Tanna and Tanna (Child support)

[2019] AATA 5119

Tanna and Tanna (Child support) [2019] AATA 5119 (5 September 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC016052

APPLICANT:  Ms Tanna

OTHER PARTIES:  Child Support Registrar

Mr Tanna

TRIBUNAL:Member F Staden

DECISION DATE:  5 September 2019

DECISION:

The tribunal varied the decision under review such that:

• The 30 June 2016 change of assessment decision in relation to Reason 3 only ends on 31 December 2016; and

• Mr Tanna’s adjusted taxable income is varied to $55,000 a year for the period 1 July 2018 to 31 October 2021.

CATCHWORDS

CHILD SUPPORT – departure determination – financial resources of both parents - costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – a ground for departure exists – decision to depart - decision under review varied

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. Ms Tanna and Mr Tanna are the separated parents of [Child 1], born 2005, [Child 2] born 2006 and [Child 3], born 2008 (the children). From 29 November 2017 to 9 July 2019, Ms Tanna was assessed as providing 64% of the care for each of the children and Mr Tanna as providing 36% of that care. Since 10 July 2019, Ms Tanna has been assessed as having 100% care of the children.

2. There has been a child support assessment for this case from 25 January 2012. Mr Tanna is the parent liable to pay child support. Ms Tanna opted for collection of child support by the Department of Human Services – Child Support (the Department) from 14 August 2012, with arrears requested from 27 July 2012.

3. Relevantly here, on 30 June 2016, a delegate of the Child Support Registrar decided to:

   ·     Set Mr Tanna’s adjusted taxable income at $69,718 for the period 9 May 2016 to 30 June 2018;

   ·     Increase Mr Tanna’s annual rate of child support by $6,535 for the period 9 May 2016 to 31 December 2016;

   ·     Increase Mr Tanna’s annual rate of child support by $6,862 for the period 1 January 2017 to 31 December 2017; and

   ·     Increase Mr Tanna’s annual rate of child support by $7,205 for the period 1 January 2018 to 31 December 2018.

   Neither party objected to this decision.

4. On 22 June 2018, Mr Tanna applied for a change of assessment on the basis of the high costs of spending time with or communicating with the children (Reason 1), extra costs in caring for, educating or training the children in the way both parents intended (Reason 3) and the child support assessment not correctly reflecting his or Ms Tanna’s income, property and/or financial resources (Reason 8A) or his earning capacity (Reason 8B).

5. Child support assessments issued by the Department on 17 July 2018 stated:

   ·     For the period 1 July 2018 to 31 August 2018, Mr Tanna’s annual child support liability was $7,205, based on Mr Tanna’s 2016/17 taxable income of $24,832 and Ms Tanna’s 2016/17 adjusted taxable income of $59,750; and

   ·     For the period 1 September 2018 to 31 December 2018, Mr Tanna’s annual child support liability was $7,205, based on Mr Tanna’s 2017/18 provisional income of $24,832 and Ms Tanna’s 2017/18 adjusted taxable income of $65,573.

6. On 18 July 2018, Ms Tanna lodged a response to Mr Tanna’s change of assessment application and cross applied on the basis that the child support assessment did not correctly reflect Mr Tanna’s income, property and/or financial resources (Reason 8A) or his earning capacity (Reason 8B).

7. On 3 October 2018, a delegate of the Child Support Registrar found Reason 8A established in Mr Tanna’s application in relation to Mr Tanna’s income and Reason 1, Reason 3 and Reason 8B not established and Reason 8A in Ms Tanna’s application established and Reason 8B not established. The delegate decided to:

   ·     End the 30 June 2016 change of assessment decision in relation to Reason 3 only on 31 December 2016; and

   ·     Set Mr Tanna’s adjusted taxable income at $40,940 for the period 1 July 2018 to 30 June 2020.

8. Ms Tanna lodged an objection to the 3 October 2018 decision on 11 October 2018.

9. On 14 February 2019, an objections officer decided to allow Ms Tanna’s objection. The objections officer decided to:

   ·     End the 30 June 2016 change of assessment decision in relation to Reason 3 only on 31 December 2016; and

   ·     Set Mr Tanna’s adjusted taxable income at $55,000 a year for the period 1 July 2018 to 30 June 2020.

10. On 5 March 2019, Ms Tanna applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) for review of the objections officer’s decision.

11. On 26 June 2019, a telephone directions hearing was conducted with Ms Tanna and Mr Tanna. Directions were issued on that day.

12. A hearing was held on 21 August 2019 in Canberra. Ms Tanna and Mr Tanna gave sworn evidence by telephone. The tribunal also had before it papers provided by the Department (383 pages), Ms Tanna (A1 to A29) and Mr Tanna (B1 to B35). Copies of these documents were provided to all parties.

