Stebbins and Stebbins (Child support)

Stebbins and Stebbins (Child support) [2021] AATA 1008 (18 March 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2020/SC020180
APPLICANT:  Ms Stebbins
OTHER PARTIES:  Child Support Registrar
Mr Stebbins

TRIBUNAL:Member Y Webb
DECISION DATE: 18 March 2021
DECISION:

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

from 1 January 2020 to 31 December 2020, the adjusted taxable income of Mr Stebbins is varied to $164,955 per annum; and
from 1 January 2021 to 31 December 2022, the adjusted taxable income of Mr Stebbins is varied to $265,000 per annum; and
from 1 January 2020 to 31 December 2021, the annual rate of child support payable by Mr Stebbins is increased by $6,990 in relation to orthodontic costs for [Child 1] and [Child 2] and an autism assessment for [Child 3]; and
from 1 January 2020 to 31 December 2022, the annual rate of child support payable by Mr Stebbins is increased by $4,666 in relation to medical costs and pharmaceuticals for [Child 3] and private health insurance for the children; and
from 1 January 2020 to 31 December 2022, the annual rate of child support payable by Mr Stebbins is increased by $4,400 in relation to school tuition fees and building levy.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of the child – orthodontic and medical costs of special needs significantly affect the cost of maintaining the child - ground for departure established – income, property and financial resources of the liable parent – school fees – just and reasonable and otherwise proper to depart - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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

This review relates to the issue of child support regarding the four children of Ms Stebbins and Mr Stebbins (“the children”). The eldest children are twins aged 13 (“[Child 1]” and “[Child 2]”); the next eldest child is 11 years old (“[Child 3]”) and the youngest child is seven years old (“[Child 4]”). According to Services Australia’s (Child Support Agency) records the children are currently in the 86% care of Ms Stebbins and the 14% care of Mr Stebbins.[1] This care determination has been in place since 15 July 2017.
[1] C1–pages 375–378
The child support case was registered from 20 July 2017. The parents have a “private collect” arrangement.
On 15 April 2020, Ms Stebbins applied to the Child Support Agency for a change to the administrative formula assessment on the basis of Reasons 2, 3, 7, 8A and 8B. Mr Stebbins cross-applied on the basis of Reasons 8A and 8B.
At the time of the application for a change to the assessment the formula assessment calculated that for the period 1 October 2019 to 24 October 2020 Mr Stebbins was assessed to pay an annual rate of child support of $28,164 based on a 2018/2019 provisional income of $177,616 and Ms Stebbins’ 2018/2019 adjusted taxable income of $36,422. The liability increased to $30,852 when the two eldest children (twins) turned 13 years old.
The child support assessment was amended to $32,180 per annum when Mr Stebbins’ 2018/2019 taxable income was determined to be $261,178.
On 21 June 2020 a Child Support Agency officer decided that Reasons 2, 3 and 8A (in relation to Mr Stebbins’ income) had been established but that no other Reasons had been established. The officer decided that Mr Stebbins’ adjusted taxable income should be varied to $219,996 for the period 1 February 2020 until 31 December 2021. In addition, the annual rate payable by Mr Stebbins was further increased by $16,656: $3,388 for the children’s medical costs; $6,363 for education costs; $1,907 for school uniform costs; $1,574 for private health insurance costs and $3,424 for out of school activities.
On 1 July 2020, Ms Stebbins objected to that decision.
On 16 October 2020, an objections officer partly allowed Ms Stebbins’ objection. The objections officer decided to set aside the original decision and replace it with the following decision:
· For the period 1 January 2020 to 30 April 2022 the adjusted taxable income of Mr Stebbins be varied to $213,202; and
· For the period 1 January 2020 to 31 December 2022 the annual rate of child support payable by Mr Stebbins be increased by $4,570 for the tuition fees of the children; and for the period 1 January 2020 to 31 December 2021 the annual rate of child support payable by Mr Stebbins be increased by $8,975 in relation to the orthodontic costs, specialist costs and medication costs of the children.
The objections officer’s decision resulted in a child support liability of $45,229 from 1 January 2020 to 24 October 2020 and a liability of $48,133 per annum from 25 October 2020 to 31 December 2020.
On 5 November 2020 Ms Stebbins requested review by the Administrative Appeals Tribunal (the Tribunal).
A telephone directions hearing was conducted with both parents on 21 January 2021.
Ms Stebbins and Mr Stebbins attended the hearing by way of a telephone conference on 18 March 2021. Both gave evidence on affirmation.

