Steele and Stott (Child support)

[2023] AATA 2950

Steele and Stott (Child support) [2023] AATA 2950 (12 July 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/SC025544

APPLICANT:  Mr Steele

OTHER PARTIES:  Child Support Registrar

Ms Stott

TRIBUNAL:Senior Member K Dordevic

DECISION DATE:  12 July 2023

DECISION:

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

·     For the period 22 July 2022 to 22 January 2024 Mr Steele’s adjusted taxable income is varied to $123,000 per annum and Ms Stott’s adjusted taxable income is varied to $31,700; and

·     Mr Steele’s annual rate of child support is reduced to $0 for the period 24 July 2023 until a terminating event occurs in relation to the child [Child 1].

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the child – a ground for departure established – decision to depart - decision under review set aside and substituted

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

REASONS FOR DECISION

BACKGROUND

1. Mr Steele (the father) and Ms Stott (the mother) are the separated parents of two children. Their youngest child [Child 1] (the child), born [in] 2006, is the only child still subject to the administrative assessment.  There has been a child support assessment in place and collected by Services Australia – Child Support (Child Support) since 18 August 2014. The child is recorded as being in the greater than primary care of the mother since 1 February 2022. The assessment for the child will end on 22 January 2024.

2. On 22 July 2022 the father applied for a change of assessment on the basis that he had out of the ordinary, necessary expenses to support himself, that the child support assessment did not correctly reflect the child’s income, property, financial resources and the mother’s earning capacity.

3. On 21 October 2022 a senior case officer found no reason established and so refused the father’s application. The father lodged an objection to the decision on 21 November 2022. On 19 January 2023 an objections officer disallowed the objection.

4. On 2 February 2023 the father applied to Tribunal for review of the objections officer’s decision. On 7 June 2023 a telephone directions hearing was conducted with the parents. Directions were issued on the same day.

5. The hearing was held on 12 July 2023. The father and the mother gave sworn evidence by MS Teams audio. The Tribunal had before it papers provided by Child Support (folios 1 to 187), the father (folios A1 to A24) and the mother (folios B1 to B19). Copies of these documents were provided to all parties. Relevant aspects of the evidence are referred to in the consideration below.

6. The Tribunal reached its decision on the same day.

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Child Support (Assessment) Act 1989 (the Act), which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that 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 under this Part …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And if so,

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraph 117(2)(c)(i) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of the child’s income, property or financial resources.

2. The central issue in this matter is whether the child’s employment income results in an unjust and inequitable determination of child support payable by the father.

3. The father contends that, though he has not spoken to the child since September 2020, her income is significant and therefore he should no longer be liable to contribute towards her costs. He was unable to provide an account of her employment since late 2020, though he knew that she was working at a [workplace] in [Town 1] for a period. He is not aware of whether she is still undertaking [specified work] as she was in 2020 or whether the child is working with other employers apart from those declared by the mother.

4. The mother’s evidence can be summarised as follows. The child left school in Year 10, at the end of 2021. She has worked in various jobs since then, as well as undertaking some studies. Apart from some infrequent [specified work] for which she received cash, her other employment earnings has been declared to the Australian Taxation Office.

5. In compliance with the Tribunal’s directions the mother provided the child’s final payslips from her 2023 financial year employers. The Tribunal finds that the child’s 2023 financial year income as at 22 May 2023 was $11,247.67:

Employer	Pay period ending	Gross earnings
[Employer 1]	8 March 2023	$6,137.32
[Employer 2]	9 April 2023	$2,915.82
[Employer 3]	21 May 2023	$2,194.53

1. The mother reported that the child will finish working at [Employer 3]on 14 July 2023 and begin a year-long traineeship with [an] agency on 24 July 2023. The child will be required to work on a full-time basis and undertake studies. Her annual salary will be $38,521.60 ($740.80 per week).

2. The Child Support Guide[1] states that a child’s income would not generally be sufficient to warrant a departure from the administrative assessment unless the child’s income is regular and exceeds the maximum basic rate of youth allowance payable to a child under 18 years of age who lives at home in addition to the income free threshold applicable to students and Australian apprentices. The Tribunal finds that as at 1 July 2023 the maximum youth allowance rate and the income free threshold was $406.25 (the same amount as at 1 January 2023). The Tribunal acknowledges that, while it may be guided by policy, it is not bound to follow it: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In the recent case of G v MIBP [2018] FCA 1229, the Federal Court observed that it is clear from earlier authorities, that in the absence of any statutory indication to the contrary, any lawful executive policy enacted to guide the exercise of a statutory power is a relevant factor for the Tribunal to take into account in performing its review task.

