of her [motor vehicle]. Ms Stanton did not deny that such a stream of funds will continue into the future. As such, the tribunal finds it reasonable that the regular provision of funds from Ms [C] be treated as a financial resource to Ms Stanton. This case is distinguished from those whereby the grandparent/s may assist as they can with various expenses without any expectation of an ongoing provision of funds.
Ms Stanton provided a spread sheet detailing the monies provided to her from Ms [C] in the 2016/2017, 2017/2018, 2018/2019 years and at the commencement of the 2019/2020 year. Ms Stanton gave oral evidence that on average she receives around $4,000 per month from her mother, in addition to $1,500 per month to pay the lease repayment relating to her [car]. Accordingly, the tribunal calculates the financial resources from Ms [C], as estimated by Ms Stanton to approximate $66,000 per annum.
Following the hearing, Mr Stanton submitted that the spread sheets did not correspond accurately to the bank statements of Ms Stanton. He pointed out numerous deposits that had not been accounted for. The tribunal notes that many of these deposits were simply transfers from Ms Stanton’s overdraft account while many were without notation. As discussed at hearing, the tribunal finds it problematic to quantify exactly the amount of financial resources made available to Ms Stanton from her mother. It is likely that there are also cash payments. As such, the tribunal does not find that the bank statements are useful in quantifying the financial resources available to Ms Stanton. For this reason, the tribunal decided that it was not necessary to require a response from Ms Stanton in regard to why some deposits were not set out in her spread sheets.
There is no question that the tax returns of Ms Stanton do not accurately reflect her available income and financial resources, a fact which was not disputed by either party. Going forward, Ms Stanton told the tribunal that she is looking for part-time work that fits around the children. She further stated that to date it appears that she is limited to casual or permanent part-time positions with the likes of Coles or Woolworths. The tribunal notes that if Ms Stanton were to find such a position in the future, it is likely that the resources from her mother would reduce accordingly and therefore have little, if any, impact on a child support assessment that included the financial resources currently provided by Ms [C].
While Mr Stanton raised the issue of earning capacity in respect of Ms Stanton, a parent's earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Act. This section requires the tribunal to consider three matters in determining that the parent's earning capacity is greater than is reflected in his or her income used in the administrative assessment.
·Whether the parent is:
o   not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
o   has reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
o   has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
·If the parent's decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii)); and
·If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).
All three criteria must be met before a departure determination can be made to take into account whether the parties have a greater earning capacity. As discussed at hearing, Ms Stanton has not changed her occupation or decreased her working hours as she was not previously employed, other than for the purposes of the family business. In any event, given that [Child 1] and [Child 2] are still at primary school and Ms Stanton is responsible for their care for 86% of the time, the tribunal is satisfied that if one was minded to find the first criterion established, it would be justified by her caring responsibilities. Therefore, it is not open to the tribunal to determine an earning capacity in respect of Ms Stanton.
According to Centrelink information, Ms Stanton currently receives family tax benefit in respect of [Child 1] and [Child 2] at the fortnightly rate of $492. As an income-tested benefit, it is not defined as a tax-free benefit under section 5 of the Act to be included in adjusted taxable income (paragraph 43(1)(e) of the Act). Consequently, for child support purposes, it is not considered to be a part of Ms Stanton’s adjusted taxable income (subparagraph 117(7)(b)(ii) of the Act).