ISSUES

The central issues for the Tribunal to determine in this case are:
· Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (the Assessment Act) exists; and if so,
· Whether it would be:
(a) just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
(b) otherwise proper
to make a particular determination to depart from the administrative assessment of child support.

DOCUMENTARY EVIDENCE

The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule. The Tribunal had regard to all of the relevant evidence and refers specifically to particular items in this Statement of Reasons.

CONSIDERATION

The child support law

The legislation relevant to this review is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by the liable parent is usually based on an administrative formula assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.
The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process as described in paragraph 13 above. The determinations which may be made are detailed in section 98S of the Assessment Act.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether a ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” in the case. If satisfied that there are “special circumstances” and 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 Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.
The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (Gyselman),[2] the Full Court of the Family Court of Australia held that:
Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.
Whilst it is not possible to define with precision the meaning of that term, as a generality 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 court will not interfere with the administrative formula result in the ordinary run of cases.
[2] (1992) FLC 92-279
Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to the Registrar and therefore the Tribunal must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

Does a ground or grounds exist to depart from the administrative formula assessment?

In considering whether a ground or grounds exist which justify departing from the administrative formula assessment, the Tribunal considered the extensive information contained within the documentation provided by the Child Support Agency as well as the additional documentation provided by the parents.
The Tribunal found both Ms Stebbins and Mr Stebbins to be genuine and credible in their statements to the Tribunal and the Tribunal accepts them both as truthful.

