Sulstone and Blakeway (Child support)

Sulstone and Blakeway (Child support) [2022] AATA 3378 (30 August 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/MC022444
APPLICANT:  Mr Sulstone
OTHER PARTIES:  Child Support Registrar
Ms Blakeway

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 30 August 2022
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period from 1 April 2021 to 31 March 2024 the adjusted taxable income of Mr Sulstone is varied to $90,000 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – 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 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 is about whether or not there should be a departure from the administrative assessment of child support.
Mr Sulstone and Ms Blakeway are the parents of [the child] (born December 2007). There has been a child support assessment in place since 15 December 2016 and Mr Sulstone is currently the liable parent under the assessment. The Tribunal notes that for the period from 26 November 2020 to 27 March 2021 Ms Blakeway was the liable parent.
The following administrative assessments of child support are under consideration:
· for the period from 4 February 2021 to 27 March 2021 Ms Blakeway was assessed to pay an annual rate of $3,318 based on a 2019–20 provisional income of $40,000 for Ms Blakeway and a 2019–20 adjusted taxable income of $46,893 for Mr Sulstone; and
· for the period from 28 March 2021 to 25 February 2022 Mr Sulstone was assessed to pay an annual rate of $4,903 based on a 2019–20 adjusted taxable income of $46,893 for Mr Sulstone and a 2019–20 provisional income for Ms Blakeway of $40,000.
On 1 April 2021 Mr Sulstone applied to the Child Support Agency for a departure from the assessment on the basis of the high costs incurred to spend time with, or communicate with, the child (the ground commonly referred to as Reason 1), money, goods or property received by the child, the payee or a third person (Reason 5), his necessary commitments of self-support (Reason 7) and a parent’s income, property and financial resources (Reason 8A).
On 17 May 2021 Ms Blakeway made a cross-application to the Child Support Agency on the basis of the high costs of caring for, educating or training the child (Reason 3), money, goods or property received by the child, the payee or a third person (Reason 5), a parent’s income, property, financial resources or earning capacity (Reasons 8A and 8B) and her responsibility to maintain a resident child (Reason 10). Ms Blakeway subsequently withdrew Reasons 3, 5 and 10 from her cross-application.
On 15 July 2021 the Child Support Agency made the decision to change the assessment so that for the period from 1 April 2021 to 31 December 2022 the adjusted taxable income of Mr Sulstone is set at $116,000 (the original decision).
On 25 July 2021 Mr Sulstone objected to this decision and on 29 September 2021 the Child Support Agency allowed the objection in part and made the decision to change the assessment so that for the period from 1 April 2021 to 31 March 2024 the adjusted taxable income of Mr Sulstone is set at $150,000 (the objection decision).
On 1 October 2021 Mr Sulstone applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 17 May 2022. Both Mr Sulstone and Ms Blakeway attended by Microsoft Teams audio. Prior to the directions hearing the Child Support Agency provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (562 pages).
Mr Sulstone and Ms Blakeway were directed to provide additional evidence and both complied to the satisfaction of the Tribunal.
A hearing was held on 30 June 2022. Mr Sulstone and Ms Blakeway gave evidence on affirmation by Microsoft Teams audio. Prior to the hearing the Tribunal received documents folioed A1 to A543 from Mr Sulstone and B1 to B14 from Ms Blakeway and these were distributed to the parties.
At the directions hearing and at the commencement of the hearing the Tribunal sought clarification from Mr Sulstone and Ms Blakeway as to the reasons for their concerns. Mr Sulstone told the Tribunal his only concern related to the income determined for him by the Child Support Agency, which was far higher than he actually earned. Mr Sulstone said he did not wish the Tribunal to review the other grounds raised in his initial application for a change as he was satisfied with the outcome in relation to those matters. Ms Blakeway said she was satisfied with the objection decision and simply wanted a fair amount of child support for [the child]. Ms Blakeway said she wanted the Tribunal to focus on the income of Mr Sulstone. She said this was her only concern as she felt Mr Sulstone was hiding his income.