The tribunal considered the assets and liabilities of Ms Stanton. While she is the sole owner of the investment property in [Suburb 1], Ms Stanton and the children reside in a property owned by Ms [C]. Ms Stanton valued the [Suburb 1] property at $875,000. According to the [Bank 1] statements before the tribunal, the corresponding mortgage, at 1 August 2019 was $352,359. Ms Stanton told the tribunal that she currently has around $500 in the bank and valued her [car] and household contents and property at $65,000 and $18,000 respectively.
Ms Stanton estimated her overdraft account balances to be around $700. In response to a question from the tribunal, she stated that she uses these accounts and pays interest on them as opposed to accessing further funds from her mother which are then assessed as income by the Department. Mr Stanton disputed the oral evidence of Ms Stanton that the $30,000 outstanding on her [Bank 2] Visa card was left over from the family business. Regardless, the credit card is in the name of Ms Stanton who for whatever reason, is legally liable for the amount outstanding. In addition, Ms Stanton provided a statement from her American Express and GE Creditline accounts in the amounts of $206 and $7,834 respectively. According to the [car finance provider] statement before the tribunal, there are remaining payments to June 2021 in the amount of $36,062. Accordingly, the tribunal finds that the net asset base of Ms Stanton is in the vicinity of $530,000.
In respect of the [Suburb 1] rental property, it was evident that the loan requires a principal and interest payment on a monthly basis. After accounting for the non-cash capital works and capital allowances expenses declared in the tax return and for the principal component of the repayments that is not a deductible expense for tax purposes, the tribunal is satisfied that the impact of the rental property on the expenses of Ms Stanton is neutral. That is, it provides no significant additional income, nor does it require any significant additional payments beyond the rental income received. In any event, any expenses are considered to be discretionary (Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144).
The tribunal accepts the written evidence of Ms Stanton that at 1 March 2019, she held a balance in her [Super] account of $85,413. The tribunal is satisfied that no additional personal contributions have been made by Ms Stanton since March 2016.
As noted above, Ms Stanton resides in a property owned by her mother and shares it with [Child 1] and [Child 2]. In response to a question from the tribunal, Ms Stanton confirmed that she pays no rent and that Ms [C] meets all of the utilities, Foxtel and internet costs. As such, none of these expenses are recorded in her statement of average weekly expenses. Ms Stanton estimates the average weekly household expenses to be $1,600, or $83,200 per annum. After excluding the costs associated with the [Suburb 1] rental property, the weekly expenses approximate $1,017. According to her Statement of Financial Circumstances, in addition Ms Stanton pays private health insurance premiums of $95 per week (a discretionary expense) and credit card payments of approximately $268 per week, bringing the weekly expenses of the household to $1,380 or $71,760 per annum.
As discussed above, Ms Stanton estimated the funds provided by Ms [C] at $5,500 per week, or $66,000 per annum. Based on information from Centrelink, Ms Stanton received family tax benefit in the amount of $10,346 in the 2017/2018 year and $8,425 in respect of the 2018/2019 year and Mr Stanton has been up-to-date in paying the assessed child support liability. It is evident that Ms Stanton’s declared resources enable her to meet the declared expenses of her and the children.
After excluding the costs associated with the [Suburb 1] rental property, the average weekly expenses attributable to Ms Stanton approximate $430. Of this amount, discretionary costs in respect of entertainment, gifts and pets are $41. The car repayment is also included in the amount of $156 per week. As this expense is regularly met by Ms [C], the tribunal will not include it in the ‘necessary’ expenses of Ms Stanton. Therefore, the estimated average weekly ‘necessary’ costs of Ms Stanton approximate $233 or just over $12,000 per annum. This is significantly less than the self-support amount used in the administrative formula in the 2019 year of $25,038, which is expected given that Ms Stanton has no rental or utilities costs to meet. Ms Stanton gave oral evidence that her, [Child 1] and [Child 2] are all in good health.