13. Relevant aspects of the evidence before the tribunal are referred to in the consideration below.

ISSUES

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under the Child Support (Assessment) Act 1989 (the Assessment Act). The formula used to calculate the rate takes into account factors such as the number of children, the levels of care provided and the income of each parent.

2. Under section 98B of the Assessment Act, a liable parent or a carer receiving child support can apply to the Child Support Registrar for a determination to depart from the administrative assessment. This is known as a change of assessment.

3. Under section 98C of the Assessment Act, the Child Support Registrar, here the tribunal, may change the assessment if the case meets the following three criteria:

   · There is a ground to depart from the assessment (subsection 117(2) of the Assessment Act lists those grounds). Only one ground has to be established for the tribunal to proceed to consider the next criterion (Marsh & Eccles [2008] FMCAfam 1417);

   ·     It is “just and equitable” to make particular changes to the assessment; and

   ·     It is “otherwise proper” to make those changes to the assessment.

CONSIDERATION

Issue 1: Is there a ground to depart from the administrative assessment?

Mr Tanna’s income, property and/or financial resources (Reason 8A)

1. Subparagraph 117(2)(c)(ia) of the Assessment Act provides a ground for departure exists where, in the special circumstances of the case, the use of the administrative assessment would result in an unjust and inequitable determination of a parent’s child support liability because the income, property and financial resources of either parent are not properly taken into account.

2. Here, Mr Tanna’s income and financial resources are considered for the period from 1 July 2018. As noted above, his income in the period 9 May 2016 to 30 June 2018 was set at $69,718 by a previous change of assessment decision of the Department to which neither party objected.

3. No issues have been raised in this case about property. In reviewing the evidence about Mr Tanna’s income and financial resources, the tribunal particularly noted the following:

   ·     Mr Tanna began receiving newstart allowance from 27 February 2018 on the basis that he was unemployed. He has been exempt from the employment-seeking requirements of newstart allowance at various times on the basis of medical certificates, examples of which were provided. In summary, he has a [specified] problem causing pain and restricted range of movement which restricts his ability to do his former manual work in [occupations]. He is also troubled by an old injury to his left arm.

   ·     The tribunal offered Mr Tanna the opportunity to provide more information about his medical condition but he did not do so. He first said that his doctor advised him against it on the ground that it was private and confidential. He then questioned why additional evidence was necessary as the medical certificates were accepted by Centrelink. The tribunal noted that the medical certificates suggested differing periods of incapacity. Mr Tanna said that this was because he had seen different doctors. During the hearing, Mr Tanna located a relevant medical report which he read in part to the tribunal. It referred to his having advanced degenerative changes at [specified points].

   ·     Mr Tanna decided to stop receiving newstart allowance about three weeks before the hearing. He said that it was too stressful being on the payment; he thought he had a job and so wouldn’t need the payment; and he was unwell with the flu and so could not attend an appointment with his job provider. Mr Tanna further explained that he had had a job interview for a position as [an occupation 2] and was hoping to get the position after a second interview on the hearing date. He said that he did not know the likely salary.

   ·     Mr Tanna stated that he has been living rent free with a friend in [Town 1] since around July 2018. Ms Tanna disputed this. Mr Tanna’s bank statements show almost all his transactions occurring in and around [a specified] area of Sydney, more than 100 km away. This is the area where Mr Tanna’s girlfriend lives. Mr Tanna at times has said his girlfriend helps him by for example, providing food. At other times, he has said that she does not assist him financially at all. He was adamant at hearing that his girlfriend will not let him live with her, although he stays there two or three nights a week to see her and also his dog who lives there all the time. The tribunal observed that his bank statements suggest he spends much longer than that in the [specified area]. Mr Tanna replied that sometimes he did. Overall, the tribunal found Mr Tanna’s evidence about where and how he was living was inconsistent and unclear.

   ·     Mr Tanna said that he has been living with his parents for the last few weeks as his friend in [Town 1] asked him to leave as he had the flu. The tribunal put it to Mr Tanna that he has previously been recorded as saying that he has no contact with his family. He said that was true in relation to his mother and brother but not his father. He then said that his father does provide him with some money although he was not specific about how much and when. He said that this is just something that fathers do.

   ·     Mr Tanna has previously argued that he has a great deal of debt. While he does owe more than $60,000 in child support, there was little evidence of other debt. The only liability listed on his 20 March 2019 Statement of Financial Circumstances (SoFC) was $5,000 owing to his father. This was increased to $7,000 on his 18 July 2019 SoFC. Mr Tanna said that his father had cleared a $7,000 debt for him.