Reason 2

In relation to Ms Stebbins’ claim that the costs of maintaining the children were significantly affected by their special needs, the legislative test is detailed in subparagraph 117(2)(b)(ia). The test is whether:
in the special circumstances of the case, the costs of maintaining the child are significantly affected because of special needs of the child;
This reason is informally referred to as Reason 2. The child support assessment in its usual form is intended to cover the “normal” costs of raising a child. However, it does not cover costs which are out of the ordinary or “special” which may be the case where the child has a particular medical need. Lightfoot and Hampson[3] established the principle that if these costs are necessary or desirable for the child’s welfare and they impact significantly on the costs of raising the child, a change to the formula assessment may be required.
[3] (1996) FLC 92-663
Ms Stebbins contended that the children have special medical or dental needs. She provided documentation including a letter dated 24 March 2020 from [Dr A] confirming that [Child 3] has been diagnosed with somatic symptom disorder which is persistent and severe; separation anxiety disorder and attention-deficit/hyperactivity disorder. [Dr A] confirmed that the first two conditions formed the basis of Ms Stebbins’ application for carer payment and carer allowance to Centrelink (which was granted). [Dr A] confirmed that [Child 3] requires medication and care on a daily basis.[4]
[4] C1–page 69
Ms Stebbins provided documentation verifying that in the period 9 December 2020 to 9 December 2021 (and reviewable thereafter) [Child 3] has been approved to receive financial support of $6,462.64 from the NDIS.[5]
[5] A75
Ms Stebbins advised that it has been arranged for [Child 3] to have an assessment for autism on 9 June 2021. This will incur out of pocket costs of $1,690 which will not be covered by NDIS funding. The Tribunal accepts Ms Stebbins’ statements in this regard. Ms Stebbins provided an invoice in relation to this assessment[6].
[6] A78
Ms Stebbins provided verification of the other medical out of pocket costs which she has incurred for [Child 3].[7] These include costs of $789 (after deducting the Medicare rebate and private health insurance rebates and disregarding cents) in the period 1 January 2020 to 31 December 2020.
[7] A28 and A31–A33
Ms Stebbins also contended that both [Child 1] and [Child 2] required orthodontic treatment. Ms Stebbins provided a letter dated 24 March 2020 from [Orthodontists] confirming that [Child 1] has a narrow upper jaw and upper and lower crowding which would be improved by orthodontic treatment. The letter also provided that the costs of the treatment (excluding oral surgery, regular dental check-ups and consultations after the treatment period), would be $8,800.[8] Ms Stebbins confirmed that the total out of pocket costs for [Child 1]’s orthodontic treatment will be $6,160[9] after deduction of the private health insurance rebate.
[8] C1–pages 79–81
[9] C1–page 272
Ms Stebbins also provided verification that she has incurred additional general out of pocket medical/dental costs which for [Child 1] were $348. However, the Tribunal does not intend to consider these costs as they are not directly related to the special orthodontic costs but rather are general medical costs which many children would incur over a year.
Ms Stebbins also provided a letter dated 6 October 2020 from [Orthodontists] confirming that after expanding [Child 2]’s jaw and correcting her cross-bite she was now ready for comprehensive orthodontic treatment to improve her upper and lower spacing and a number of teeth which are rotated. The letter confirmed that the cost of the treatment is $7,850.[10] Ms Stebbins confirmed, and the Tribunal accepts, that the total out of pocket orthodontic costs for [Child 2] are $6,130[11] after deduction of the private health insurance rebate.
[10] A13–A15
[11] A25
Ms Stebbins also provided verification that she has incurred additional general out of pocket medical/dental costs which for [Child 2] were $320 in the 2020 calendar year (ignoring cents). However, as for [Child 1], these general costs are not directly related to the special orthodontic costs and would be similar to the costs which most children may incur over a year.
In relation to the youngest child [Child 4], there was insufficient evidence to confirm that she has any special needs. Mr Stebbins stated that while she had [body part] surgery it was five years ago and that there are no current conditions for which she receives significant medical support.[12] Ms Stebbins did not specifically contend that [Child 4] has a special need and the out of pocket costs of medical treatment for [Child 4] in the period 1 January 2020 to 31 December 2020 were $36.75[13] which the Tribunal finds is not significant enough to affect the costs of maintaining [Child 4].
[12] B18
[13] A25
Ms Stebbins also advised that the children have incurred pharmacy costs in the 2020 calendar year totalling approximately $1,362. However, while the Tribunal accepts this is the case, only the child [Child 3] has incurred pharmaceutical costs which are directly related to her special needs. It does not appear that the pharmaceutical costs of the other children are directly related to the special needs of [Child 1] and [Child 2]’s orthodontic treatment. It is difficult to ascertain with precision how much of the $1,362.93 relates to [Child 3]’s special needs but the Tribunal considers it is fair to attribute $500 per year to pharmaceuticals for [Child 3]’s special needs.
In relation to health insurance costs Ms Stebbins stated that the premiums totalled $4,221.40 for the 2020 calendar year.[14] However, she confirmed that this cost includes private cover for her as well as the children. Mr Stebbins contended that cover for a single person is $2,623.60 and therefore that the cost of private health insurance for the children is approximately $1,574 per annum. (The Tribunal accepts that there has been a small increase in the insurance in October 2020.) The Tribunal will consider the issue of private health insurance and the proportion which should be taken into account when it assesses what is just and equitable.
[14] A25
The Tribunal is satisfied that [Child 3] has special medical needs which are out of the ordinary and which therefore create a special circumstance. The Tribunal is also satisfied that [Child 1] and [Child 2] also have special dental needs that are also out of the ordinary in that they both require orthodontic treatment and that it is expensive and affects the costs of caring for them. The Tribunal is not persuaded that [Child 4] has any special medical or dental needs beyond the ordinary needs of many children.
In terms of the costs, the Tribunal finds that the expense associated with [Child 3], [Child 1] and [Child 2]’s special needs significantly affects the costs of caring for them. The Tribunal has found that the costs are a total of $2,979 for [Child 3] ($789 medical costs; $500 pharmaceuticals and $1,690 for the autism assessment;) $6,160 for [Child 1]; and $6,130 for [Child 2]. In addition, the Tribunal is satisfied that the private health insurance which Ms Stebbins holds assists with the costs of the children’s special needs.
The Tribunal finds that Reason 2 has been established. It will consider the extent to which Mr Stebbins should contribute to these costs under the “just and equitable” considerations.
In relation to the claim that Reasons 3, 7, 8A and 8B are also relevant in this case the approach of the Federal Circuit Court of Australia has been to limit the analysis about particular grounds once it was evident that one had been established, and to thereafter focus on the “just and equitable” considerations. The Tribunal adopts that approach in its reasoning in this matter.

