Ticknor and Codling (Child support)

[2021] AATA 2720

Ticknor and Codling (Child support) [2021] AATA 2720 (26 May 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/AC020361

APPLICANT:  Ms Ticknor

OTHER PARTIES:  Child Support Registrar

Mr Codling

TRIBUNAL:Member S Brakespeare

DECISION DATE:  26 May 2021

DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

·For the period 23 May 2020 to 30 September 2020 Ms Ticknor’s adjusted taxable income is varied to $64,480;

·For the period 23 May 2020 to 16 August 2020 Mr Codling’s adjusted taxable income is varied to $97,800;

·For the period 17 August 2020 to 31 October 2021 Mr Codling’s adjusted taxable income is varied to $110,400.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – a ground for departure established – 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. Mr Codling is the parent liable to pay child support to Ms Ticknor in respect of their children [Child 1] who is 14, and [Child 2] who is 12. The child support case commenced on 8 October 2012. The Child Support Agency records reflected that Ms Ticknor had 57% care of the children and Mr Codling had 43% care of the children until 17 July 2020. There was a change to the percentages of care which reflects that from that date Ms Ticknor has 75% of the children and Mr Codling has 25% care of children.

2. On 23 May 2020 Mr Codling applied for a change of assessment citing as a ground that his liability under the administrative assessment was unjust and inequitable because of Ms Ticknor’s income. Ms Ticknor made a cross-application citing multiple grounds for departure.

3. At the time the application for a change of assessment was made, the administrative assessment was based on Mr Codling’s 2018/19 adjusted taxable income of $84,538 and Ms Ticknor’s 2018/19 adjusted taxable income of $24,587 which resulted in annual liability for Mr Codling of $9,174.

4. On 4 September 2020 an officer of the Child Support Agency made a departure determination in the following terms( the original decision):

   ·for the period 1 February 2020 to 31 July 2020 Ms Ticknor’s adjusted taxable income is varied to $78,500;

   ·for the period 1 February 2020 to 31 January 2022 Mr Codling’s self-support amount is decreased by $10,000.

5. Ms Ticknor lodged an objection to the original decision. On 23 November 2020 an objections officer allowed the objection in part and replaced the original decision with a departure determination the following terms:

   ·for the period 1 May 2020 to 31 October 2021 Ms Ticknor’s adjusted taxable income is varied to $67,000;

   ·for the period 1 May 2020 to 16 August 2020 Mr Codling’s adjusted taxable income is varied to $99,000;

   ·for the period 17 August 2020 to 31 October 2021 Mr Codling’s adjusted taxable income is varied to $114,000.

6. Ms Ticknor lodged an application for review of the objection decision with the tribunal. A telephone directions hearing was held on 7 April 2021. Both parties participated and complied with the directions that were issued. A hearing was held on 26 May 2021. Ms Ticknor and Mr Codling gave evidence to the tribunal by conference telephone. The Child Support Agency provided to tribunal and the parties with bundles of paper relevant to the review (589 pages). Prior to the hearing the tribunal numbered and exchanged extra documents provided by the parties ( folios A1 to A33 and B1 to B24).

7. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. 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).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three-step process such that the issues for determination by this tribunal are:

   ·whether a ground is established to depart from the administrative assessment of child support; and

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

   ·if so, whether it is otherwise proper to make a particular departure determination.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. 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 & Gyselman (1992) FLC 92-279 has held:

   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.

7. Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. 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.

9. 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?

1. A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. It is not in contention, and the tribunal finds, that Ms Ticknor’s income increased significantly from February 2020 because she was employed in two part-time positions until 1 October 2020 when she returned to working one part-time position only. The objections officer calculated that Ms Ticknor’s employment income for the period she was working two positions was $58,702 annualised. The tribunal is satisfied with that calculation.

3. The objections officer also added a further amount of $9,222 (annualised) to Ms Ticknor’s income for income support payments she received during that period. However, the tribunal finds that paragraph 117(7A)(b) of the Act provides that, in having regard to the income property and financial resources of the parent of the child, any entitlement that the carer has to an income-tested pension or allowance or benefit must be disregarded. The tribunal therefore finds that Ms Ticknor’s newstart allowance should not be included in her income.

4. Mr Codling is of the view that Ms Ticknor derives a benefit from her business which should be taken into account; in particular he questioned a business deduction recorded in Ms Ticknor’s 2019/20 income tax return in respect of a depreciation expense of $12,000.  He noted that if the depreciation expense was disallowed, Ms Ticknor’s business would have shown a profit of about $6,000.  