   [1] At >

   At the time the father lodged the departure application under review he was liable to pay an annual rate of child support of $11,055[2] based on his 2022 adjusted taxable income and the mother’s provisional income.  At the date of hearing the father was liable to pay an annual rate of child support of $17,568[3] based on the parents’ 2022 adjusted taxable incomes and reflecting that the father had 0% care of the child. 

   [2] At folios 33 to 35

   [3] At folios 57 to 59

3. The Tribunal considered the policy and finds, in the special circumstances of the case, that upon the child commencing her traineeship her income will result in an unjust and inequitable determination of child support payable by the father. In reaching this conclusion the Tribunal acknowledges that the mother will continue to incur costs associated with her care of the child, including the provision of food, accommodation and transport. The Tribunal concludes that the ground provided for in subparagraph 117(2)(c)(i) of the Act is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.

2. In compliance with directions, the father provided payslips which confirm that his gross base salary is $2,651.52 per week. However, his gross year to date income of $121,511.85 as at 31 May 2023 indicates that the father undertakes additional shifts on a regular basis. Assuming that he would only earn his base salary in June 2023, the Tribunal calculates that the father’s gross 2023 income will be in the vicinity of $132,118. Allowing for similar income tax deductions as those claimed in the 2022 financial year, the father’s 2023 adjusted taxable income is likely to be in the vicinity of $123,000. The current administrative assessment is based on his 2022 adjusted taxable income of $105,069.

3. The father provided a Statement of Financial Circumstances dated 13 February 2023. He declared that for the previous seven years he worked as a [occupation] at a [company] located in [Town 2], NSW. He declared weekly income of $2,651.52 per week. His assets include savings of $700, shares valued at $15,000, a motor vehicle valued at $30,000 and a motorbike valued at $40,000, household contents of $10,000 and superannuation of $101,000. At hearing he confirmed that, despite declaring his liabilities including a mortgage of $182,000, he does not have a mortgage; as a matter of fact he lives in his partner’s home and pays her rent of $320 per week, apparently equivalent to half her mortgage payments. He reported that he also meets 50% of all household costs, including insurance and rates. The father reports personal expenditure of $1,372.28 and weekly household expenses of $1,562, which includes $100 per week for entertainment and hobbies and $85 per week for holidays. The father reported that he has been diagnosed with a mental illness, but there are no costs associated with its treatment. The father also stressed that he has additional costs associated with the assistance he provides his elderly parents. At hearing the father explained that he undertakes a three-hour drive every four to six weeks to his parents’ home, where he assists them in undertaking household tasks. This travel costs him between $150 to $200 per visit. He also stressed that his workplace is nearly a 1.5 hour drive from his home and explained that his costs associated with his necessary work travel also renders the administrative assessment unfair.

4. At hearing the father provided a summary of his liabilities, summarised as follows:

Lender	Amount	Repayments per fortnight
[Lender 1]	$37,762.90	$413.61[4]
[Lender 2]	$6,000	$210[5]
[Lender 3]	$46,140.74	$461.54[6]
[Lender 4]	$2,000	$296.88[7]
TOTAL:	$1,382.03

[4] At folio A21

[5] At folio A20

[6] At folio A23

[7] At folio A22

1. The father stated that he was forced to take out the [Lender 4] and [Lender 2]as a consequence of child support payments being garnished from his salary; otherwise he would have been unable to meet his living expenses, including paying for fuel to get to his work. He explained that the [Lender 1]was to purchase his motor vehicle and the [Lender 3] loan was to pay out a loan with his former fiancée as well as purchase his  [motorbike].

2. The father states that these loan repayments, in addition to his fuel costs associated with his employment and visits to his elderly parents, significantly reduce his capacity to provide financial support to the child, as set down in subparagraph 117(2)(iii)(A) of the Act. The Tribunal is not so persuaded. Section 3 of the Act states that a parent’s duty to maintain a child has priority over all commitments of the parent other than their necessary commitments to support themselves or any other child. The father does not dispute that he has no other duty to support a child; he provides no financial support to the parents’ older daughter. Certainly, whilst the Tribunal accepts that the father may well have a moral obligation to visit his parents, this is not a legal responsibility nor, in the Tribunal’s view, do such visits have the character of a necessary commitment to enable the father to support himself. Similarly, the Tribunal is not persuaded that purchase of the  [motorcycle] is a necessary expense. The Tribunal notes that the father claimed work-related travel expenses of $6,600 in his 2022 income tax return (in addition to clothing of $1,000 and his mobile telephone costs of $1,400). In such a context where the father claims his work-related travel as a deduction, the Tribunal is not persuaded that the father’s work travel costs render the administrative assessment unjust or unfair. In any event, given his income and declared necessary expenses, the Tribunal is not persuaded that the father is unable to meet his liabilities and assessed child support liability.

