Stocker and Doble (Child support)

[2018] AATA 4418

Stocker and Doble (Child support) [2018] AATA 4418 (4 October 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/PC014132

APPLICANT:  Mr Stocker

OTHER PARTIES:  Child Support Registrar

Mrs Doble

TRIBUNAL:Member W Budiselik

DECISION DATE:  4 October 2018

DECISION:

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

• For the period 1 January 2018 to 31 January 2018, the father’s adjusted taxable income is varied to an annual rate of $70,000;

• For the period 1 February 2018 to 1 May 2018, the father’s adjusted taxable income is varied to an annual rate of $47,000.

CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of a 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 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 Stocker (the father) and Mrs Doble (the mother) are the parents of one child (born March 2009). A child support case was registered with the Department of Human Services – Child Support (the Department) in respect of the child on 17 March 2011. The matter before the tribunal concerns the amount of child support the father is required to pay the mother.

2. On 14 September 2017, the Department issued an administrative assessment of child support based on the father’s 2016/2017 Australian Taxation Office (ATO) determined adjusted taxable income of $44,069 and the mother’s 2016/2017 ATO determined adjusted taxable income of $20,989. This assessment determined the father was to pay the mother child support of $32.45 per week for the period 1 August 2017 to 31 October 2018.

3. On 15 November 2017, the mother lodged an application to depart from the administrative assessment of child support because she believed the assessed rate of child support did not fairly reflect the father’s income. In her application for departure she said she had come to the view that the father was not paying a fair amount of child support because she and the father had been required to lodge financial statements with the Family Court of [State 1], and in the process she learned the father’s employment income was approximately $70,000.

4. On 13 December 2017, the father contacted the Department and advised it he had ceased employment and that he was waiting to receive his last pay. The Department contacted the company that handled the father’s employment payments on behalf of his employer. The company confirmed the father had ceased employment on 9 December 2017. It was unable to provide a reason why the father’s employment had ceased.

5. On 14 December 2017, the Department accepted the father’s income estimate of $0 for the period 14 December 2017 to 30 June 2018. The father’s year to date income for the period 1 July 2017 to 13 December 2017 was $36,407.

6. On 24 January 2018, a Departmental officer made a decision about the mother’s departure application and decided to change the assessment so for the period 1 January 2018 to 30 June 2020, the father’s adjusted taxable income was varied to $70,000. A reason for the decision to attribute notional income to the father was because the Department’s decision maker decided it was more likely than not that the father had changed his working arrangements to affect his child support assessment. 

7. On 8 February 2018, the father contacted the Department about the decision. He said he did not earn $70,000 per annum and that he had been out of work from 9 December 2017 to 8 February 2018, when he commenced employment with [Company 1]. On 23 February 2018, the father objected to the Department’s decision. In his objection application the father wrote:

   [The mother] states I quit my previous job. I did not quit, I was dismissed. [The mother] also claims I have been doing ‘cash jobs’. That is not true. I did not work from 9 December 2017 until 7 February 2018. I started work on 8^th of February 2018 and am earning $890 per week.

8. On 28 February 2018, a Departmental officer contacted the father and among other things confirmed with him the date he commenced employment with [Company 1] was 8 February 2018. On 12 March 2018, a Departmental officer contacted the father for the purpose of obtaining payslips. At this time the father said he would like the child’s school fees to be considered as part of his objection, as well the mother’s income. He said the mother was receiving over $800 a week in benefits (including carer payment) and that she was perpetrating fraud because there was no-one for her to care for.

9. On 23 March 2018, an objections officer from the Department ruled on the father’s objection and partly allowed it. The objections officer decided:

   From 1 January 2018 to 31 March 2018, the adjusted taxable income for [the father] will be set at $70,000

   From 1 April 2018 to 31 October 2018, the adjusted taxable income for [the father] will be set at $47,000.

10. On 21 May 2018, the father lodged an application for a review of the Department’s decision with the Administrative Appeals Tribunal (the tribunal). On 6 August 2018, the tribunal conducted a telephone directions hearing (TDH) with the parents and directions were issued. It was agreed by parents at the TDH the focus of the application for review was the father’s contention that he was being unfairly assessed for child support because his child support liability was being assessed on a notional employment income.

