Thatcher and Granger (Child support)
[2024] ARTA 216
•13 November 2024
Thatcher and Granger (Child support) [2024] ARTA 216 (13 November 2024)
Applicant/s: Ms Thatcher
Respondent: Child Support Registrar
Other Parties: Mr Granger
Tribunal Number: 2024/SC027945
Tribunal: General Member S Letch
Place:Brisbane
Date:13 November 2024
Decision:The Tribunal sets aside the decision under review and in substitution decides to:
(a)vary Mr Granger’s adjusted taxable income to $145,000 for the period 29 February 2024 to 31 December 2027;
(b)vary Ms Thatcher’s adjusted taxable income to $63,000 from 1 November 2024 to 31 December 2025;
(c)increase Mr Granger’s annual child support liability by $3,100 for the period 1 January 2025 to 31 December 2027 (as a contribution towards [the child]’s school fees).
CATCHWORDS
CHILD SUPPORT – departure from the administrative assessment – income, property and financial resources – adjusted taxable income and child support liability – mother’s claim that father working full-time for cash accepted – no participation by father in proceedings and conservative estimate of earnings – school fees – father’s current wife enrolled child in private school – change in mother’s earnings from provisional to actual – decision under review set aside and varied
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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.
Statement of Reasons
BACKGROUND
Ms Thatcher and Mr Granger are the parents of [the child], born April 2013. Mr Granger has been assessed by Child Support as liable to pay child support to Ms Thatcher. Ms Thatcher seeks a review of an objection decision which disallowed her objection to a “change of assessment” decision of 29 February 2024.
By way of background, it is convenient to set out some extracts from the objections officer’s decision dated 13 May 2024:
Prior to the Change of Assessment decision (subject of this objection), the following assessments were in place:
- For the period 27 October 2023 to 30 June 2024, Mr Granger is assessed to pay an annual rate of child support of $1265. This assessment is based on a 2022–23 Adjusted Taxable Income (ATI) amount of $45 720 for Mr Granger, and a 2023–24 estimated ATI amount of $53 915 for Ms Thatcher.
DECISION UNDER REVIEW
On 2 November 2023, Ms Thatcher applied for a change to the assessment on the basis of Reason 7, Reason 8A and Reason 8B. Mr Granger was sent a copy of the application and provided a verbal response.
On 29 February 2024, the DM refused to change the assessment as a Reason was not established.
…
Based on the above information, I am not satisfied that Ms Thatcher has commitments which are necessary and reasonable to support herself. Therefore, I cannot consider if her commitments significantly affect Ms Thatcher’s ability to maintain [the child].
Reason 7 is not established.
…
A child support assessment is generally calculated using the parents’ most recent taxable income.
The Agency will be satisfied there are special circumstances if a parent’s income is not appropriately reflected in the assessment, rendering it unfair. Mr Granger is assessed on his 2022–23 ATI amount of $45 720.
There is currently no evidence before me demonstrating Mr Granger has additional income not reflected in his tax return, which is currently utilised in the assessment.
Ms Thatcher asserted Mr Granger may be deriving income via cash. To form any conclusion Mr Granger or any other parent is partaking in such cash economy, I must rely on evidence. As I have no evidence before me demonstrating Mr Granger is completing such cash work I cannot make a decision regarding this.
The income currently used in the assessment is $45 720. Based on the above information I do not find Mr Granger’s current income is any different than as assessed therefore I am not satisfied the child support assessment is unfair.
Reason 8A is not established.
…
When considering Criterion 2, given Mr Granger continues to receive a compensation payment for a work related injury, I will accept his changes to employment were justified by his state of health at this time. As such, I do not find Criterion 2 satisfied at this point.
Given all three compulsory Criterion cannot be satisfied, a decision considering Mr Granger’s earning capacity cannot be made.
…
DECISION
As no reason has been established, the application must be refused under Section 98F of the Child Support (Assessment) Act 1989. As a result, no changes will be made to the child support assessment.
When comparing my decision to the decision made on 29 February 2024, we have come to the same conclusion and have found no reasons established.