Would it be just and equitable to depart from the administrative assessment?

Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain. The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must be taken into account.
Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment. The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act. This requires an assessment of the duty of the parents towards their children; the needs of the children; any income, earning capacity and financial resources of the children; the income, earning capacity and financial resources of the parents; self-support commitments; and an evaluation of hardship on the parties (and/or the children) if the Tribunal increased or decreased the amount of child support payable.
In considering these issues, the Full Family Court, in the case of Gyselman, stated that:
However, some of the matters listed in sub-section [117](4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).
Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act.

The proper needs of the children

In determining the proper needs of the children, subsection 117(6) of the Act requires the Tribunal to have regard to the manner in which the parents expected the children to be cared for, educated and trained as well as a consideration of any special needs of the children.
The Tribunal has found that the children [Child 3], [Child 1] and [Child 2] all have special needs which significantly affect the costs of caring for them. The Tribunal has found that the out of pocket medical costs incurred by [Child 3] in the 2020 calendar year were $789 and that her pharmaceuticals were $500 in the same period. She has an autism assessment appointment for 9 June 2021 at a cost of $1,690. [Child 3] has NDIS funding of $6,462.64 for the period 9 December 2020 to 9 December 2021. The Tribunal presumes that [Child 3] will continue to incur medical costs and pharmaceutical costs and that they will be similar to the costs incurred in 2020.

In relation to [Child 1], he has orthodontic out of pocket costs of $6,160.
In relation to [Child 2], she has orthodontic out of pocket costs of $6,130.
In addition, there is the cost of private health insurance which Ms Stebbins advised (and the Tribunal accepts) is $4,221.40 per annum. The Tribunal acknowledges that this cost includes private cover for Ms Stebbins. Mr Stebbins contended that the cost of a single adult of $2,623.60 (prior to the price rise in October 2020) should be deducted leaving a cost for the children’s cover of $1,574.15.[15] However, the Tribunal accepts that it is not possible to obtain private health insurance just for the children and that Ms Stebbins is obliged to insure herself as well as the children to obtain cover for the children. For this reason, the Tribunal is not persuaded that deducting the cost of cover for a single person is fair to Ms Stebbins. The Tribunal considers that the private health cover costs for the children should be calculated on the basis that four fifths of the costs should be attributed to the children. This will mean that the portion of the total costs of private health insurance attributable to the children would be $3,377 per annum. On an ongoing annual basis [Child 3]’s medical costs will be approximately $789 per annum; her pharmaceuticals $500 per annum; and the private health insurance (for all of the children) will be $3,377 per annum. The annual costs of these three items will total approximately $4,666.
[15] C1–page 101
In addition, there are the one-off costs of the autism assessment and report at a cost of $1,690; the orthodontic treatment for [Child 1] of $6,160 and the orthodontic treatment for [Child 2] of $6,130. These one-off expenses total $13,980.
In relation to the children’s education, the parents confirmed that the children all attend Catholic schools. There is no dispute that the children’s private school education is supported by both parents.
Ms Stebbins provided documentation relating to 2020 and 2021 from the Catholic Schools Office detailing the tuition fees and other fees payable as well as documentation from the children’s schools.[16]
[16] C1–pages 105–108 and 112–114; A17–A19; A66
These documents show that for 2020 the annual tuition fees for children in kinder to Year 6 (which applies to the two youngest children) were $1,275 per child. Ms Stebbins confirmed at the hearing that she is entitled to a 50% discount on tuition fees (40% because she has four children plus 10% for health care card/pension card holders).[17] This means that the annual tuition fees payable for the two youngest children in 2020 totalled $1,275.
[17] C1–page 113
In relation to the older children (the twins) the tuition fees for 2020 were $1,740 for each child. With the 50% discount this means that the total annual tuition fees for the twins in 2020 were $1,740.
Therefore the total tuition fees payable in 2020 for all four children were $3,015 and the Tribunal so finds.
The documentation from the Catholic Schools Office also advised that a building levy was payable on a per family basis. Ms Stebbins confirmed that this is a compulsory levy and the Tribunal accepts her statements regarding this. In 2020 the building levy was $1,250. This takes the tuition and building levy costs for 2020 to $4,265.
In relation to 2021, the Catholic Schools Office document advised that the 2021 annual tuition fees for the children for the two younger children were $1,293 each and with the 50% discount this is a total tuition fee cost of $1,293.
In relation to the twins the tuition fees for 2021 were $1,767 for each child. With the 50% discount this means that the total annual tuition fees for the twins in 2021 are $1,767.
Therefore the total tuition fees payable in 2021 for all four children are $3,060 and the Tribunal so finds.
The documentation from the Catholic Schools Office also advised that the compulsory building levy for 2021 was $1,344. This takes the tuition and building levy total costs in 2021 to $4,404.
Ms Stebbins contended that Mr Stebbins should contribute to other education costs such as stationery, equipment, subject requirements, uniforms and extracurricular activities. However, these additional items are not considered “special” or out of the ordinary as they are typically incurred by children who attend government schools as well as private schools and therefore no change to the assessment is warranted in relation to these additional costs.