   ·     Mr Tanna did not provide itemised weekly household expenses on either of his SoFCs. In the period 9 July 2017 to 9 July 2018, his available bank statements show two payments for rent in 2017 and none thereafter and no utility payments. More recent bank statements for the period 15 February 2019 to 30 June 2019 similarly show no rent or utility payments. All bank statements relating to the period February 2018 on show spending, much of it apparently discretionary, consuming all of Mr Tanna’s newstart allowance and family tax benefit (which continued for six months after Mr Tanna ceased to have care of the children). When asked for an explanation of his financial arrangements, Mr Tanna referred again to the possibility that his father may have helped him.

   ·     Mr Tanna’s adjusted taxable income for 2017/18 was $13,771 and that for 2018/19 was $15,485. According to his bank statements, in the period from 9 July 2017 to 7 February 2018, Mr Tanna received deposits into his account totalling $16,868, excluding Centrelink payments; some of these were labelled wages. There were no deposits into his account, apart from Centrelink payments from 8 February 2018 on. Ms Tanna argued that the deposits ceased when the Department began to investigate the possibility of garnisheeing Mr Tanna’s earnings.

Conclusion

1. The tribunal found that much of Mr Tanna’s evidence was changeable and contradictory, both at the hearing and in previous decision making processes. It did not satisfactorily account for how he has supported himself in the period from 1 July 2018. His pattern of spending, as seen from his bank statements, indicates that Mr Tanna has access to income and financial resources not being taken into account in the assessment. The question is how that should be taken into account in calculating his child support liability.

2. Ms Tanna argued that Mr Tanna has worked as [an occupation 1] and should be attributed wages of $2,100 a week, the average weekly wage for [an occupation 1] on the Job Outlook website ( Mr Tanna said that he is getting too old for such physical work, especially given his [specified health] problem. The tribunal found some validity to Mr Tanna’s argument given that he, at [age], is 12 years older than the average [occupation 1] and does have medical evidence in relation to a condition which would restrict his ability to do that type of work.

3. The original decision maker used the What Jobs Pay 2012/13 publication to attribute Mr Tanna an adjusted taxable income of $40,940 on the basis of the average wages of a labourer aged [in a specified range]. The tribunal was not persuaded that this amount reflected current wages and again noted the physical restrictions on Mr Tanna’s ability to do labouring work.

4. The objections officer found that Mr Tanna’s likely rent and utility costs were around $23,000 and calculated that to produce a net income of that amount would require a gross income of $30,000. The officer further found that, based on bank statements for the period 9 July 2017 to 9 July 2018, Mr Tanna has an income of around $25,000 a year of combined wages and Centrelink payments. The officer therefore attributed Mr Tanna an adjusted taxable income of $55,000 ($30,000 + $25,000) which the tribunal found to be an acceptable approach to assessing Mr Tanna’s income.

5. Mr Tanna stated that he is likely to get a position as [an occupation 2]. Given the constraints on his capacity for physical labour and his employment history, the tribunal found that this was not an unreasonable occupation for Mr Tanna. The average annual wage across the three types of [an occupation 2] listed on the Job Outlook website was $55,000 which supports the use of this amount as Mr Tanna’s adjusted taxable income going forward.

6. From 1 July 2018, under the administrative assessment, Mr Tanna’s child support liability was calculated on the basis of his adjusted taxable income being $24,832. The tribunal has found above that the amount of $55,000 better represents his financial circumstances. The tribunal was satisfied that the discrepancy between these figures is a special circumstance in this case whereby the application of the administrative assessment could result in an unjust and inequitable determination of financial support for the children. The tribunal therefore found that a ground for departure on the basis of Mr Tanna’s income and financial resources was established.

Issue 2: Is it just and equitable to depart from the administrative assessment?

1. To decide whether it is just and equitable to depart from the administrative assessment, the tribunal must consider the matters required by subsection 117(4) of the Assessment Act, plus any other matters raised in the change of assessment application.

Duty of a parent to maintain a child

1. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain.

2. Mr Tanna and Ms Tanna each have the primary duty to financially support the children. Neither has any other child.

The proper needs of the child

1. In determining the proper needs of a child it is necessary to consider the manner in which the parents expected the child to be cared for, educated or trained, and any special needs of the child.

2. Ms Tanna accepted that the additional amount which had been added to Mr Tanna’s annual child support liability as a contribution to the children’s school fees should cease from 31 December 2016 as the children have attended local public school since then.

3. The children are in generally good health. They are all receiving counselling but as this is through Ms Tanna’s Employment Assistance Program there are no costs involved. [Child 2] is receiving therapy in relation to [a condition] which will cost a total of $2,000. It is likely that [Child 3] will also require this therapy. Ms Tanna did not provide evidence in relation to these costs because at the telephone directions hearing [Child 2] had yet to be assessed and the therapy had not begun.