The tribunal considered the financial circumstances of Mr Stanton. He told the tribunal that he is a qualified [Occupation]. However, due to the issues relating to the liquidation of the family business, [Company C], he is currently unable to be registered in his own right. He was employed at [Company A] for a number of years as a [Occupation] before being made redundant at 3 June 2018.
According to Mr Stanton’s 2016/2017 tax return, his sole source of income consisted of his wages and allowances from [Company A]. The expenses are unremarkable. The tribunal is satisfied that use of Mr Stanton’s income as recorded in his 2016/2017 tax return in the amount of $129,074 provides an accurate reflection of his available income from all sources at that time.
According to Mr Stanton’s 2017/2018 tax return, his income consisted of wages and allowances from [Company A] in the amount of $121,979. According to his payslips it is evident that Mr Stanton salary sacrificed additional amounts into superannuation during the 2017/2018 year from his gross weekly payment. His 2017/2018 tax return records the total salary sacrificed amount into super at $7,051. However, the administrative assessment adds back these amounts for the purposes of assessing Mr Stanton’s adjusted taxable income.
After excluding the unused annual leave and in lieu of notice payments from total income, deducting declared expenses and adding back reportable superannuation contributions, the tribunal calculates that the regular wages and allowances available to Mr Stanton from [Company A] in the period 1 July 2017 to 3 June 2018 was $121,543 ($134,948 - $5,005 - $7,926 - $7,505 + $7,031), which annualises to $131,252.
According to his final payslip and the 2017/2018 PAYG Summary from [Company A], Mr Stanton received a payout on 3 June 2018 of unused annual leave, payment in lieu of notice, and redundancy in the amount of $27,055. Of this, the redundancy component of $14,123 is non-taxable. While Mr Stanton maintains that it should not be included in his income for child support purposes, the tribunal disagrees. The payout figure of $27,055 represents Mr Stanton’s normal weekly payment of $2,353.85 over a period of eleven and a half weeks. The tribunal calculates this to represent the period 4 June 2018 to 23 August 2018.
In addition, Mr Stanton commenced employment with [Company B] on 4 June 2018. However, there is no such payment declared in his 2017/2018 tax return. In any event, the tribunal is satisfied that Mr Stanton commenced earning an income from [Company B] on 4 June 2018, as specified in the employment contract. As Mr Stanton has not changed his occupation or decreased his working hours, it is not open to the tribunal to determine an earning capacity in respect of Mr Stanton under subsection 117(7B) of the Act.
Mr Stanton gave oral evidence that [Company B] is the business of Ms [B] and he is simply an employee. He told the tribunal that the business involves maintenance work which is usually related to warranty work. While Ms [B] liaises with the client (a single builder) and arranges the work calendar between him and various subcontractors, Mr Stanton maintains that his role is simply to do as directed by Ms [B] on a daily basis.
The employment contract before the tribunal recorded Mr Stanton’s annual wage at $80,000, inclusive of a 9.5% superannuation contribution and provision of a company vehicle and mobile phone. Based on payslips from [Company B], Mr Stanton is in receipt of wages at $80,000 per annum in addition to a 9.5% contribution to superannuation. Furthermore, Mr Stanton is salary sacrificing $322.23 per week into his [superannuation account]. As discussed above, the tribunal is satisfied that the administrative assessment adds back these amounts for the purposes of assessing Mr Stanton’s adjusted taxable income. However, based on the 2018/2019 PAYG Summary from [Company B], Mr Stanton’s gross wages, including reportable superannuation contributions, totals $84,615. The discrepancy likely represents payments relating to June 2018 that were paid in the 2018/2019 year.
In response to a question from the tribunal, Mr Stanton stated that the company vehicle is a [van] which is packed with tools in the back and a bench seat in the front. He maintains that it is rarely used for anything other than work. Given the type of vehicle, the tribunal accepts that this is so. While Mr Stanton receives the benefit of a fully paid mobile phone, the tribunal is satisfied that any benefit from the private use component is likely to be negligible. While Ms [B] operates the office from home, Mr Stanton confirmed that the rent on their residence is paid from their private funds.
ASIC information before the tribunal, dated 6 February 2019 records the registration date of [Company B] as 3 November 2017. Ms [B] is recorded as the sole director and secretary of [Company B], while Mr Stanton and Ms [B], in their capacity as trustees of the [Family Trust] (the Trust), own 100% of the shares. Since then, Mr Stanton’s accountant, Mr [D] of [Accountants], wrote to the tribunal on 2 August 2019 advising that Mr Stanton has now been removed as a trustee of the Trust. Regardless, the tribunal is not satisfied that Mr Stanton is not a potential beneficiary of the Trust. Given that Mr Stanton was initially recorded as a trustee and that he continues to be a signatory on the bank accounts of [Company B], the tribunal does not accept that his role is simply that of an employee. However, the tribunal does accept his oral evidence that Ms [B] also plays a role in the business operation of [Company B].