The income, property and financial resources of the children

Both Ms Stebbins and Mr Stebbins agreed that the children have no significant income, property and financial resources of their own and the Tribunal accepts that this is the case and that the children are wholly dependent on their parents for financial support. The Tribunal notes that Ms Stebbins receives family tax benefit in relation to the children but this is a payment which is not taken into account for child support purposes.

Mr Stebbins’ income, property, financial resources, expenses and earning capacity

Mr Stebbins provided a Statement of Financial Circumstances. He stated that currently his employment income is approximately $250,000 per annum. He stated that this includes a bonus (paid once a year if at all) of approximately $25,000, gross income of approximately $240,000 and deductions of approximately $15,000. In his Statement of Financial Circumstances he declared net rental income of $288 per week (which equates to approximately $15,000 per annum). The Tribunal accepts his statements about his current income and finds, based on the above calculations, that it is approximately $265,000 per annum.
In the previous 2019/2020 financial year Mr Stebbins stated that his income was lower. He stated that it was $185,000 per annum from 1 July 2019 to 30 September 2019. He then had no income in October 2019; worked part time from 1 November 2019 to 1 April 2020 earning $11,000 per month during that five-month period. From 1 April 2020 he worked full time on a gross salary of $220,000 per annum.[18]
[18] B15–B16
Mr Stebbins provided a summary of his expected income tax return for the 2019/2020 financial year based on the above employment arrangements.[19] This shows that his income was derived from two employers. He received a distribution of $526, interest of $15,612 and a taxable capital gain of $16,681. Mr Stebbins explained that it was a one-off capital gain from ASX shares which were bought and sold. While this capital gains amount is included in his income for taxation purposes the Tribunal disregards the capital gains tax liability because the adjusted taxable incomes used in the child support formula do not include capital gains. Hence, Mr Stebbins’ gross income in the 2019/2020 financial year is reduced to $181,444 and with deductions of $16,489 the Tribunal finds his income was $164,955.
[19] B15
This is considerably lower than Mr Stebbins’ anticipated income for the 2020/2021 year of $265,000 and in the Tribunal’s view this should be reflected in Mr Stebbins’ income in the child support assessment.
In relation to his financial resources Mr Stebbins declared savings of approximately $132,713; investments valued at $86,960; a motor vehicle valued at approximately $45,000 and home contents of approximately $5,000.
Mr Stebbins advised that in December 2020 he purchased a home valued at approximately $1.36 million. He has approximately $848,710 owing on the mortgage.
In relation to his expenses he pays income tax of approximately $1,707 per week ($88,700 per annum), life insurance premiums of $101 per week ($5,252 per annum) and private health insurance premiums of $30 per week ($1,560 per annum). Mr Stebbins estimated his weekly household expenses to be approximately $2,237 ($116,324 per annum). His current expenses (including taxation but not including child support) total approximately $212,000 per annum.
In relation to earning capacity, Mr Stebbins is working full time and the Tribunal is satisfied that he has not deliberately reduced his hours of work or changed his occupation or working pattern. The Tribunal finds that he is exercising his full earning capacity.