Income, earning capacity, property and financial resources of the children

1. The children have no income, property or financial resources which they can use to support themselves and their earning capacity is not at issue here.

Income, earning capacity, property and financial resources of Ms Tanna

1. Ms Tanna works full time for [an employer] as a [position]. There is no issue in relation to her earning capacity. Her 2017/18 adjusted taxable income was $65,573. Her current income, based on the payslips provided, is around $70,600 a year. The tribunal was satisfied that any variations in Ms Tanna’s earnings would be properly represented by her relevant adjusted taxable income.

2. Consideration of Ms Tanna’s SoFC and her related evidence showed no indication that she has access to any income, property or financial resources not currently being taken into account in the assessment. In terms of liabilities, Ms Tanna has a car loan of $27,852, credit card debt of around $7,250 and a personal loan with around $5,500 remaining to be repaid.

3. Mr Tanna stated that he had no issues to raise in relation to Ms Tanna’s income, earning capacity, property or financial resources.

Earning capacity of Mr Tanna

1. Mr Tanna’s working pattern since he was made redundant from his full-time work in [an industry] in 2013, has been doing some part-time/casual work and receiving some Centrelink payments. The question of whether Mr Tanna has exercised his earning capacity post redundancy has been previously considered by this tribunal, differently constituted, and it was found that in the particular circumstances at that time it was not open to the tribunal to find that Mr Tanna had an earning capacity that was greater than his income. As Mr Tanna’s pattern of employment has not changed significantly since then, the tribunal found that his earning capacity is not at issue here.

Commitments necessary for self-support or the support of anyone else the parent has a duty to maintain

1. Mr Tanna and Ms Tanna have no duty to maintain anyone other than the children. Ms Tanna is in reasonable health. The impact of Mr Tanna’s health condition was taken into account in the consideration of his earning capacity above. Mr Tanna did not argue that his health condition is associated with any unusually high medical expenses.

Direct and indirect costs of providing care for the child incurred by the parent entitled to child support

1. Ms Tanna was the primary carer for the children during the period from 1 July 2018, with a care percentage of 64%. Both parties agreed that she has had 100% of the children’s care since January 2019, with that care percentage being reflected in the assessment from 10 July 2019. Ms Tanna did not identify any out of the ordinary costs associated with the care she provides for the children.

1. Mr Tanna raised the issue of his high cost of contact with the children in his change of assessment application but provided no evidence about that. At hearing, Mr Tanna clarified that he did not wish to pursue this argument and so it is not considered here.

What determination should be made taking into account the above factors?

1. The tribunal proposes varying Mr Tanna’s adjusted taxable income to $55,000 for the period 1 July 2018 to 31 October 2021, to better represent his income during that time. The basis on which this amount was determined is outlined above.

2. The start date of 1 July 2018 is the day following the end of the previous change of assessment decision which varied Mr Tanna’s income. The end date of 31 October 2021 is to allow the parties a period of certainty following this decision. It is also reasonable to expect that information about the 2020/21 adjusted taxable incomes of both parties will be available by then, assisting consideration of whether a return to the administrative assessment would be appropriate at that time.

Any hardship resulting from the departure determination

1. The proposed adjusted taxable income variation for Mr Tanna will increase the amount of child support payable by him for the period from 1 July 2018 to 31 October 2021. The amount of this increase will be partially offset by the decrease in his contribution to school fees from 1 January 2017.

2. Given the concerns expressed above about the accuracy of Mr Tanna’s evidence in relation to his financial circumstances, it is not possible to know with certainty whether the proposed departure determination in relation to his income will cause him hardship. Nonetheless the tribunal found, on the balance of the evidence that was available, that the variation proposed is more representative of his financial situation than his adjusted taxable income.

Issue 3: Is it otherwise proper to depart from the administrative assessment?

1. The tribunal considered the impact of its decision on the balance of support provided by the parents on one hand and the taxpayer on the other. It is necessary to decide whether this is a proper outcome given that parents have the primary responsibility to support their children.

2. Ms Tanna receives family tax benefit for the children. The proposed change to Mr Tanna’s adjusted taxable income may reduce the amount she is paid as she will receive more in child support. The tribunal was therefore satisfied that this decision is otherwise proper in the circumstances of the case.

DECISION

The tribunal varied the decision under review such that:

• The 30 June 2016 change of assessment decision in relation to Reason 3 only ends on 31 December 2016; and

• Mr Tanna’s adjusted taxable income is varied to $55,000 a year for the period 1 July 2018 to 31 October 2021.