11. On 14 June 2018, the father lodged with the Department an application for a departure determination. He identified the reason for this application as being that the administrative assessment did not correctly reflect both parent’s income, property and financial resources. The father stated after he reviewed the mother’s financial statement lodged to the Family Court of [State 1] he concluded her income was higher than that used in the child support assessment.  

12. On 27 June 2018, a Departmental officer discussed the departure application with the father. Among other things the officer advised the father that he could not deal with the departure application until the tribunal had made its decision. The father withdrew his departure application.

13. On 17 September 2018, the tribunal conducted a hearing into the father’s application for a review of the Department’s objection decision of 23 March 2018. The parents participated in the hearing via telephone conference. Prior to the hearing the Department provided to the tribunal and to the parents a bundle of documents taken from their file (folios 1-316). The father and mother also provided documents to the tribunal (folios A1-A 24 and folios B1-B10, respectively).  On 17 September 2018, the tribunal deferred its decision making process to obtain further information from the father’s employer (folio D1). All documents referred to have been provided to the Department.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The three issues to be determined by the tribunal are:

   a)   whether a ground is established to depart from the administrative assessment of child support; and if so,

   b)   whether it is just and equitable to make a particular departure determination; and if so,

   c)   whether it is otherwise proper to make a particular departure determination.

CONSIDERATION

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula which takes into account factors such as the adjusted taxable income of each parent, the number of children and the level of care provided. A parent’s adjusted taxable income for a given year is calculated according to a formula that includes a parent’s previous year’s taxable income (see section 43 of the Act).

2. Part 6A of the Act allows for a departure from an administrative assessment. The liable parent or a carer entitled to child support may apply to the Child Support Registrar (the Registrar) for a determination to depart from the child support administrative assessment under Part 6A of the Act.

3. Section 98C of the Act provides that the Registrar (and the tribunal in the Registrar’s place) may make a determination to depart from the administrative assessment if satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination.

4. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether a ground exists, the tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279, held that:

   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.

5. In this matter before the tribunal the departure application lodged by the mother on 15 November 2017 identified the ground for the departure as the father’s income, property, financial resources and earning capacity.

Issue a: Is a ground established to depart from the administrative assessment?

Is the administrative assessment unfair because of either parent’s income, property and financial resources?

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the payer for the child because of the income, property and financial resources of either parent.

2. In this case when the mother lodged a departure application on 15 November 2017, the father’s child support liability for the period 1 August 2017 to 31 October 2018 was assessed according to his 2016/17 ATO determined adjusted taxable income of $44,069. He was required to pay the mother child support of approximately $32.45 per week.

3. On 3 November 2017, as part of another legal process between the parents, the father lodged with the Family Court of [State 1] a financial statement in which he declared a rate of annual employment income from 21 November 2016, of approximately $70,000.

4. The mother sought a departure determination because she believed the father was paying less child support than he was able to pay given his higher income.

5. In this case when the 2015/2016 and 2016/2017 financial years were compared, the father’s rate of annual income had increased by over 60% ($44,069 in 2016/2017 and his current rate of income of approximately $70,000 in 2017/2018). The tribunal considered it unusual for a person’s income to increase by over 60% on their previous year’s income.

6. When an adjusted taxable income amount of $70,000 was entered into the child support formula along with other elements particular to this case, the father’s liability was assessed at approximately $72 per week.

7. The mother’s income is less than the child support self-support amount. Her Statement of Financial Circumstances identified no additional assets.  

8. In this case the tribunal concluded there was, in the special circumstances of the case, reason to conclude the administrative assessment of child support would result in an unjust and inequitable determination because of the father’s income at the time the mother lodged her departure application. Consequently, the tribunal determined there was a ground to depart from the administrative determination of child support, provided it was just and equitable to make a particular departure determination.

Issue b: Is it just and equitable to make a particular departure determination?