Ms Stebbins’ income, property, financial resources, expenses and earning capacity

Ms Stebbins provided a Statement of Financial Circumstances. She confirmed that her income comprises carer payment, carer allowance, education allowance and family tax benefit from Centrelink in addition to child support from Mr Stebbins. She also declared that she currently receives approximately $20 per week in interest ($1,040 per annum). For child support purposes Ms Stebbins’ adjusted taxable income in the 2018/2019 year was $36,422 and in the 2019/2020 year was $26,825.[20] Because Ms Stebbins has the majority of the care of the children and because her adjusted taxable income is low, her actual income makes very little difference to the annual rate of child support payable to her. For this reason the Tribunal is satisfied that the income used for Ms Stebbins in the assessment is accurate and should not be varied.
[20] C1–page 368
In relation to financial resources Ms Stebbins declared savings of approximately $118,778 obtained as a result of the property proceedings between the parents in 2019. She advised that she loaned a friend $60,000 three years ago and the expectation was that it would be repaid within 12 months. However, that hasn’t happened although she is confident that it will be repaid in due course. She owns a motor vehicle which she valued at approximately $45,000 and household contents valued at $5,000. In terms of property Ms Stebbins owns her home freehold. She estimated its value to be $875,000.
In relation to expenses Ms Stebbins declared household expenses totalling $2,070 per week which annualises to approximately $107,640 per annum. In addition she has private health insurance premiums of $83 per week (approximately $4,316 per annum).
In relation to earning capacity, the earning capacity provisions are difficult to satisfy. There are three criteria, all of which must be satisfied. Subsection 117(7B) of the Assessment Act states:
(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)one or more of the following applies:
(i)the parent does not work despite ample opportunity to do so;
(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)the parent’s caring responsibilities; or
(ii)the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
Ms Stebbins agreed that at the time of the separation she was working on a part-time basis and was also studying part time.[21] However she is not currently in employment. Ms Stebbins stated that she found it extremely difficult to work even on a part-time basis due to the special needs of the children and the challenges and unpredictability of her caring responsibilities. Ms Stebbins stated that last year she again commenced part-time work but she lost her job partly due to the COVID-19 pandemic and partly due to not meeting the time requirements due to her caring responsibilities. She stated that Mr Stebbins works full time and needs to spend a lot of his time in Sydney for work and this means that most of the responsibilities for the children fall on her especially during school terms. Ms Stebbins stated that she commenced part-time study for a Master’s qualification in August 2020 with a view to retraining as [an Occupation 1]. She anticipates that it could be five years before she finishes her studies but that she is intending to return to paid employment when she can.[22]
[21] B16
[22] A21
The Tribunal acknowledges that Ms Stebbins is not currently in employment despite there being ample opportunity to obtain work in her field of expertise ([Occupation 2]). However, the Tribunal accepts that Ms Stebbins’ caring responsibilities currently militate against her successfully returning to paid employment. In particular, the Tribunal accepts that the child [Child 3] requires more intensive support than the other children and that Ms Stebbins has qualified for the carer payment and carer allowance in relation to the special needs of [Child 3] and the time and effort required in caring for her by Ms Stebbins. For this reason the Tribunal finds that Ms Stebbins’ decision not to work is justified on the basis of her caring responsibilities for [Child 3]. Hence, earning capacity is not an issue because the second criterion has not been met.

Necessary commitments to support themselves

The Tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children. This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities and some loans. In Mee and Ferguson[23] the Full Court of the Family Court stated at paragraph 128:
Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one's cloth to meet that commitment during the years when it applies.
[23] [1986] FamCA 3
Ms Stebbins stated that she had had a number of medical expenses including surgery in recent times. She estimated that her out of pocket costs for surgery and medication were approximately $3,000. The Tribunal accepts that Ms Stebbins incurred medical costs as she explained. However, the Tribunal is not persuaded that, in view of Ms Stebbins’ savings, this is an expense which should be taken into account in the child support assessment.
Mr Stebbins advised that he did not have any out of the ordinary self-support expenses and the Tribunal finds accordingly.