During the hearing Mr Sulstone told the Tribunal he had not received the additional evidence provided by Ms Blakeway (B1–B14). The Tribunal agreed to send these documents to Mr Sulstone again and allow him further time to make written comments before a decision was finalised. No additional comments were received from Mr Sulstone.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act, the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process such that the issues for determination by this Tribunal are:
·     whether or not a ground is established to depart from the administrative assessment of child support; and if so,
·     whether or not it is just and equitable to make a particular departure determination; and if so,
·     whether or not it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held that:
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 formula in the ordinary run of cases.
In Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If the Tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
Mr Sulstone told the Tribunal he was [an Occupation] and had been working in the industry for around 30 years. Mr Sulstonesaid he was currently working for [Company 1] in [City], Victoria and had been since his own [Occupation 1] business had collapsed after the parents separated. Mr Sulstone said he was ultimately declared bankrupt.
Mr Sulstone said [Company 1] was owned by his son, [Mr A], who was the only director and shareholder. Mr Sulstone said he had no input into the running of [Company 1] and no financial interest in the business. Mr Sulstone stressed it was not his business.
Ms Blakeway told the Tribunal she was uncertain why the family [Occupation 1] business, [Company 2], had shut down in 2018 but pointed out that [Company 1] had similar clients. Ms Blakeway said [Company 1] generated most of its income through a [Work sector] business called [Business 1] as had [Company 2]. Ms Blakeway said that [Company 1] was established in the name of their son not long after he qualified as [an Occupation 1] and she suspected this was done to hide the true income Mr Sulstone was earning. Ms Blakeway added that following an investigation by the Child Support Agency it was discovered that Mr Sulstone and his life partner had access to the [Company 1] bank accounts.
The Tribunal notes in evidence an extract from the Australian Securities and Investments Commission (ASIC) database which shows [Company 1] was first registered on 17 May 2017. [Mr A] is the sole director and shareholder and has been since [Company 1] was registered. The Tribunal also notes in evidence from the Child Support Agency that [Company 2] was deregistered on 11 December 2018. The Tribunal further notes in evidence confirmation from NAB dated 14 May 2021 that Mr Sulstone was a signatory to all [Company 1] bank accounts along with [Mr A] and a third party.
Mr Sulstone responded by reiterating he was only an employee of [Company 1]. Mr Sulstone acknowledged that [Company 1] did work for [Business 1] but not to the same extent as [Company 2]. Mr Sulstone said he was unaware he had been a signatory to the [Company 1] bank accounts until this was raised by the Child Support Agency but this was likely because he had a card which was used to purchase [Occupation 1] supplies and fuel. Mr Sulstone said he could not comment on why his then partner, [Ms B], was also a signatory on the bank accounts as this was a decision made by his son and not him. Mr Sulstone pointed out he was no longer in a relationship with [Ms B] but they still worked together.
Ms Blakeway said according to the Child Support Agency it appeared [Ms B], who was Mr Sulstone’s long-time partner and also worked at [Company 1], was earning significantly more than he was. Ms Blakeway expressed the view that as Mr Sulstone was the most experienced [Occupation 1] at [Company 1] and [Ms B] was not [an Occupation 1] this did not add up.