1. 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 just and equitable to depart from the assessment. In deciding whether it is just and equitable, the tribunal must have regard to matters set out in subsection 117(4) of the Act. In making this assessment the tribunal had regard to the Federal Magistrates Court case of Tyagi & Meares(SSAT Appeal) [2008] FMCAfam 886 which stated:

   In considering whether a child support assessment is ‘just and equitable’, the Tribunal must have regard to the matters referred to in s.117(4). Whilst the section need not be slavishly followed, each of the relevant factors listed in s.117(4) should be considered. Importantly, overt consideration is required of the relevant factors.

   The tribunal’s assessment against the relevant factors referred to in subsection 117(4) of the Act follows.

The nature of the duty of a parent to maintain their children

1. Section 3 of the Act makes it clear that the parents have the primary duty to maintain their children, 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.

The proper needs of the children

1. In determining the proper needs of the children it is necessary to have regard to the manner in which the children are being educated, and in which the parents expected the children to be cared for, educated or trained, and any special needs of the children.

Education costs/school fees

1. In this matter the child is being educated at a [private] primary school. When the father sought a review of the Department’s decision he wrote:

   I feel that as we both originally agreed to the new school and [the child’s] mother originally said she would help as much as she can, she should be liable for a portion of the expense.

2. On 20 March 2018, the mother provided to the Department a sealed copy of Court Orders dated 5 December 2017. Among other things the Orders stated:

   The father be responsible for the payment of all school, uniform, book and any other fees charged by the [name] primary school.

3. The school’s website sets out the fee schedule. For a primary school child the total fees and charges total $2,085 (inclusive of amenities fees, levies and school pack).

4. Given the specificity of the Court Order with respect to the school fees, the tribunal decided that while this Order is in place it would not change the administrative assessment of child support to accommodate the child’s school fees and associated costs.

5. The tribunal discussed this aspect of the decision with the parents. The father said given the Court Order he understood the rationale for the tribunal’s conclusion.

Special needs

1. Neither parent identified the child has a special need and the tribunal decided it would not change the administrative assessment to accommodate the child’s special needs.

The income, earning capacity, property and financial resources of the child

1. Neither parent asserted the child had income, property or financial resources which needed to be taken into account in assessing a fair rate of child support. The tribunal decided it would not change the administrative assessment to accommodate the child’s earning capacity, property and financial resources.

The income, property and financial resources of each parent who is a party to the proceeding

Background

1. The tribunal’s consideration of each of the parents’ income, property and financial resources is qualified by subsection117(7A) of the Act which states:

   (7A)  In having regard to the income, property and financial resources of a parent of the child, the court must:

   (a)  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

   (b)  disregard:

   (i)  the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and

   (ii)  any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.

The mother’s income, property and financial resources

1. The mother provided the tribunal with a Statement of Financial Circumstances dated 27 May 2018. The statement set out that her weekly income was $898 per week, the value of property owned was $6,002, the value of her superannuation was $84 (sic), her liabilities totalled $2,000 and her household expenditure totalled $556.

2. The mother declared she earned $50 per week from employment and that she received $517 per week from carer pension, $261 per week from family tax benefit and $70.83 per week from child support (not this case). She listed no savings, a motor vehicle valued at $1,000 and personal property of $5,000. She has a loan [valued] at $2,000.

3. At the TDH the father told the tribunal he had reviewed documents the mother had provided to the Family Court of [State 1] and had assessed the mother’s income to be $44,000 per annum. The father’s calculation was based on the mother’s declaration at that time that her weekly income was $849. This conclusion led him to lodge a further departure application on 14 June 2018, which he later withdrew.

4. However, the mother’s statement to the Family Court listed income comprising components that must be disregarded when her income, property and financial resources are considered (see paragraph 39, above). These components include child support, carer payment and child support. When these amounts are subtracted from the weekly income figure, the mother’s income falls below the child support formula self-support amount.

5. That the mother’s income would be reduced by these amounts was explained to the father at the TDH and reiterated at the commencement of the hearing. The father agreed given the application of the law that the mother’s income was not a ground for changing the administrative assessment.