5. The tribunal finds that Ms Ticknor’s tax return recorded a net business loss of $6,222 for the 2019/20 financial year. Ms Ticknor confirmed that the depreciation expense related to car that she purchased for $12,000. She said that she believes that her accountant has factored in the personal use of the vehicle in preparing her accounts.  The tribunal accepts that taxation law allows for accelerated depreciation for capital purchases under particular amounts. However, the tribunal notes from Ms Ticknor’s Statement of Financial Circumstances that the vehicle was purchased for $12,500 under finance and remains under finance for that amount. The tribunal does not accept that Ms Ticknor incurred an expense of $12,000 in the 2019/20 year. Therefore, the amount of $12,000 should not be deducted from her income for the purpose of the child support assessment. If the depreciation expense is added back, her business would derive a small profit of $5,778.  This amount should therefore be added to her income of $58,702.

6. The tribunal finds that Ms Ticknor’s income, for the purpose of the child support assessment, is $64,480 per annum for the period 1 February 2020 to 30 September 2020. The tribunal accepts the evidence provided by Ms Ticknor which indicates that from 1 October 2020 there was a significant reduction in her income due to further employment changes.

7. Mr Codling’s 2019/20 adjusted taxable income is $87,418. Mr Codling agreed that as part of his employment package he is provided with a house in a rural location which he values at $200 per week. He is also provided with a work vehicle. He said the in-kind benefits are not a reportable fringe benefit tax. The business that Mr Codling works for was taken over by another company in August 2020. Mr Codling said that his salary is now $1,923.08 per week. His current employer advised the Child Support Agency that he receives a further $300 per week in allowances after tax. Mr Codling said that that amount represents the house and the car provided by the employer. He said the employer records his remuneration in that manner to make the salary package appear more attractive. However, the work vehicle is only used for work. Mr Codling said he and his partner both have their own vehicles for private use. Mr Codling said he receives no other in-kind benefits from his employer. He said that he thought that his salary and housing benefit together were worth about $108,500 per annum.

8. The tribunal takes the view that an amount should be added to Mr Codling’s taxable income to reflect the in-kind benefit of his employer-provided housing. The tribunal is satisfied that the value of that benefit is $10,400 per annum. The tribunal does not find it appropriate to include an amount in respect of the work vehicle. The tribunal therefore finds that Mr Codling’s income for child support purposes is in the vicinity of $98,000 per annum. This amount increased to approximately $110,000 from 17 August 2020 when Mr Codling’s taxable income increased to $99,996.

9. The tribunal finds that the application of an income for Ms Ticknor of $64,480 per annum and an income for Mr Codling of $98,000 per annum to the child support calculator results in an annual liability for Mr Codling of $6,642. This is significantly less that the amount of $9,174 that is payable under the administrative assessment.

10. The tribunal is satisfied that there are special circumstances in this case, being the change to Ms Ticknor’s employment and as a result Mr Codling’s liability under the administrative assessment, is unjust and inequitable because of the income, property and financial resources of the parents.

11. This means that there is a ground for departure in accordance with subparagraph 117(2)(c)(ia) of the Act

Issue 2 – is it just and equitable to make a particular 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 as regards the children, 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 re 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.

2. In having regard 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).

3. Ms Ticknor told the tribunal that the Act requires that, as well as the amount of child support that arises under the administrative assessment , Mr Codling must pay for 50% of the needs of the children. Ms Ticknor said that this provision in the Act is called the Jack & Jill Table.  She said that Mr Codling has not covered 50% of the children’s needs for the past 10 years and therefore the tribunal is required to make a determination that takes into account the costs borne solely by her.  Mr Codling disputes Ms Ticknor’s claim. He stated that he has continually paid for additional expenses for the children above and beyond his child support payments. He provided the Child Support Agency with a number of receipts to support his contention. 

4. The tribunal does not agree with Ms Ticknor’s assertion that Mr Codling must pay for 50% of all the children’s costs as well as the child support liability. The tribunal notes that the administrative assessment assumes that the liable parent is meeting some of the children’s needs by providing care (as long as the care is in excess of 14%).   The tribunal does not accept that the liable parent is required to transfer extra funds to the other parent, other than when there are extra costs arising from special needs or in circumstances where there are extra costs because the children are being educated or trained in a manner intended by both parents (e.g. private school costs). The tribunal notes that Ms Ticknor has a debt of almost  $12,000 arising from private school fees for the children in 2019. Ms Ticknor provided no evidence to support her contention to the Child Support Agency that both parents intended for the children to be educated privately. The children now attend public schools. The tribunal finds that there are no extra costs to be taken into account in respect of the children’s needs and therefore it is appropriate to calculate the costs of their needs by reference to the Costs of the Children Table.[2]

   [2] Provided for in section 155 of the Act.