Mr Sulstone told the Tribunal he felt he was being paid a fair wage by [Company 1] for the work he did. Mr Sulstone added that he had a breakdown and as a result of his poor mental health had been working two days per week since 19 August 2021. Mr Sulstone said this followed a series of warnings from his employer. Mr Sulstone said he had no idea what his ex-partner, [Ms B], was earning and could not control what other employees were paid by his son.
The Tribunal notes in evidence that according to Australian Taxation Office (ATO) records Mr Sulstone and [Ms B] have been employed at [Company 1] since 1 June 2017. The occupation recorded for Mr Sulstone is [an Occupation 1] and he received gross payments from [Company 1] of $48,615 in 2020–21. The occupation recorded for [Ms B] is office manager and she received gross payments from [Company 1] of $204,801 in 2020–21. The address recorded for [Company 1] is the residential address of Mr Sulstone and the registered phone number for [Company 1] is the phone number of [Ms B].
In evidence provided by Mr Sulstone the Tribunal notes three letters addressed to the Child Support Agency written by [Mr A] relating to staff employment and other matters. In a letter dated 26 August 2021 [Mr A] states Mr Sulstone is “just an employee” of the company and his hours of work have been reduced to two days per week from 19 August 2021 due to his health issues. [Mr A] also states in this letter the remuneration of employees is based on their “capacity, capabilities and performance”. In a letter dated 4 October 2021 [Mr A] again states that Mr Sulstone is working two days per week due to poor performance standards. [Mr A] also states the business phone number was registered to [Ms B] as he was unable to take incoming calls due to his role as [an Occupation 1]. In a third letter dated 9 November 2021 [Mr A] states Mr Sulstone had access to the company business bank account “solely for business purposes” but this was no longer the case.
The Tribunal also notes in evidence provided by Mr Sulstone a letter from [Ms B] addressed to the Registrar. At the top of the letter it is noted “given to me by [Ms B] Monday 4/9/21”. [Ms B] states, relevantly, that she is “not hiding Mr Sulstone’s income” and while her title was that of office manager her role involved a vast number of duties “from payroll to sales and marketing”. [Ms B] goes on to state that she and Mr Sulstone are no longer in a relationship but “remain as friends” and “share our living accommodation amicably”.
In response to directions Mr Sulstone provided the Tribunal with a copy of his 2020–21 individual tax return. It shows a gross salary of $48,615 and an adjusted taxable income after minor deductions of $48,465. The Tribunal notes in evidence that Mr Sulstone had an adjusted taxable income of $46,893 in 2019–20, an adjusted taxable income of $44,449 in 2018–19 and an adjusted taxable income of $46,713 in 2017–18. His adjusted taxable income in 2015–16, according to the Child Support Agency, was $116,000.
Mr Sulstone told the Tribunal his salary had declined in 2021–22 because he was working only two days per week. Mr Sulstone said he was currently earning $350 per week but this would change as he would be working three days per week from 1 July 2022. He said his income was supplemented by jobseeker payment of approximately $400 per fortnight.
In response to directions Mr Sulstone provided the Tribunal with recent payslips from his employment at [Company 1]. The payslip for the period from 2 June 2022 to 8 June 2022 shows total year-to-date earnings including base salary, annual leave and various other entitlements of $21,468.12. This is equivalent to approximately $22,845 on an annualised basis for 2021–22. Mr Sulstone said this amount sounded about right.
Mr Sulstone also provided the Tribunal with a Statement of Financial Circumstances received on 8 October 2021. Mr Sulstone lists total weekly household expenditure of $335 including food of $80 per week, rent of $230 per week, telephone expenses of $5 per week, medical expenses of $10 per week and other expenses of $10 per week. Mr Sulstone said he had access to a [Company 1] vehicle but did not use it outside work hours and walked everywhere. Mr Sulstone lists total personal expenditure of $341 per week which is for child support only. He declares no property and liabilities of approximately $34,908 including an income tax debt of $33,598. Mr Sulstone has superannuation totalling approximately $166,792.