6. Consistent with this discussion, directions issued following the TDH required the father to provide bank statements for the period 1 November 2017 to 28 February 2018. The mother was not required to provide additional financial information.

7. The tribunal did not identify the mother had property or financial resources that warranted changing the assessment.

8. The information the mother provided in her Statement of Financial Circumstances dated 28 May 2017 is consistent with the information provided by her to the Family Court on 20 October 2017, other than in May 2018, when she was receiving a small amount of income ($50 per week) from employment and different figures for superannuation (in the Family Court of [State 1] document she indicated about $800 of superannuation and in the Statement of Financial Circumstances she indicated about $80 of superannuation).

9. At hearing the father did not raise any concerns about the mother’s Statement of Financial Circumstances. However, after the hearing her rang an officer of the tribunal and claimed the mother was working for cash and earning more money than him.

10. If the father has evidence of his allegations it is open to him to lodge a further change of assessment application.

11. On the evidence before it, the tribunal did not identify the mother’s income, property and financial resources as a reason to amend the administrative assessment.

The father’s income, property and financial resources

1. The father provided the tribunal with a Statement of Financial Circumstances dated 2 July 2018. The statement set out his weekly income was $0, the value of property owned was $4,000, the gross value of his superannuation was $55,000 and the total of his liabilities was $4,000. He identified a car valued at $2,000 and household contents at $1,500. He did not complete the household expenses part of the Statement of Financial Circumstances and clarified at hearing that his partner met these costs and the costs associated with the child’s schooling from her income ($1,250 per week).

1. The context for the father’s Statement of Financial Circumstances is that he has ceased work on 1 May 2018. A separation certificate provided to the tribunal confirmed his employment had been terminated for unsatisfactory work performance.

2. The father had emphasised to the Department when he was responding to its queries based on the mother’s departure application that he had been unemployed from 9 December 2017 to 8 February 2018. However, the documentation provided to the tribunal showed the father had been employed by [Company 1] from 2 January 2018. The father said he had made an error when he maintained he was unemployed until 8 February 2018. The tribunal reviewed the documents provided by the Department where on various occasions the father emphasised his period of unemployment and that he had commenced work on 8 February 2018. The tribunal decided that the father had misled the Department about his employment and that this reflected poorly on his honesty. 

3. The father explained that after his employment was terminated with [Company 1] he commenced working as a sole trader operating [Business 1].   The tribunal used the on-line ABN lookup facility and noted the two business names were registered to the father.  [Business 1] has been active since 22 May 2018. A previous business [was] registered by the father from 16 March 2009. The ABN was cancelled for the period 30 September 2015 to 22 May 2018.

4. The father explained he advertises his business via [social media]. The tribunal also noted the service is advertised on [another website].

5. The mother claimed the father had been working for cash for some time. She referred to the father’s bank statements provided for the period 30 October 2017 to 27 February 2018, and asked the tribunal to query deposits from various individuals. The father had explanations for each of the deposits, including that he had lent money to some individuals who were merely repaying these loans.

6. The tribunal noted a review of the father’s [Business 1] dated 5 August (no year identified):

   Highly recommend him and have been dealing with him for a few years now.

   The tribunal interpreted this comment to mean a customer who had used the father’s previous business has now commenced using his new business.

7. The tribunal concluded that after the father ceased employment at [Company 1] he moved promptly to re-establish [Business 1], which is a form of employment the father is familiar with. The father indicated he is obtaining some work, but not a lot, which is presumably consistent with rebuilding a customer base.  

8. The tribunal concluded the administrative assessment ought to be amended to accommodate the father’s change of income.

The earning capacity of each parent who is a party to the proceeding

1. Paragraph 117(4)(da) of the Act requires the tribunal to consider the earning capacity of each parent. Subsection 117(7B) provides the tribunal can only make a finding that a person has unexercised earning capacity if it 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.

2. In this case the father changed his working pattern and the decision to change his working pattern is not justified on the basis of his caring responsibilities or his state of health.

3. The original decision maker attributed the father with unexercised earning capacity and found it more likely than not that the father had changed his working pattern to affect his child support assessment.