Accordingly, despite Mr Stanton’s view otherwise, the tribunal considered it appropriate to satisfy itself that Mr Stanton did not have access to other benefits or financial resources from [Company B]. The 2017/2018 tax return was before the tribunal, albeit it only represented seven months of the year. It recorded a net profit of $1,500. Ms [A] of [Accountants] confirmed to the tribunal that the business activity statements are lodged on a quarterly basis. Based on the amounts reported, it is evident that while Mr Stanton received $84,615, the remaining wages of $25,227 are attributable to Ms [B]. The tribunal accepts that this is reflective of her role in [Company B]. Ms [A] also confirmed that no rental is paid from [Company B], utility costs are expensed on the individual tax returns and no directors loan accounts exist. The tribunal is satisfied that Mr Stanton is in receipt of the bulk of the profits generated by [Company B], which is commensurate with his working hours.
As discussed at hearing, the tribunal considers it appropriate that Mr Stanton be attributed with income in the period 4 June 2018 to 23 August 2018 of $2,353.85 per week, or $122,400 from [Company A], in addition to his income from [Company B] of $80,000 per annum. This equates to $202,400 per annum. The tribunal finds accordingly.
Mr Stanton’s 2018/2019 tax return was before the tribunal. His sole income source is [Company B]. The expenses are unremarkable. Commencing 24 August 2018, Mr Stanton’s most recently lodged tax return, being the 2017/2018 year, does not provide an accurate indication of his available income going forward. As Mr Stanton lodged an estimate of his adjusted taxable income of $80,195 on 1 March 2019, it is only then that the administrative assessment aligns more closely with his true income.
The tribunal considered the assets and liabilities of Mr Stanton. According to his Statement of Financial Circumstances, completed 12 March 2019, Mr Stanton’s assets consist of funds in the bank and household contents. At hearing he estimated the amounts at $500 and $10,000 respectively. Mr Stanton has no liabilities. Therefore, the tribunal calculates the net asset position of Mr Stanton to approximate $10,500 and finds accordingly.
The tribunal accepts the written evidence of Mr Stanton that at 31 December 2018, he held a balance in his [Super account] of $176,831. As already discussed, based on his most recent payslips Mr Stanton contributes an additional 21% of his salary into superannuation each week at $322.23, or $16,756 per annum.
Mr Stanton gave oral evidence that he, Ms [B], and their son, [Child 3], are all in good health. In respect of his expenses, Mr Stanton estimated the current average weekly household expenses to be $1,460. After removing child support, $416 is attributed to Mr Stanton. Of this, discretionary costs in respect of private health insurance, entertainment, holidays, and gifts amount to $84. Mr Stanton’s annualised ‘necessary’ costs of self-support of $17,264 are less than the self-support amount used in the administrative formula in the 2019 year of $25,038. This is largely as a result of allocation of rent to [Child 1], [Child 2] and [Child 3].
The tribunal accepts the oral evidence of Mr Stanton that following the death of Ms [B]’s father, her mother no longer wished to remain in the family home. A solution was for her to move into her sister-in-law’s rental property in [Suburb 2]. As a result, Mr Stanton, Ms [B] and [Child 3] moved into the family home and they pay the rent of $400 per week for Ms [B]’s mother so as to remove the middle step of transferring the rent through three accounts.
At the time of Ms Stanton’s application for a change of assessment in February 2017, the income used in the administrative assessment, based on the income recorded on the most recently lodged tax returns of Mr Stanton and Ms Stanton, was $35,326 and $15,661 respectively. In this case Mr Stanton had not yet lodged his 2015/2016 tax return, which recorded a taxable income of $124,725. Based on the tribunal’s findings above, $15,661 is far from an accurate reflection of the financial resources available to Ms Stanton. This is also the case in respect of Ms Stanton’s income recorded on her 2017/2018 and 2018/2019 tax returns. Furthermore, given the overlap of payments received by Mr Stanton from [Company A] and [Company B], including non-taxable redundancy payments, the tribunal is satisfied that the administrative assessment does not produce a fair outcome.
Accordingly, while the period will be discussed later in these reasons for decision, the tribunal finds that special circumstances do exist in this case. As such, the tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Stanton, Ms Stanton, [Child 1] and [Child 2] to make a particular departure determination?