Any hardship to either parent or the children by the making of, or refusal to make, an order

Ms Stebbins stated that if the child support liability was calculated by way of the administrative formula only she would not be able to financially support the children. She would have to sell the house because she would no longer be able to afford the ongoing costs associated with owning the house such as council rates and maintenance. She would have to return to work and she does not know how she could manage that given the care which [Child 3] requires and how she could successfully work when the children are sick or on school holidays.
Mr Stebbins stated that he is happy to pay extra above the child support administrative formula. He loves the children and wants to care for them. However, it may not be financially possible for the children to retain all of the activities which they may have undertaken in the past.
The Tribunal acknowledges that in view of the private education which the children receive and the special needs of the children at this time that it would be just and equitable to make a change to the administrative formula assessment.

Proposed determination

The Tribunal has carefully considered the evidence provided and the statements and submissions of both parents.
The Tribunal is satisfied that a change to the assessment should be made in relation to Mr Stebbins’ income for the 2019/2020 financial year. The Tribunal is satisfied that the capital gains events correctly formed part of his taxable income as assessed by the Australian Taxation Office but should have been excluded from his adjusted taxable income for child support purposes. The Tribunal has found that in the 2019/2020 financial year Mr Stebbins’ income was $164,955 and that in the 2020/2021 year it is expected to be approximately $265,000. The Tribunal proposes to vary Mr Stebbins’ adjusted taxable income to $164,955 from 1 January 2020 to 31 December 2020. The Tribunal considers this is an appropriate date from which to change the assessment as it follows neatly from the time that the unregistered child support agreement expired. The Tribunal also considers it is fair to apply that income for a full year. The Tribunal also proposes to vary Mr Stebbins’ adjusted taxable income to $265,000 from 1 January 2021 to 31 December 2022. This will give both parents some certainty for a period of time while at the same time not fixing Mr Stebbins’ income for too long a period of time to the point where it may become too inaccurate.
The Tribunal also proposes that in addition Mr Stebbins’ child support liability will be increased due to the private school costs and the special needs costs of the children. In relation to the percentage of the costs payable by Mr Stebbins, the Tribunal compared Mr Stebbins’ 2019/2020 adjusted taxable income of $164,955 and Ms Stebbins’ 2019/2020 adjusted taxable income of $26,825.[24] After deducting the self-support amount of $25,575[25] from both parents’ incomes, the result was that Mr Stebbins’ proportion of child support income was 99% and Ms Stebbins’ 1%. On Mr Stebbins’ current income of $265,000 per annum the disparity between their respective incomes would be even greater. On that basis, the Tribunal proposes that Mr Stebbins be liable for the total cost of the particular expenses which the Tribunal has found are out of the ordinary and beyond the “usual” costs that children incur.
[24] C1–page 382
[25] C1–page 382
These out of the ordinary expenses are a combination of lump sum expenses: the orthodontic costs for [Child 1] and [Child 2] and the autism assessment for [Child 3]. These total $13,980 ($6,160 orthodontic expenses for [Child 1]; $6,130 for [Child 2] and $1,690 for [Child 3]). The Tribunal proposes to divide the cost of these expenses over two years by increasing Mr Stebbins’ annual rate of child support by $6,990 over the period 1 January 2020 to 31 December 2021.
In relation to the ongoing medical expenses and pharmaceutical costs for [Child 3] and private health insurance costs the Tribunal proposes to increase Mr Stebbins’ annual rate of child support by $4,666 per annum ($789 for medical expenses; $500 for pharmaceuticals and $3,377 for private health insurance) over the period 1 January 2020 to 31 December 2022.
In relation to the schooling costs the Tribunal proposes to increase Mr Stebbins’ annual rate of child support by $4,400 in the period 1 January 2020 to 31 December 2022. This amount is an approximate average of the cost of tuition fees plus the building levy over the above three year period. The Tribunal acknowledges that by the end of 2022 [Child 1] and [Child 2] will have completed year 9, [Child 3] will have completed year 6 and [Child 4] will still be in primary school. 2023 will involve a more significant increase in school fees and the Tribunal is reluctant to make a determination regarding school costs so far in advance.