4. The objections officer did not attribute unexercised working capacity to the father. The objections officer wrote:

   It is difficult to establish if [the father] resigned from his employment to affect his child support or if he was terminated. I do however, wonder why [the father] would resign from a position, earning an income of $73,364 and knowing he was required to cover the costs of [the child’s] schooling to now earning an income of $48,360?...no separation certificate was provided.

   Based on these points, I will give the benefit of the doubt as to the circumstances of his employment ending plus [the father] attempted to find another position as soon as he could.

5. The Department made its decisions about the father’s working capacity based on his ceased employment on 9 December 2017. The tribunal obtained information from the father’s employer who confirmed his employment was terminated and he was summarily dismissed (folio D1).

6. The tribunal noted the father had been in continuous employment (including self employment) from November 2016, apart from the periods 9 December 2017 to 1 January 2018 and 2 May 2018 to 21 May 2018. While the father’s income has varied as he has changed employment, given his past experience there is reason to believe he will rebuild income as a sole trader.

7. The tribunal was satisfied the conditions set out in subsection 117(7B) of the Act were not met and therefore it was not open to the tribunal to determine either parent had unexercised earning capacities.

Any hardship that would be caused to the children, or the carer entitled to child support by the making of, or the refusal to make, the order, and to the liable parent, or any other child or another person that the liable parent has a duty to support, by the making of, or the refusal to make, the order

1. The father has not had to borrow money to establish/re-establish his [Business 1]. In effect he is being funded to establish his business by his partner. According to the father his partner is meeting various domestic expenses, paying for the child’s school fees and supporting him while his business grows. The father said he drops his partner off at her work and then uses her vehicle to go out to jobs. The tribunal did not identify the father or the child would suffer hardship if the determination was varied, because of the father’s partner’s on-going support.

2. The mother said she has experienced many years without child support from the father and she plans and budgets as if she will not receive any income. The mother’s comment about not receiving child support concerns a period until 23 August 2017, when the parents had a private collect arrangement. The mother did not believe she or the child would suffer hardship if the father did not pay child support, though she believed the outcome would be unfair.

What is the tribunal’s determination?

1. The tribunal considered it is just and equitable to make a departure determination from the administrative assessments issued in accordance with the Act. The tribunal may make a departure determination in accordance with section 98S of the Act.

2. The tribunal concluded the mother’s income should be determined in the usual manner based on her ATO determined adjusted taxable income.

3. The tribunal notes the father misled the Department about his income from 2 January 2018, when he claimed he was unemployed. The tribunal concluded the father’s income should be varied to $70,000 from 1 January 2018 to 31 January 2018, and then varied to $47,000 from 1 February 2018 to 1 May 2018. The tribunal discussed varying the father’s income to $70,000 for the period 1 January 2018 to 31 January 2018 at the hearing with the parents. The tribunal notes each agreed with that aspect of the proposed decision.

4. The effect of this decision is that the father’s income estimate of $0 will apply for the periods 14 December 2017 to 31 December 2017 and from 2 May 2018 to 30 June 2018. Thereafter the normal provisions apply to the father’s income, noting it is open to him (or the mother) to seek a further change of assessment or for the father to lodge income estimates relevant to the 2018/2019 financial year.

Issue c: Is it otherwise proper to make a particular departure determination?

1. 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) of the Act sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination.  Subsection 117(5) focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. Paragraph 117(5)(b) of the Act means that the tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the child may be affected by the level of child support.

2. The tribunal was satisfied that it was appropriate to change the Department’s decision in this case to better reflect the father’s changed income. The tribunal did not identify an unfair burden being placed on taxpayers to support the child as a result of its decision.

3. In these circumstances, the tribunal decided it was otherwise proper to make the proposed determination.

DECISION

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

• For the period 1 January 2018 to 31 January 2018, the father’s adjusted taxable income is varied to an annual rate of $70,000;

• For the period 1 February 2018 to 1 May 2018, the father’s adjusted taxable income is varied to an annual rate of $47,000.