3. The mother provided a Statement of Financial Circumstances dated 19 June 2023. She declares that she is a [Occupation 1] and has been employed by [a specified employer] for five years and [another employer] for six months and that her average weekly income is $561. Her assets include savings of about $4,073, a motor vehicle valued at $80,000, household contents valued at $5,000 and superannuation of $112,268. She lives in a home owned by her husband, though she and her husband are jointly liable for the home’s mortgage. She lists liabilities including her half share of the mortgage of $200,000 and solar panel finance totalling $2,400. She reports personal expenses of $344 per week and household expenses are $1,953 per week, of which about $400 relates to the child (after taking into account costs associated with the provision of food and accommodation). The mother did not identify any personal health-related costs, any other unusual self-support expenses or any out of the ordinary expenses relating to her younger children.

4. The mother gave the following account of her work history. She is a [Occupation 1], with a substantive permanent three day per week position at a [workplace]. She ceased working three days per week immediately before the birth of her youngest child in November 2020. She returned to her permanent position only one day per week in January 2023; in the 2022 calendar year she undertook casual [work]. She supplements this income by [working], on average, another two days per week in a [workplace]. The payslips in evidence indicate that her year-to-date salary as at 8 June 2023 from the [first workplace] was $17,101[8]. As at 2 June 2023 her year to date income from the [second workplace] was $12,412[9]. Assuming similar casual [working] days for the remainder of the 2023 financial year indicates that the mother’s gross 2023 financial year earnings will be in the vicinity of $32,700. Allowing for deductions of $1,000, her 2023 adjusted taxable income is likely to be about $31,700.

   [8] At folio B13

   [9] As folio B16

5. The father states that the mother’s earning capacity should be reflected in the administrative assessment. Subsection 117(7B) provides that when considering the earning capacity of a parent a decision maker is required to consider three tests:

   (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.

6. It is not in dispute that the mother has changed her working pattern.  Subparagraph 117(7B)(a)(iii) is satisfied.

7. The evidence suggests that the mother’s decision to decrease her work hours was justified because of her caring responsibilities; she has a child aged 2.5 years in her care. Subparagraph 117(7B)(b)(i) is not satisfied.

8. For completeness, the Tribunal notes that the father’s position is that his child support liability should not be increased on the basis that the mother must care for a child that is not his. In order for the Tribunal to be satisfied that the third criterion of subsection 117(7B) of the Act is met it is not necessary for the Tribunal to find that the mother’s only reason for deciding to change her pattern of work was to affect the level of child support. Rather the mother must demonstrate that it was not a substantial motivation. In the circumstances where the annual child support liability increased by about $1,600 as a consequence of the change to her work arrangements and that the mother has had a period of maternity leave and has returned to the work within two years of the child’s birth, the Tribunal is not persuaded that a major purpose of the mother’s decision to change her pattern of work was to affect the administrative assessment of child support.   

9. As outlined above, the father’s current child support liability is $17,568 based on the parents’ 2022 adjusted taxable incomes of $105,069 (the father) and $25,425 (the mother). Application of their likely 2023 adjusted taxable incomes of $123,000 (the father) and $31,700 (the mother) would result in the father’s annual liability increasing by over $2,100. The Tribunal is of the view that it would be unjust and inequitable not to vary the parents’ adjusted taxable incomes on this basis from the date that the father lodged his departure application. Certainly, there would be some hardship to the mother and child should the administrative assessment not be varied accordingly.

10. The Tribunal is also satisfied that from 24 July 2023, the date on which the child commences her full-time employment, it would be just and equitable as regards the child, mother and father that the annual rate of child support payable by the father be reduced to nil until such time that there is a terminating event in respect of the child, likely to be on the child’s 18th birthday on [date] 2024.  

11. The Tribunal is satisfied that the administrative assessment is unfair given the parents’ 2023 income and the child’s income from 24 July 2023.  This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents, rather than the community, have the primary duty to maintain a child. The mother is not in receipt of income-tested benefits. Departing from the administrative assessment will have no impact on the apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

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

·     For the period 22 July 2022 to 22 January 2024 Mr Steele’s adjusted taxable income is varied to $123,000 per annum and Ms Stott’s adjusted taxable income is varied to $31,700; and

·     Mr Steele’s annual rate of child support is reduced to $0 for the period 24 July 2023 until a terminating event occurs in relation to the child [Child 1].