In summary therefore the Tribunal’s proposal is that Mr Stebbins’ adjusted taxable income will be varied to $164,955 in the period 1 January 2020 to 31 December 2020. His adjusted taxable income will be varied to $265,000 for the period 1 January 2021 to 31 December 2022. Mr Stebbins’ annual rate of child support will be increased by $6,990 per annum in the period 1 January 2020 to 31 December 2021 in relation to [Child 1] and [Child 2]’s orthodontic treatment and [Child 3]’s autism assessment. Mr Stebbins’ annual rate of child support will be increased by $4,666 per annum in the period 1 January 2020 to 31 December 2022 (in relation to [Child 3]’s medical expenses, pharmaceuticals and private health insurance for the children). Mr Stebbins’ annual rate of child support will be increased by $4,400 per annum in the period 1 January 2020 to 31 December 2022 (in relation to school tuition fees and building levy).
This proposal will result in Mr Stebbins’ child support liability being (very) approximately:
·$28,960 plus $16,056 = $45,016 in the period 1 January 2020 to 31 December 2020; and
·$37,930 plus $16,056 = $53,986 in the period 1 January 2021 to 31 December 2021; and
·$37,930 plus $9,066 = $46,996 in the period 1 January 2022 to 31 December 2022.
These figures are very approximate because there may be changes in care of the children or in Ms Stebbins’ income which will affect the calculations.
The Tribunal considers this proposed determination is fair, just and equitable and that it balances the needs and financial capacities of both parents.

Is it otherwise proper to depart from the administrative assessment?

The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman). It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.
The Tribunal is satisfied that Ms Stebbins needs financial assistance with the children’s schooling, medical and orthodontic costs and that Mr Stebbins has the capacity to contribute to those costs.
Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income tested pension, allowance or benefit.
Ms Stebbins is receiving family tax benefit and she confirmed that she is aware of the impact of child support payments on that benefit.
The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.

DECISION

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

from 1 January 2020 to 31 December 2020, the adjusted taxable income of Mr Stebbins is varied to $164,955 per annum; and
from 1 January 2021 to 31 December 2022, the adjusted taxable income of Mr Stebbins is varied to $265,000 per annum; and
from 1 January 2020 to 31 December 2021, the annual rate of child support payable by Mr Stebbins is increased by $6,990 in relation to orthodontic costs for [Child 1] and [Child 2] and an autism assessment for [Child 3]; and
from 1 January 2020 to 31 December 2022, the annual rate of child support payable by Mr Stebbins is increased by $4,666 in relation to medical costs and pharmaceuticals for [Child 3] and private health insurance for the children; and
from 1 January 2020 to 31 December 2022, the annual rate of child support payable by Mr Stebbins is increased by $4,400 in relation to school tuition fees and building levy.

SCHEDULE

List of Exhibits

Services Australia – Child Support Agency marked as C exhibits:
· CSA’s large bundle of 397 pages marked as exhibit – C1
Ms Stebbins has provided the following documents marked as A exhibits:
·     A1-A11                Statement of Financial Circumstances
·     A12  Letter re orthodontic payment plan for [Child 1]
·     A13-A15               Letter re orthodontic treatment for [Child 2]
·     A16  Orthodontic costs for [Child 2]
·     A17 -A19              Letter from Catholic Schools Office re fees for 2020
·     A20  cover sheet
·     A21-A24               Written submission
·     A25  Summary: medical, orthodontic, pharmaceutical, health insurance costs
·     A26 -A34              Details of claims history
·     A35-A51               Details of pharmaceuticals
·     A52  Letter re orthodontic payment plan for [Child 1]
·     A53 -A54              Letter re orthodontic payment plan for [Child 1]
·     A55  Letter re orthodontic payment plan for [Child 2]
·     A56  Payment plan schedule for [Child 2]
·     A57                    private health rebate for [Child 2]
·     A58  Notice of Assessment year ended 30 June 2020
·     A59-A63               Income tax return 2019/2020 year
·     A64  Written submission
·     A65  Private health insurance premiums
·     A66  School fee information
·     A67 -A68              Letter from [Primary School] re laptops
·     A69-A77               NDIS information and plan
·     A78  Invoice – autism assessment
·     A79 -A80              Medical referral letter
·     A81  Letter from [Primary School] re learning support
Mr Stebbins has provided the following documents marked as B exhibits:
·     B1-B9                 Statement of Financial Circumstances
·     B10  Cover email
·     B11   (blank)
·     B12-B14              Payslips
·     B15 -B18               Written submission

[2021] AATA 1008

18 March 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Remedies

Judicial Review

Statutory Construction