Mr Sulstone made his application for a departure from the administrative assessment on 1 April 2021. The Tribunal finds that in 2020–21 Mr Sulstone had an adjusted taxable income of $48,465. The Tribunal is not satisfied, however, that Mr Sulstone’s true income and financial resources are accurately reflected by his taxable income alone.
Mr Sulstone has been [an Occupation 1] for around 30 years. He has run his own [Occupation 1] business and has considerable experience in the trade. Prior to his business, [Company 2], experiencing financial difficulty Mr Sulstone paid himself a wage of $116,000. The Tribunal notes that according to research undertaken by the Child Support Agency the government website Job Outlook lists the median income of [an Occupation 1] in 2021 at $98,488 per annum. Mr Sulstone has consistently earned between $44,500 and $48,500 per annum since he began employment with [Company 1]. Mr Sulstone has argued this is a fair wage.
In discussing the median income of [an Occupation 1] of $98,488 Mr Sulstone told the Tribunal this was more likely to be [Occupation 1] working in the construction sector. He said this was an unrealistic salary for [an Occupation 1], such as himself, working on houses in a regional area like [City]. Mr Sulstone also reiterated that his poor mental health meant he was only able to work reduced hours from 19 August 2021. Mr Sulstone pointed to various medical certificates from his GP in 2021 as well as letters from his treating psychologist in 2021 and 2022 which confirm his health issues.
The Tribunal does not dispute that Mr Sulstone was being treated for mental health issues in 2021 and his treatment is ongoing. This does not explain why Mr Sulstone has been earning considerably below the market wage for [an Occupation 1] with his skills and expertise since he started working for his son in 2017. It also stretches credibility for [Ms B], an office manager in [an Occupation 1] business with various administrative and sales responsibilities, to be receiving a wage more than four times higher than Mr Sulstone who is [an Occupation 1] in [an Occupation 1] business with several decades of experience. Mr Sulstone and [Ms B] started work at [Company 1] on the same date and although no longer in a relationship they have been life partners for most of the time. According to [Ms B] they were still living together in late 2021 and judging by his limited personal expenses – with no utility, motor vehicle, pharmaceutical and other living expenses – Mr Sulstone is having these costs met for him.
[Company 1] was established on 17 May 2017 not long before [Company 2] was deregistered and Mr Sulstone was declared bankrupt. The main client for [Company 2] was [Business 1] and this also appears to be the case for [Company 1]. The Tribunal considers [Company 1] to be, in essence, a family business with Mr Sulstone acting like a silent partner. Mr Sulstone, until recently, also had access to all [Company 1] bank accounts and the Tribunal does not accept his explanation that he was unaware of this situation.
In relation to alienation of income the Child Support Guide at 2.6.14 states, relevantly:
A reduction of a parent's taxable income by alienation of personal services income or other income will result in an artificially reduced or increased child support liability.
Generally, income is alienated when the income generated or derived by a person is attributed to others and, consequently, reduces the first person's taxable income. Personal services income, or income derived through personal exertion, can be defined as income that an individual earns predominantly as a direct reward for their personal efforts. Personal services income paid to a company, trust or partnership is also alienation of income.
If a parent is involved in alienation of their personal services income, this may indicate that they have additional income or financial resources that make the current child support assessment unjust and inequitable (CSA Act section 117(2)(c)(ia)).
Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation.