As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The tribunal does not propose to explore every matter in detail, but will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). Clearly Mr Stanton and Ms Stanton have the primary duty to financially support [Child 1] and [Child 2]. Furthermore, Mr Stanton also has a legal duty to contribute to the support of [Child 3] and the child he and Ms [B] are expecting in early October 2019.
In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs (subsection 117(6) of the Act). It was undisputed that the children are generally in good physical health and have no special needs. While [Child 1] and [Child 2] attend [School], it is by choice of Ms Stanton and the costs are funded by Ms [C].
Based on the estimates of Mr Stanton and Ms Stanton, the tribunal calculates their costs to approximate $516, or $26,832 per annum. This includes discretionary costs in respect of entertainment, holidays and gifts of approximately $123. Therefore, the tribunal calculates the weekly ‘necessary’ costs of [Child 1] and [Child 2], as estimated by the parents to be $393 or $20,436 per annum.
It is noteworthy that the administrative formula calculates the maximum cost for two children under 13 years with the combined child support income of almost $131,000 (based on the estimates by the tribunal of the parents’ income, benefits and financial resources in the 2018/2019 year of $80,000 and $97,000 respectively, allowing for the reduced costs of Ms Stanton and for [Child 3] as a relevant dependent child of Mr Stanton) to approximate $28,500. Given the reduced expenses of the children in respect of rent and utilities, the discrepancy is to be expected.