The objection is therefore disallowed. The COA determination made on 29 February 2024 is affirmed.
…
Ms Thatcher participated in the Tribunal’s hearing by conference telephone. Mr Granger advised the Tribunal prior to the hearing that he would take no active part in the proceedings; however, he wished to remain a party and receive the Tribunal’s decision. In making its decision, the Tribunal took into account the evidence of Ms Thatcher, the Child Support materials, and the additional materials submitted by both parties.
CONSIDERATION
The legislative framework
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.
Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:
· one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));
· a departure is just and equitable as regards the children and each parent
(sub-subparagraph 98C(1)(b)(ii)(A)); and· it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)).
Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2) of the Act.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.
Issue 1 – Is there a ground to depart?
Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by Child Support as Reason 8A, provides as a ground for departure:
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia)because of the income, property and financial resources of either parent; or
(ib)because of the earning capacity of either parent; …
The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. While it is not possible to define with precision the meaning of that term, 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 Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92–279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
The hearing
10.In summary, Ms Thatcher told the Tribunal that it is “no secret” that Mr Granger works
full-time. He commenced receiving his workers’ compensation around ten years ago when she and Mr Granger were still together. A variety of text messages record Mr Granger indicating he was “at work” or was being paid less than he was in a prior job.[1] [The child] is driven to school by Mr Granger’s current wife; she cares for him (including during school holidays) whilst Mr Granger is at work. Ms Thatcher said Mr Granger was an “independent contractor” and kept “changing ABNs” without properly declaring income to the ATO. He has done work in positions he obtained through family members (for example, through his cousin at [Employer] – see photograph at folio 184); she understands he receives cash (and in the past at least, cheques). Ms Thatcher lived in the home in which Mr Granger presently resides before she left the relationship; the home was gifted to Mr Granger by his parents who own multiple properties. Ms Thatcher said Mr Granger’s parents had gifted all their children a house. Mr Granger “knocked the home down” and rebuilt it to a very high standard; Ms Thatcher said he paid cash for the renovations. She understands he does not have a mortgage (she suspects he was declared bankrupt some years ago and would not be able to access finance). She said she had witnessed him buy a $60,000 [Vehicle] in cash when they were together.[1] See, for example, text exchanges at folios 160, 161, 165, 178, 179, 181 and 184.
11.Ms Thatcher said that based on Mr Granger’s prior earnings and the experience he has in the industries in which he works that he would be earning the equivalent of at least $100,000 per annum on a very conservative estimate. Along with his workers’ compensation payments, he would earn at least $150,000.
12.Ms Thatcher said that until recent years, Mr Granger was paying her $150 per week (down from $250 a week), as well as upholding their agreement that he would pay for [the child]’s school fees and sporting costs. However, Ms Thatcher said the arrangement was soured when Mr Granger’s current wife decided to enrol [the child] at a local private school. Litigation ensued – Ms Thatcher said Mr Granger was able to afford a lawyer whilst she had to access Legal Aid. Mr Granger stopped making payments and paying school fees and other expenses; Ms Thatcher said she has paid for [the child]’s school fees this year (at two different schools) – she will be facing tuition fees of around $5,200 from next year ([School]): folio A2. She will also be liable for a building levy of $1,000, as well as being required to purchase an expensive Apple laptop and expensive school uniforms and the like, which she cannot afford without assistance from Mr Granger.
13.Ms Thatcher started “full-time” work in April this year; she estimates she is earning around $63,000 a year. She has her own medical expenses (she has ADHD); she also incurs expenses for [the child]’s medicines. [The child] has other health issues such as with his ankle which requires expensive aids.
14.In terms of going forward, Ms Thatcher indicated her preference for a departure for as long as possible to avoid having to engage with Child Support and argue the same issues – she said it is likely Mr Granger will continue to work for “cash” and not disclose his income to the ATO.