The Tribunal is satisfied that by working at [Company 1], a business owned by his son, for a wage that is considerably less than would reasonably be expected for a very experienced [Occupation 1], Mr Sulstone is effectively alienating income. The Tribunal does not accept the arguments made by Mr Sulstone and his son that he is just an employee of [Company 1].
The Tribunal also considers it likely that Mr Sulstone is more actively involved in the operations of the business than he has indicated. [Company 1] and the [Occupation 1] business previously run by Mr Sulstone before [Company 1] was established have a major client in common. Mr Sulstone had access to all [Company 1] bank accounts until this matter was raised by the Child Support Agency. The Tribunal finds Mr Sulstone has additional financial resources available to him arising from his close association with [Company 1].
The Tribunal notes in evidence from the Child Support Agency a copy of the tax return for [Company 1] for 2019–20. It shows the business generated total income of $680,341 and made a taxable income of $80,505 after accounting for total expenses of $575,959 and other deductible and non-deductible expenses. More up-to-date financial information for [Company 1] was not available as Mr Sulstone argued that as an employee he did not have access to this information. The Tribunal is of the view that, in addition to his income from employment and expenses being met on his behalf, a portion of this profit could also be considered as a resource available to Mr Sulstone for the purposes of child support.
The Tribunal is satisfied, based on the evidence provided, that Mr Sulstone has access to income, property and financial resources equivalent to a person with an adjusted taxable income of at least approximately $90,000. The Tribunal consider this amount to be conservative in light of the relationship between Mr Sulstone and [Company 1].
The Tribunal also considered the income, property and financial resources of Ms Blakeway.
Ms Blakeway told the Tribunal that until recently she was working at [Employer 1] in Western Australia as [an Occupation 2]. Ms Blakeway explained she left [Employer 1] on 26 May 2022 and would shortly be starting a new career at [Employer 2]. Ms Blakeway said she expected her new salary to be approximately $61,000 per annum.
Ms Blakeway said she had been working at [Employer 1] in a permanent part-time position from around March 2020, which was not long after she moved to Western Australia from Victoria. Ms Blakeway said prior to relocating she had been working as [an Occupation 2] in a similar capacity at [Employer 3] in [City], Victoria. Ms Blakeway said her income at [Employer 3] was higher than her income at [Employer 1] because she had family support in [City] and was able to work longer hours as well as weekends while her family cared for [the child].
In response to directions Ms Blakeway provided the Tribunal with an ATO notice of assessment for the year ended 30 June 2021. It shows Ms Blakeway had an adjusted taxable income of $39,707. Ms Blakeway told the Tribunal she expected her income in 2021–22 would be higher. The Tribunal notes that in 2019–20 Ms Blakeway had an adjusted taxable income of $50,436, however, from 1 October 2021 she was being assessed on a 2020–21 provisional income of $52,638.
Ms Blakeway also provided the Tribunal with a Statement of Financial Circumstances received on 28 October 2021. Ms Blakeway declares total average weekly income of $800, which is her gross salary. Ms Blakeway states she receives no child support from Mr Sulstone. She lists total weekly household expenditure of approximately $785 and total weekly personal expenditure of $90 per week. This does not include income tax. Ms Blakeway declares total assets of $3,000 and total liabilities of $9,821 including a credit card debt of $5,821. Ms Blakeway states she closed her credit card and was currently paying off the outstanding amount. Ms Blakeway has superannuation of $21,000.
The Tribunal finds that Ms Blakeway had access to income, property and financial resources equivalent to a person with an adjusted taxable income of $39,707 in 2020–21. There is no evidence to suggest Ms Blakeway is in receipt of an income which renders the child support assessment unfair. The higher income she will receive when she commences her new role at [Employer 2] will ultimately be reflected in the assessment when her tax return for the relevant financial year is submitted.
The Tribunal is satisfied that Ms Blakeway is fairly assessed on her adjusted taxable income under the administrative assessment.
At the time he made his application for a change on 1 April 2021 Mr Sulstone was assessed on his 2019–20 adjusted taxable income of $46,893. Ms Blakeway was assessed on a 2019–20 income tax declaration of $40,000. The Tribunal has found, however, that Mr Sulstone has access to income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $90,000. When this amount is applied in the child support formula the annual rate of child support payable by Mr Sulstone would be approximately $14,314.
The Tribunal finds this to be significantly more than his liability under the administrative assessment. The Tribunal is satisfied that special circumstances exist and the application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Mr Sulstone in respect of [the child].
On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