5. The tribunal is satisfied the children do not have any income, earning capacity, property or financial resources that should be taken into account for the purpose of the child support assessment.

6. The tribunal has found that Mr Codling’s employment income is to be increased by an amount of $10,400 to take account in-kind benefits provided by his employer. The tribunal finds that Mr Codling owns a motor vehicle and a beach house (encumbered by mortgage). He has a small amount of savings. He has no other assets of significance.

7. The tribunal has found that Ms Ticknor’s income increased to $64,480 per annum from February 2020. However, the increase was for a limited period, until the end of September 2020.  The tribunal finds that from 1 October 2020 Ms Ticknor’s casual income from employment and self-employment is unlikely to be significantly more than the self-support amount provided for in the administrative assessment. Ms Ticknor has no savings and no assets of significance. Her car is under finance.

8. The tribunal is satisfied that the earning capacity provisions do not apply to either parent.

9. The tribunal proposes to make a departure determination in the following terms:

   ·For the period 23 May 2020 to 30 September 2020 Ms Ticknor’s adjusted taxable income is varied to $64,480;

   ·For the period 23 May 2020 to 16 August 2020 Mr Codling’s adjusted taxable income is varied to $97,800;

   ·For the period 17 August 2020 to 31 October 2021 Mr Codling’s adjusted taxable income is varied to $110,400.

1. Ms Ticknor contended that the change to Mr Codling’s income should be backdated 10 years. Ms Ticknor said that she had not brought an application previously as she was the victim of domestic abuse and coercive control perpetuated by Mr Codling. She said that she was never made aware that she could contest the administrative assessment.

2. The tribunal can only make a departure determination in respect of a day that is not more than 18 months prior to the date the application was made (subsection 98S(3B) of the Act). However, the tribunal must have regard to whether it is just and equitable to create arrears for a parent by backdating the departure determination.  The tribunal does not accept that Ms Ticknor could not make a change of assessment application earlier.  Information regarding making an  application for a change of assessment where a parent has special circumstances is readily available through the Child Support Agency or the Services Australia website.

3. The tribunal does not find that it would it just and equitable to backdate the departure determination and therefore it applies from the date the change of assessment application was lodged. The application put both parents on notice regarding a possible change to the assessment.

4. The proposed determination is likely to result in the following liability for Mr Codling:

   ·For the period 25 May 2020 to 16 July 2020 approximately $6,612 per annum ($126 per week);

   ·For the period 17 July 2020[3] to 16 August 2020 approximately $11,364 per annum ($217 per week);

   ·For the period 17 August 2020 to 30 September 2020 approximately $13,420 per annum ($257 per week);

   ·For the period 1 October 2020 to 30 September 2021 approximately $15,790 per annum ($302 per week).

   [3] The percentages of care used in the assessment changed from this date.

5. The tribunal is satisfied that Mr Codling has the capacity to pay the assessed amount given that his gross weekly income is in the vicinity of $1,923. He has no rent liability and only a small mortgage on his beach house.  After meeting his necessary commitments for his self-support he still has a considerable amount of disposable income.  His liability was reduced for the period when Ms Ticknor’s income increased because of her employment. However, once Ms Ticknor’s income reduced when her employment ended, her ability to contribute to the children’s care also reduced. She is now in receipt of casual employment income and income support payments.  Ms Ticknor is required to pay rent in the amount of $300 per week and also has to make monthly payments in relation to her motor vehicle. Her ability to provide for the children’s needs is limited due to her low casual income and lack of other resources.  The tribunal finds the proposed determination to be just and equitable.

Issue 3 – 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) 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.

2. Ms Ticknor receives family tax benefit for the children. The tribunal finds that the overall effect of the tribunal’s decision will be a decrease to the amount of family tax benefit payable. This means that some of the burden of supporting the children will move from the taxpayer to the parents. Such an outcome is otherwise proper. 

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

·For the period 23 May 2020 to 30 September 2020 Ms Ticknor’s adjusted taxable income is varied to $64,480;

·For the period 23 May 2020 to 16 August 2020 Mr Codling’s adjusted taxable income is varied to $97,800;

·For the period 17 August 2020 to 31 October 2021 Mr Codling’s adjusted taxable income is varied to $110,400.