Consideration
15.I did not have the benefit of hearing from Mr Granger who elected not to participate in these proceedings. I found Ms Thatcher a reliable witness. Her evidence that Mr Granger has been working on a full-time basis is corroborated by his own text messages. I consider it more likely than not Mr Granger is working on a full-time basis “off the books” and conservatively earning the equivalent of at least $100,000 per annum (as a gross figure, before tax or other deductions). This renders the child support assessment unfair. In the special circumstances of the case, there is a ground to depart from the child support formula.
Issue 2 – Is it just and equitable to depart from the administrative assessment?
16.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal is obliged to conduct reviews in a way that is, amongst other things, informal and quick: section 9 of the Administrative Review Tribunal Act 2024.
17.I find it more likely than not that Mr Granger is working full-time “off the record” in addition to receiving his compensation payments. On my calculations, assessing Mr Granger’s income as $145,000 and Ms Thatcher’s income as $53,915 renders Mr Granger liable to some $11,700 per annum. Assessing Ms Thatcher at her higher level of income expected in 2024/25 of some $63,000 reduces that liability by around $500 per annum.
18.The evidence from Ms Thatcher is that the parents expected [the child] to attend Catholic schooling, and that as agreed, Mr Granger was, until 2024, paying for those school fees. I note that the issue of school fees was not raised in the original application nor in the course of the objection process. I accept Ms Thatcher’s evidence that she has paid the fees for this year, and is expecting to pay some $6,200 next year (including the building levy). She will also incur higher costs in the form of equipment and unforms. I note that those costs are generally expected to be met from the amount a payer is assessed to pay as “ordinary” child support.
19.I consider it just and equitable for Mr Granger to make a 50% contribution to [the child]’s private school expenses. Given that matter was not a live issue in the objection process, I consider an amount should be added to his general liability with effect from 1 January 2025.
20.Ms Thatcher made her departure application on 2 November 2023. A variation to Mr Granger’s adjusted taxable income from that time would create a significant arrears liability. I consider it just and equitable to vary Mr Granger’s adjusted taxable income to $145,000 from 29 February 2024, the date of the original decision. Given it unlikely, in my view, that Mr Granger’s adjusted taxable income as disclosed to the ATO will include his employment income, I consider varying his income until the end of 2027 to be appropriate. I note that in Mr Granger’s favour, I have decided not to index the figure of $145,000 I have adopted as representative of his financial capacity.
21.As to Ms Thatcher’s adjusted taxable income, the assessment was based upon her estimated 2023/24 adjusted taxable income and 2022/23 adjusted taxable income of around $53,000 until 1 November 2024 when the assessment reverted to a “provisional” 2023/24 figure of $10,518.[2] I consider the assessment generally representative of Ms Thatcher’s financial capacity for the period prior to 1 November 2024; from 1 November 2024, I consider her adjusted taxable income should be varied to $63,000 (her estimated level of current income) until the end of 2025, by which time her actual 2024/25 adjusted taxable income should be known, and can feed into the formula assessment.
[2] Assessing Mr Granger’s adjusted taxable income as $145,000 and Ms Thatcher’s income as $10,518 yields an annual liability of some $13,200, some $1,500 higher than her income being assessed as $53,915.
22.In my assessment, I do not consider there to be any other relevant expenses for the parents, or for [the child], which would warrant any further adjustment. There is no evidence before me which would suggest that Mr Granger, with appropriate budgeting, will not be able to meet this ongoing child support liability.
23.I consider it just and equitable to make a departure in the same terms set out above.
Issue 3 – Is it otherwise proper to make a departure determination?
24.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.
25.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.
26.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.
DECISION
The Tribunal sets aside the decision under review and in substitution decides to:
(a)vary Mr Granger’s adjusted taxable income to $145,000 for the period 29 February 2024 to 31 December 2027;
(b)vary Ms Thatcher’s adjusted taxable income to $63,000 from 1 November 2024 to 31 December 2025;
(c)increase Mr Granger’s annual child support liability by $3,100 for the period 1 January 2025 to 31 December 2027 (as a contribution towards [the child]’s school fees).
| Date(s) of hearing: | Wednesday, 13 November 2024 |
| Representative for the Applicant: | Self-represented |
| Representative for the Other party: | Not attended |
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