Issue 2 – Is it just or equitable to make a particular determination?

As the Tribunal finds 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 as regards the child, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider the matters discussed below,[1] which are as set out in subsection 117(4) of the Act:
[1] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares(SSAT Appeal) [2008] FMCAfam 886.
(4)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii)any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
(A)the liable parent; or
(B)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; and
(iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

The nature of the duty of a parent to maintain a child

Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments. In this case the parents have a duty to support [the child]. The Tribunal was not made aware that either parent has a responsibility to any other child or person.

The proper needs of the child

In relation to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).
The Tribunal was not made aware that the parents expected [the child] to be cared for, educated or trained in a particular way or that she had any special needs.
In her Statement of Financial Circumstances Ms Blakeway apportioned approximately half of household expenses, such as food, clothing, entertainment and education, to [the child].
The Tribunal finds it reasonable to calculate the costs of her needs by reference to the Costs of the Children Table (provided for in section 155 of the Act) in the circumstances of this case.

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

The Tribunal is satisfied that [the child] has no income, earning capacity, property and financial resources which should be taken into account for the purpose of child support.

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

The Tribunal has already considered in detail the income, property and financial resources of both parents.
Ms Blakeway raised the earning capacity of Mr Sulstone in her cross application. In order to establish that Mr Sulstone’s earning capacity might be greater than that reflected in the child support assessment and render the assessment unfair, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied. Those three criteria are:
(a)    one or more of the following applies:
·the parent does not work despite ample opportunity to do so (subparagraph 117(7B)(a)(i));
·the parent has reduced the number of hours per week of their 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 (subparagraph 117(7B)(a)(ii));
·the parent has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
(b)    the parent’s decision not to work, to reduce the number of hours, or to change their occupation, industry or working pattern is not justified on the basis of:
·the parent’s caring responsibilities (subparagraph 117(7B)(b)(i)); or
·the parent’s state of health (subparagraph 117(7B)(b)(ii)); 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 (paragraph 117(7B)(c)).
Mr Sulstone has told the Tribunal he is not working full-time and his employer reduced his hours to two day per week from 19 August 2021. The first criterion is, therefore, met.
Mr Sulstone has argued the change in his work pattern was largely due to his mental health. The Tribunal notes in evidence from the Child Support Agency a medical certificate from [Dr C] dated 27 September 2021 stating that Mr Sulstone is unfit for work from 23 September 2021 to 8 October 2021.
In response to directions Mr Sulstone also provided the Tribunal with further medical records including a referral, dated 1 October 2021, from [Dr D] to [Mental health clinic]. The referral states Mr Sulstone is suffering with severe depression. In addition, Mr Sulstone provided a letter from [Mental health clinic] dated 4 November 2021, which states that he has been attending the mental health clinic since September 2021 for psychosocial and psychological support. A further medical certificate from [Dr D] dated 3 November 2021 states Mr Sulstone will be unfit for work from 15 October 2021 to 22 October 2021. A letter dated 25 November 2021 from [Mr E], psychologist at [Mental health clinic], states that “due to the severity of his state of health” Mr Sulstone’s “capacity to work has reduced”. A second letter from [Mr E] dated 3 June 2022 states he is discussing a management plan with Mr Sulstone while trying to get him back to full-time work.
It is unclear, based on the evidence provided, when Mr Sulstone first commenced treatment for his mental health condition. Mr Sulstone started working two days per week from 19 August 2021, which is around one month before he attended [Dr C] and was provided with a certificate stating he was unfit for work for a two-week period. The additional evidence provided by Mr Sulstone indicates he was seeking assistance for mental health issues from around September 2021. It is not unusual for someone to have time off work before seeking formal help for mental health issues and the Tribunal accepts that his reduced days of work from 19 August 2021 could be justified by Mr Sulstone’s state of health.
As all three criteria must be satisfied, it follows that if one is not satisfied, then this ground cannot be considered. The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Mr Sulstone in this case.
Ms Blakeway changed employers when she moved from Victoria to Western Australia, however, she remained working in a permanent part-time capacity in the same industry. Ms Blakeway has explained that her salary initially fell when she started working for her new employer in Western Australia as she was unable to work the same hours due to her caring responsibilities. Ms Blakeway has taken on a new career with [Employer 2] and her income from employment will be higher. The Tribunal is also satisfied that the earning capacity criteria are not met in relation to Ms Blakeway.

Other relevant matters

In his initial application to the Child Support Agency for a change Mr Sulstone raised the high costs incurred to spend time with, or communicate with, the child (Reason 1), money, goods or property received by the child, the payee or a third person (Reason 5) and his necessary commitments of self-support (Reason 7) in addition to a parent’s income, property and financial resources (Reason 8A).
Mr Sulstone has told the Tribunal his only concern was the consideration of his income for the purposes of child support and he did not wish the Tribunal to review these other matters. The Tribunal did not consider Reasons 1, 5 and 7 further.

Any hardship that would be caused

The Tribunal has established that Mr Sulstone has access to income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $90,000. The Tribunal has made this decision in light of the nature of the relationship between Mr Sulstone and his employer and the finding that Mr Sulstone is alienating income.
Mr Sulstone has worked two days a week from 19 August 2021 and continues to work reduced hours due to his mental health. This is supported by medical evidence. Although Mr Sulstone has yet to submit his 2021–22 individual tax return, payslips he provided to the Tribunal indicate his income from employment will be approximately $22,845 for 2021–22. Mr Sulstone has said he is also in receipt of jobseeker payment. Regardless of his lower actual earnings in 2021–22 the Tribunal is satisfied Mr Sulstone will receive sufficient benefits through the family business such that he will continue having access to the same level of financial resources despite his changed working arrangements.
Mr Sulstone declares total household expenditure of approximately $17,420 per annum and total personal expenditure of approximately $17,732 which he states is for child support. Mr Sulstone told the Tribunal he was not currently paying child support, however, as he could not afford to. Mr Sulstone added that he had a poor lifestyle from a financial perspective.
Ms Blakeway had an adjusted taxable income of $39,707 in 2020–21 and the Tribunal has found this to be an accurate reflection of her financial circumstances. Ms Blakeway has advised that her salary will increase in 2021–22. The Tribunal notes that even when applying the higher income reported in her Statement of Financial Circumstances, being $41,600 per annum, in the child support formula there would be little difference in the annual rate payable by Mr Sulstone.
Ms Blakeway has total average household expenses of approximately $40,820 per annum and total personal expenditure of approximately $4,680 per annum although this does not include tax on her gross income. Ms Blakeway told the Tribunal she was just able to scrape by but found it difficult without child support from Mr Sulstone.
Taking into account the interests of both parents the Tribunal proposes that for the period from 1 April 2021 to 31 March 2024 the adjusted taxable income of Mr Sulstone be varied to $90,000 per annum.

The Tribunal is limited to making a determination in respect of a day in a period that is not more than 18 months prior to the date the change of assessment application was made (paragraph 98S(3B)(a) of the Act). Mr Sulstone made his application for a departure on 1 April 2021 and the Tribunal must decide whether it is just and equitable to backdate the determination prior to this date.
The Tribunal is of the broad view that retrospectively changing entitlements should be avoided without compelling reasons. The onus is on a parent to initiate a change of assessment in a timely fashion should they believe the existing assessment is unfair. As there was nothing preventing either parent from making an application sooner, the Tribunal finds it just and equitable to commence the departure determination from 1 April 2021 when Mr Sulstone submitted his application and not an earlier date.
As previously calculated and in accordance with the determination of the Tribunal the annual rate of child support payable by Mr Sulstone from 1 April 2021 will be approximately $14,314. The Tribunal has varied the income of Mr Sulstone until 31 March 2024 as it is unlikely his taxable income will provide an accurate reflection of his ability to support [the child]. This will also provide some certainty to the parents in relation to child support for [the child].
Having carefully considered the financial circumstances of both parents, the Tribunal is satisfied that the proposed determination will not cause hardship to Mr Sulstone, Ms Blakeway or [the child] and is otherwise just and equitable.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be otherwise proper to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
Ms Blakeway is not in receipt of family tax benefit. The Tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community and would be otherwise proper.

DECISION

[2022] AATA 3378

30 August 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Procedural Fairness

Remedies

Statutory Construction