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

As found earlier in these Reasons for Decision, the tribunal is satisfied that Mr Stanton has had access to annualised income and financial resources in the amount of $129,074 in respect of the 2016/2017 year, $131,252 in respect of the period 1 July 2017 to 3 June 2018, $202,400 in respect of the period 4 June 2018 to 23 August 2018 and $80,000 in respect of the period commencing 24 August 2018. Mr Stanton has no asset base to speak of from which to access financial resources.
The tribunal is satisfied that Ms Stanton has had consistent access to financial resources to meet annual expenses of almost $72,000. This amount is equivalent to a grossed-up income of over $97,000 throughout the review period. Ms Stanton indicated that if the child support payable were to be reduced, she would ask her mother for further assistance. The tribunal is cognisant that Ms Stanton also has access to equity in her investment property in excess of $500,000.

Conclusion

After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Stanton and Ms Stanton and the reduced “necessary” costs of Ms Stanton and the children, the tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Act. The tribunal may make one of the determinations set out in section 98S of the Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support.
The tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). Therefore, the earliest commencement date the tribunal is able to consider is August 2015. Prior to 1 November 2016, the income used in calculation of the child support liability was calculated on the basis of a prior departure decision made on 28 August 2015, whereby the adjusted taxable income of Mr Stanton and Ms Stanton was varied to $120,000 and $117,884 respectively. This resulted in annual child support payable by Mr Stanton in the amount of $7,504. The child support liability payable by Mr Stanton increases at 1 November 2016 to over $14,000 when the income of Ms Stanton is based on the income recorded in her tax return, before any adjustment to school fees.
Furthermore, the departure decision of 28 August 2015 also increased the child support payable by Mr Stanton in respect of a contribution to school fees by $5,245 per annum until 31 December 2016, despite Ms [C] meeting those expenses in full. It appears that the child support assessment has not been adjusted to reflect the findings by the objections officer that Reason 3 was not established and that Ms Stanton has not met any of the private educational costs of the children. Overall, the tribunal considers it is appropriate to commence the departure decision at 1 November 2016.
While the income used in the administrative assessment in respect of Mr Stanton is indicative of his actual income and financial resources until 4 June 2018 and again beyond 24 August 2018, it is difficult to be satisfied that the actual amount of financial resources provided to Ms Stanton from Ms [C] can be accurately assessed throughout the review period and indeed going forward. Mr Stanton gave oral evidence that he considers that the three previous decision-makers have been fairly consistent and therefore the current assessment must be reasonably fair. While it is Ms Stanton who is objecting to the assessment of her annual financial resources at the grossed-up figure of $130,000, it is clear to the tribunal that regardless of the assessment, Ms Stanton will simply adjust her financial resources from her mother to fill in any gaps.
The tribunal is cognisant of providing some degree of certainty for the parties moving forward. Since the objections officer’s decision, the Department has accepted estimates from Mr Stanton in respect of his adjusted taxable income from 1 March 2019 until 30 June 2020 in the vicinity of $80,000 per annum. The tribunal does not consider that these estimates result in an unfair assessment of child support. While nothing is certain in the future, the tribunal is satisfied that the circumstances of the parties are unlikely to alter significantly such that there is a major impact on the child support assessment. Therefore, the tribunal proposes to end the departure decision at 31 October 2021.
While Ms Stanton clearly has access to significant financial resources such that she does not struggle to meet the costs of her and the children, this in no way negates the obligation of Mr Stanton to contribute to the needs of [Child 1] and [Child 2] in accordance with his capacity.
After considering the findings above in respect of the income of Mr Stanton, the financial resources available to Ms Stanton to meet the total costs of the household grossed up to at least $97,000 and the reduced ‘necessary’ costs of Ms Stanton and the children, the overall child support liability payable by Mr Stanton in the period 1 November 2016 to 31 August 2019 results in arrears in respect of Mr Stanton in the vicinity of $2,000. The tribunal is cognisant of the fact that Mr Stanton was over-assessed in respect of a contribution to school fees in the period commencing 1 January 2016 to 31 October 2016 of approximately $4,000. In the circumstances the tribunal is not satisfied that it is just and equitable to place Mr Stanton in a position of arrears. Given that Ms Stanton has the majority care of the children, it is not fair to place her in a position where she has been overpaid child support. Therefore, to avoid any overpayment or arrears, the tribunal proposes to vary the annual rate of child support payable by Mr Stanton to $8,945 per annum in respect of the period 1 November 2016 to 30 August 2018, resulting in an overpayment by Mr Stanton of less than $10. The tribunal proposes to vary the annual rate of child support payable by Mr Stanton to $2,300 in respect of the period 31 August 2018 to 30 September 2019 and to $1,900 in respect of the period 1 October 2019 to 31 October 2021, following the birth of a second relevant dependent child of Mr Stanton. The proposed decision results in an ongoing child support liability of approximately $44 per week until 1 October 2019, then reducing to $37 per week.

Subsection 117(4) of the Act requires the tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.
Mr Stanton told the tribunal that he does not consider that any change in the child support assessment will impact Ms Stanton or the children due to the financial resources available from Ms [C]. He further stated that [Child 1] and [Child 2] do not go without at either parent’s home and in his view the current assessment is reasonably fair. In addition, with the upcoming birth of another child his weekly expenditure will increase. Ms Stanton had no comment in respect of any hardship that would be imposed on Mr Stanton if there was an increase in the child support assessment and noted that she would request further funds from her mother if the child support assessment were to decrease. As Mr Stanton is currently salary sacrificing over $300 per week to his superannuation, the tribunal does not consider that the proposed decision will place him or his family in hardship.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be ‘otherwise proper’ to make a departure determination.
In this case Ms Stanton is in receipt of family tax benefit Part A and Part B. As a sole parent and based on her annual income, a change in the child support payable by Mr Stanton will have no impact on her entitlement to family tax benefit Part B. In respect of family tax benefit Part A, based on her taxable income, Ms Stanton is entitled to the maximum rate. As such, a change in the child support payable by Mr Stanton will have no impact on the family tax benefit Part A payable to Ms Stanton. Therefore, it is otherwise proper to make the particular proposed determination.
It is open to either party to lodge a further change of assessment application should the future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

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

·     The annual rate of child support payable by Mr Stanton is to be varied to $8,945 in respect of the period 1 November 2016 to 30 August 2018;
·     The annual rate of child support payable by Mr Stanton is to be varied to $2,300 in respect of the period 31 August 2018 to 30 September 2019 and
·     The annual rate of child support payable by Mr Stanton is to be varied to $1,900 in respect of the period 1 October 2019 to 31 October 2021.

[2019] AATA 4866

6 September 2019

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction