Toczek and Thierry (Child support)

[2020] AATA 5565

Toczek and Thierry (Child support) [2020] AATA 5565 (11 November 2020)

DIVISION:  Social Services & Child Support Division

REVIEW NUMBER:  2020/PC019407

APPLICANT:  Ms Toczek

OTHER PARTIES:  Child Support Registrar

Mr Thierry

TRIBUNAL:  Member S Hoffman

DECISION DATE:  11 November 2020

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides as follows:

·     From 2 December 2019 to 4 October 2023, Mr Thierry’s adjusted taxable income is varied to $136,000.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of special needs of child do significantly affect the cost of maintaining the child – income, property and financial resources of the liable parent – a ground for departure established – decision to depart – whether determination should be backdated – decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1.This review is about the child support assessment in respect of [Child 1], born October 2005 and therefore now 15 years old.  The case was registered with the Department of Human Services – Child Support (the CSA) on 21 December 2005 and the CSA has been involved with the collection of child support since then. The father pays child support to the mother.

2.On 2 December 2019 the mother applied for a change of assessment. At that time, according to the CSA’s records, the mother was providing 78% of the child’s care and the father was providing 22% of his care. The father was required to pay $11,937 a year in child support, based on an adjustable income for him of $115,438 as varied by a previous change of assessment decision, and the mother’s provisional adjusted taxable income for 2017/18 of $22,312.

3.On 14 April 2020 a senior case officer from the CSA decided that a reason to change the child support assessment had not been established (the original decision). Therefore, there was no change to the assessment.

4.On 23 March 2020, the mother objected to the original decision and on 11 June 2020, an objections officer from the CSA disallowed the objection (the objection decision). He also found that no reason to depart from the administrative assessment had been established. This meant that the child support assessment was unchanged.

5.On 14 July 2020, the mother lodged an application for review with the Administrative Appeals Tribunal (AAT). A directions hearing was held on 30 September 2020 after which directions were issued. The matter was heard on 11 November 2020. Both parties attended via conference telephone and gave sworn evidence.

6.Both parties had made requests to be represented. Paragraph 32(3)(b) of the Administrative Appeals Tribunal Act 1975 sets out that in deciding whether to grant permission for a party to be represented by another person, the tribunal must have regard to the wishes of the parties and the need to protect their privacy.

7.The father requested that he be represented by his father-in-law on the basis that he (the father) was not always able to attend to matters concerning the review, due to work commitments and the nature of his work.[1] The applicant opposed the father’s request as she said she believed the process should be between the parents of the child and not a third party. The mother, who has multiple sclerosis, also asked the tribunal to consider the impact a third person being involved in the hearing could have on her, given her health condition.[2]

[1] According to documents he provided, the father is self-employed as a [Occupation 1]. He said at the hearing that he was now doing more general [work]

[2] The tribunal notes that the father referred to the mother having multiple sclerosis in his submissions and is aware of her medical condition

8.The mother requested she have a representative at the hearing, with the main reason being her health. She was asked to provide medical evidence in support of her request for representation and as this was not done (she submitted proof of her condition rather than evidence specifically addressing why she might need representation at the hearing), her request was denied and the father was informed accordingly. The mother later submitted medical evidence in support of her request to be represented. After this was received, the tribunal granted her request and informed the father accordingly.

9.In coming to a view regarding the parents’ requests for representation, the tribunal has to balance competing considerations. The tribunal decided to grant the mother’s request (largely because of her health) and reject the father’s request, having considered each parent’s request, the reasons for their request, and the need to protect their privacy.

10.Whereas the mother requested a representative, the person she asked to be present at the hearing, [Ms A], acted as a support person rather than a representative. [Ms A] did not make any oral submissions during the hearing. The mother said that [Ms A] would assist her by doing things like taking notes, turning over pages and locating specific evidence in the documents. A non-disclosure order was issued to [Ms A], as well as to each parent, prior to the hearing. 

11.The CSA had provided documents numbered 1 to 198 and 200 to 227,[3] the mother submitted documents numbered A1 to A23 and the father had submitted documents numbered B1 to B64. Copies of these documents were sent to both parties before the hearing.

[3] Neither bundle had a page numbered 199, the first bundle had a blank, unnumbered final page and the second bundle’s cover page was also not numbered. It was unclear to which bundle page 199 belonged

12.The mother said she had not received the second bundle from the CSA. Of the 28 pages in that bundle, 22 were copies of forms and supporting evidence the mother had provided to the CSA. The other six pages were notes made by CSA officers documenting unsuccessful attempts to contact the mother, and the content of phone conversations when they did contact her. The tribunal explained the make-up of the second bundle to the mother and she was happy to proceed with the hearing even though she did not have those documents in front of her. The tribunal was satisfied there were no issues of procedural fairness arising from the fact that the mother said she had not received the second CSA bundle.

ISSUES

13.The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act1989 (the Act). The Act provides for an administrative assessment of child support to be paid. Pursuant to section 98C of the Act, a decision to depart from the administrative assessment may be made if the following three requirements are met:

i.A ground is established; and

ii.It would be just and equitable as regards the child, the liable parent and the carer entitled to child support to make a particular determination; and

iii.It would be otherwise proper to make a particular determination.

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

15.If the tribunal is satisfied that the three requirements are met, it may make one of the determinations prescribed in section 98S of the Act, which include 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.

16.As there have been a number of departure (change of assessment) decisions made by the CSA in recent years, it would seem the parties are familiar with the process.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

17.Subparagraph 117(2)(b)(ia) of the Act provides that there is a ground for departure where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the special needs of the child.

18.  The tribunal notes that the term ‘special needs’ is not defined in the Act. It is not a reference to a child having a disability. Its meaning is broader than that. In Lightfoot, the Full Court stated that the phrase ‘special needs of the child’:[4]

…encompasses a wide range of needs of a child which are seen as special in the sense of necessary or at least desirable for that child’s welfare but outside the ‘normal’ needs of a child which could be catered within the formula.

[4] Lightfoot and Hampson [1996] FLC 92-663 at [82]

19.  The term ‘significantly affected’ is also not defined in the Act. Guidance is given in Potter & Burbage (SSAT Appeal) [2010] FMCAfam 1009. Riethmuller FM considered what was meant by the costs of maintaining the child being significantly affected, in the context of education expenses. He stated that the income of the parents should be taken into account as well as the rate of child support.

20.  The mother was seeking a contribution from the father for the following costs related to the child:

·     Root canal work

·     Orthodontic work - braces

·     Speech therapy, tutoring and psychiatric costs to do with the child’s specific learning disorder (SLD).

21.Although the objection decision did not specifically consider dental costs, it did consider the child’s special needs. Special needs can include dental and orthodontic costs and therefore the tribunal considers it appropriate to address these costs as part of this review. The tribunal will address each of the three in turn.

Root canal work

22.The mother submitted that dental treatment was needed for the son’s [tooth], which involved root canal work. In her Statement of Financial Circumstances (SFC) dated 29 July 2020, the mother listed three amounts totalling $989.50 and recorded the costs as being incurred in 2018.

23.By the time of the hearing, the mother had received a statement of account from the dental practice, which she submitted. This showed that there were costs amounting to $523.20 incurred in 2014, $228.90 in 2015, $168.00 in 2016 and $391.55 in 2017, totalling $1,311.65. Most of the payments were annotated “Direct Debit/Medicare” and therefore it is likely that most of the total amount of $1,311.65 was not made up of out of pocket expenses for the mother.

24.The CSA documents only record the cost of the child according to the child support formula going back to 5 October 2018. The cost of the child has been at least $15,700 since then.[5] Compared to an annual cost of the child of at least $15,700, the cost of dental work each year was not sufficient to significantly affect the costs of maintaining the child. Although the documents do not record the cost of the child for the years between 2014 to 2017, the documents do show the father’s taxable income for those years, and on that basis the tribunal is certain that the cost of dental work was not sufficient to significantly affect the costs of maintaining the child for those years.

[5] Pages 187 to 193 of the CSA documents. The cost of the child is worked out according to a formula using the parents’ respective incomes

25.In addition, it is expected that an application for a change of assessment on the grounds of special needs is made in a timely fashion. The mother said that she had previously lodged a change of assessment claim for these costs but then withdrew it as she was told it would not succeed.

26.The tribunal is satisfied that these costs would not significantly affect the cost of maintaining the child after taking into account that they were spread across a number of years. In addition, it is unclear whether they were out of pocket costs for the mother.

Orthodontic work – braces

27.In support of this claim, the mother submitted a document from [a dental health service provider] dated 16 September 2020. It is headed “Non-subsidised orthodontic treatment”. It states that government-subsidised orthodontic treatment is only available for patients who meet specific financial and clinical criteria approved by the State government.

28.The document goes on to say that the [dental health service provider] has a policy to provide treatment to patients who do not meet the clinical criteria for government-subsidised treatment but who have low incomes. The mother receives disability support pension (DSP).

29.It appears from this document that the child does not meet the clinical criteria for subsidised orthodontic treatment. The mother did not provide any evidence of the clinical basis for the orthodontic work. This is needed to assess, for example, whether there is a medical, rather than purely cosmetic, basis for the orthodontic work such that it can be characterised as a special need of the child; necessary or at least desirable for his welfare.

30.In addition, the mother has not yet incurred, or committed herself, to these costs . The document states that the cost of the work is $4,249.20, and that a deposit of $2,124.60 must be paid before work starts and the balance paid off in nine monthly instalments.

31.The tribunal finds that a ground for departure has not been established in relation to orthodontic work for the child.

Specific Learning Disorder – tutoring, speech therapy and psychiatric costs

32.The documents include a Functional Literacy Assessment Report from [Ms B], educational and developmental psychologist, dated December 2019 and an assessment from [Dr C], consultant child and adolescent psychiatrist dated 20 February 2020. The mother attended the psychiatric assessment with the child.

33.It is apparent from these reports that there have been different diagnoses or explanations given for the child’s learning difficulties at different times. Even though it may have taken some years to arrive at a diagnosis of SLD, that does not mean that costs incurred in relation to the child’s learning difficulties prior to the SLD diagnosis being made should be disregarded.

34.[Ms B] wrote that the child meets the criteria for an SLD with moderate impairment in reading and writing, and that he has been receiving private intervention and classroom accommodations since Year 4. She noted that as mandated in the Diagnostic Statistical Manual for an SLD diagnosis, he has received more than six months of literacy intervention and that the assessment has highlighted his “continual challenges in performing at an age appropriate level in all literacy tasks…[his] cognitive challenges place a significant functional impact on his reading and writing.”

35.[Ms B] wrote that it would be reasonable and fair to continue to provide the child with a curriculum adjustment plan and participation in literacy remediation at school, and private speech pathology/professional tutoring targeting his literacy needs.

36.In his assessment, the psychiatrist noted the child achieves reasonable grades, with the exception of subjects with which he is bored or where he dislikes the teacher. He also recorded that he supported the recommendation by [Ms B] for ongoing speech pathology assistance.

37.The father said he disputed the diagnosis. As the diagnosis is supported by two clinicians whose areas of speciality are highly relevant, the tribunal sees no basis on the evidence before it to reject the diagnosis. It finds therefore that the child meets the criteria for SLD. Even if the SLD diagnosis was found to be incorrect, there is sufficient evidence of the child having some learning difficulties over a number of years. That is, the focus should be on the child’s needs rather than a specific diagnosis.

38.As the objections officer observed in his decision, the criteria relating to the special needs provision (subparagraph 117(2)(b)(ia) of the Act) do not include a requirement for the agreement of, or consultation with, the other parent.

39.The relevant criteria are concerned with the special needs of the child and the extent to which the out of pocket expenses associated with the special needs significantly affects a parent’s ability to maintain their child.

40.The recommendation made by [Ms B] which was specifically supported by [Dr C] was that for speech therapy. The father strongly disagreed that this was required and did not agree that he should have to contribute to the related costs. Again, the tribunal notes that speech therapy was the recommendation by two clinicians with highly relevant expertise. 

41.The mother submitted invoices from [Ms B] as follows:

Date  Description  Amount

22 November 2019               Individual Assessment          $199.00

2 December 2019                 Individual Assessment          $199.00

2 December 2019                 Consultation/intervention       $199.00

11 December 2019               Short Report  $377.00

$974.00         

42.A Medicare statement referring to a charge of $199.00 recorded that the schedule fee was $101.35 and the benefit was therefore $86.15. The mother claimed that this was the only rebate payable and her out of pocket expenses for [Ms B] totalled $887.85.

43.As pointed out by the father, [Dr C] referred to “numerous psychometric testing and investigations across many years” and observed that the child had some annoyance over the repeated testings over the years. [Dr C] wrote “No further testing is recommended at this point. In fact, I’ve communicated my view that there’s a danger of [the child] becoming more disillusioned and disengaged from education if the approach to achievement and learning isn’t adjusted”.

44.[Dr C] charged $599.00 for his assessment. The mother’s out of pocket expense after a Medicare rebate was $259.70.

45.The documents include an email from the mother to the father dated 20 September 2019 in which she stated that following consultation with the child’s school and the school psychologist, the child was referred to undergo assessment by an occupational therapist specialist and a developmental optometrist. There is no record of the father responding to this email.

46.The mother submitted copy invoices from [the occupational therapist] for six appointments in June and July 2019, totalling $700. After rebates, the mother’s out of pocket expenses amounted to $465.00.

47.The mother’s out of pocket expense for the [optometrist] was about $100. It is not uncommon for children to be tested in relation to their vision and whether they need glasses. Generally this type of expense is covered by the child support formula. The tribunal does not consider this to be a special need and will not consider it further.

48.As already noted, speech therapy was recommended by both [Dr C] and [Ms B]. The mother provided evidence from a speech pathologist about those costs. She said those sessions have not started. As costs have not yet been incurred, the tribunal will not consider the cost of speech therapy any further. 

49.Over the period from July 2019 to February 2020, the mother has had out of pocket costs which the tribunal is satisfied should be taken into account with regard to the child’s special needs. These are as follows:

[Ms B]   $887.85

[Dr C]  $259.70

[Occupational Therapist]        $465.00

$1,612.55

50.The tribunal notes that these are not recurring costs and notes again [Dr C]’s expressed concern about too much testing.

51.The mother did not submit any claims or evidence of expenses incurred relating to the child’s SLD for the period from March 2020 to October 2020; the parents were directed to provide evidence to the tribunal by 14 October 2020 and were further advised they could make written submissions up to two weeks before the hearing date.

52.To summarise, in light of the foregoing, the tribunal accepts that the child has a barrier to learning which has been most recently diagnosed as SLD. It appears from the documents that he receives support from school to assist him with this. The mother has demonstrated to the tribunal’s satisfaction that she has incurred out-of-pocket expenses in relation to the child’s learning difficulties and is satisfied that these meet the threshold to be considered special circumstances for child support purposes. 

53.The next stage is as follows. The tribunal is required to consider whether the out of pocket expenses incurred by the mother significantly affected the costs of maintaining the child. These costs were incurred over an eight month period and cost the mother about $200 a month. The cost of the child is at least $1,308 a month ($15,700 / 12); $200 a month represents 15% of that which, in the tribunal’s view, is a significant additional cost,  The tribunal also has regard to the fact that the mother is in receipt of DSP. Although she did manage to cover the costs at the time they were incurred, the tribunal is satisfied that these costs did significantly affect her ability to maintain the  child.

54.The tribunal finds therefore that a ground for departure from the administrative assessment has been established, pursuant to subparagraph 117(2)(b)(ia) of the Act.

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

55.As the tribunal is satisfied that there is a ground to depart from an administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the child, the father and the mother 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 a variety of factors, as set out in subsection 117(4) of the Act.[6]

[6] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi and Meares (SSAT Appeal) [2008] FMCAfam 886

56.Section 3 of the Act makes it clear that parents have the primary duty to maintain their children, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain. In this case the father and the mother have the primary duty to financially support their child of this case. 

Income, property and financial resources – the mother

57.According to the CSA’s records, the mother’s income from Centrelink was $22,312 in 2018/19 and $22,751 in 2019/20. As already recorded the mother receives DSP. The regular coronavirus supplement paid to people receiving, for example, jobseeker, has not been paid to people in receipt of DSP. 

58.The mother’s income is less than the self-support amount for 2020 of $25,038. If a person’s income is less than the self-support amount, variations in their income that do not increase it to more than the self-support amount do not affect the rate of child support.

59.According to her SFC, the mother lives in a property worth $390,000 which has no mortgage against it. She has about $3,200 in bank accounts. She listed weekly household expenses totalling $502.35 a week plus $41.18 a week in personal expenditure, giving total outgoings of $543.53 a week. The mother recorded that she spends $40 a week on food for her and the child which seems very low. She said that her parents take them out to dinner about two nights a week. She briefly described what kind of food she buys and how she cooks large amounts of mince and uses that in different meals.

60.The biggest expense was education expenses for the child of $193 a week or $10,036 a year. The child attends [School 1]. A summary of the school fees for 2020 can be found on its website which shows they are about $16,000 a year for children in years 7 to 10.[7]

[7] A summary of the school fees can be accessed here [Source deleted]

61.The mother pays strata fees of $38.46 a week but does not pay rent or mortgage repayments which means that she extra funds available to her compared with those who do pay rent or have a mortgage. There is mention in the documents of the child benefiting from a scholarship. The tribunal returns to school fees below.

62.According to her SFC, the mother’s income is $786 a week (from DSP, family tax benefit and child support) and her outgoings amount to $543.53, leaving $243 a week left over. The mother indicated that she budgeted carefully and used what was left over each week to cover other expenses. It was also apparent that the mother receives support from her parents. The mother said they purchased clothes for the child and clothes were also provided by the school.

63.With regards to her health, she said that visits to the doctor were bulk-billed or covered through her health insurance.

64.The father had compared the details of the mother’s SFC with similar information she had provided to the CSA when lodging her change of assessment application. He pointed out that in her SFC, she wrote that education expenses were $193 a week and in the CSA form, she wrote they were $550 a year. The mother said this was a mistake and the SFC figure was the correct one.

65.In his written submissions, the father queried other figures the mother had provided. The tribunal would note that this review process does not entail a forensic examination of a person’s finances. It is an administrative exercise. In this case the mother is in receipt of DSP. She receives financial assistance from her parents. The tribunal asked her if she had received an inheritance or was the beneficiary of a trust and she said no to both of those.

66.It is not uncommon, in the tribunal’s experience, for parties to these kinds of review to make mistakes with their SFCs. SFCs can be viewed as giving a sense of the person’s financial situation; for example, is the person experiencing financial hardship; are they managing week to week by keeping to a strict budget; are they able to pay their bills without having to worry about them; or does their income easily cover their expenses, including discretionary spending. In most cases, it is the person’s income that is a more relevant figure than individual expense items when considering if the income used in the child support formula adequately reflects a person’s income, property and financial resources. 

67.The tribunal also notes that variations in the mother’s income, because of the care percentages and the difference between her income and the father’s income, would have to be significant to make a material difference to the rate of child support. For example, if the father’s adjusted taxable income was $136,000 a year and the mother’s was $20,000, the tribunal estimates that the rate of child support payable by the father would be $13,850 a year. If the mother’s income increased to $30,000 a year, the rate of child support would decrease by about $10 a week.

68.As the mother is in receipt of DSP, the tribunal is satisfied it need not vary her adjusted taxable income through this change of assessment review.  

Income, property and financial resources – the father

69.The father is self-employed. According to his SFC he worked as a [Occupation 1]. At the hearing he said because of the availability of work, he now does more general [work]. He operates his business as a partnership with his wife.

70.The father’s adjusted taxable income of $115,438 was varied to that amount through a change of assessment decision made by the CSA on 8 July 2019. Prior to that, he had been assessed to pay child support based on an adjusted taxable income of $134,000 which followed a change of assessment decision made by the CSA on 15 August 2017.

71.The father submitted financial statements for this review which show that the partnership made a profit of $147,251 in 2017/18 and $177,404 in 2018/19. 

72.A CSA decision made on 10 May 2017 recorded that the 2015/16 profit was $163,253. The CSA decision made on 8 July 2019 recorded that the profit made in 2017/18 ($147,251) was a reduction compared with previous years. (The tribunal could not locate the profit figure for 2016/17 in the documents.)

73.The profit was distributed equally between the partners, being the father and his wife. For 2019, this was $88,702 each.

74.The father’s tax return for 2018/19 records his wife’s adjusted taxable income to be $110,284. If $88,702 of that was derived from the business, then she received $21,582 from elsewhere. The father said that his wife was employed outside the business as well as working for it, and her other employment was on a casual basis. He said that they were vulnerable as his business was not as busy as usual. He expressed concern as to what would happen if his wife lost her job.

75.The CSA decision-makers took the view that 75% of the profit of the business should be allocated to the father and 25% to the mother for child support purposes. The father had confirmed to the CSA that his wife’s role in the business was similar to an administrative/bookkeeper role. The father said at the hearing he could not conduct the business without his wife’s input.

76.The tribunal accepts that to be the case. It also agrees with the CSA decision-makers as to how to split the profits of the business between the father and his wife for child support purposes, to reflect their respective contributions to the business, being 75% to the father and 25% to the mother. The income is largely derived from the personal exertion and expertise of the father who works in the business full-time. His wife is in an essential, supportive role who also has employment outside the business which suggests she works part-time in the business. It makes sense that the allocation of the profit between the partners for child support purposes should take account of these factors; their different roles within the business and whether they work full-time or part-time for it. The tribunal is satisfied that 75/25 is the appropriate ratio. The tribunal notes that the CSA recorded that the father has not sought further review of the decisions made in 2017 and 2019.

77.The father said that he did not think his wife’s income should be used in the child support assessment. The tribunal agrees, and observes that the child support assessment only takes into account the father’s income. However in arriving at an appropriate income for the father, a decision-maker should consider how the profits of the business are split between husband and wife and whether that reflects their respective contributions to the business. That is, in the tribunal’s view, a different issue to using a spouse’s income in a child support assessment. For example, his wife’s income from her employment as a casual employee for an unrelated party is not included in the child support assessment.

78.Turning now to the 2018/19 financial statement, the tribunal notes that 25% of home phone and internet costs were claimed through the business. The depreciation cost of $2,176 related to a spray gun purchased in the financial year. It is not uncommon when assessing financial statements for child support purposes to add back amounts for phone and depreciation costs to the profit figure. The tribunal finds it is not appropriate to do that in this case.

79. In his SFC, the father included two vehicles. He said both were work-related. The tribunal considers it reasonable to add $5,000 to the profit figure of $177,404 to represent a personal benefit derived from the business for personal use of the vehicles. This gives $182,404, 75% of which is $136,803.  The tribunal finds therefore that the father’s income for child support purposes based on the 2018/19 financial statements is $136,000.

80.The father’s SFC records that his average income is $2,237 a week[8] and his wife’s is $2,124, giving a total of $4,361 a week, which covers the weekly outgoings of $3,332. 

[8] This is based on the father being allocated 50% of the profit of the business plus income from other sources, such as rental income and dividends

81.The father recorded that he and his wife jointly own their home which he valued at $480,000. He also owns two other properties which are rented out, and are worth $160,000 and $280,000. The mortgages over the three properties are slightly more than the properties’ combined values. Although there is rental income, the associated costs are more, meaning the rentals are negatively geared and make a loss. According to his 2018/19 tax return, the rental loss was $7,043.

82.The father recorded about $12,500 in bank accounts and $24,924 invested in shares, for which he receives a dividend of about $1,144 a year. The father valued the two vehicles – [Vehicle 1] and [Vehicle 2] – at $14,000 each.

83.In the household expenses section of his SFC, there was little of particular note apart from the weekly mortgage expense being $1,122. The father explained that this covered the three properties he owns, on his own or with his wife. Also, the father allowed $150 a week in petrol costs which he said were largely work-related. On that basis, much of that cost would be reflected in his financial statements.

84.The father said that he always paid his child support on time which is consistent with the CSA’s records.

85.The father wrote in his SFC dated October 2020, that his weekly income as recorded in the form was based on previous financial years. He wrote that work has fallen off because of the pandemic and was likely to worsen, and he has had to travel further to obtain work. He wrote that his weekly income was $1,705, equivalent to $88,860 a year. This is close to his taxable income for 2018/19 of $90,087. These two figures represent the father’s 50% share of the business profit, whereas the tribunal has determined he should be allocated with 75% of the profit for the purposes of child support.

86.The tribunal considers therefore that $136,000 better reflects the father’s income based on his income, property and financial resources for the 2018/19 and 2019/20 financial years. With regard to the current financial year, the father said that his work was dropping off and it was not as busy as it usually is at this time of the year. He said that he had started to do general [work] rather than [Occupation 1 work]. The father also said, and the tribunal agrees, that it is very hard to know what will happen over the next few months. However, there are some positive signs for the [industry] for 2021.[9]

[9] [Source deleted]

87.Generally, the child support assessment uses the person’s most recent taxable income to calculate the rate of child support. Applying the same principle, the tribunal is of the view that it is appropriate to use the income figure which the tribunal has calculated for 2019/20 to be applied to 2020/21. This means the father will be assessed on the same adjusted taxable income from 1 July 2020 and going forward, which also reflects the income figure he included in his SFC dated 14 October 2020, based on him being allocated with 50% of the partnership profit. It is open to the father to lodge a change of assessment application if his circumstances change.   

88.The tribunal notes that the father‘s income was determined to be $134,000 in a decision made on 10 May 2017 and this was used in the child support assessment from 1 April 2017 to 31 May 2019. Based on the change of assessment decision made on 8 July 2019, the father’s income was varied to $115,438 a year from 1 June 2019 to 31 May 2021. The tribunal’s determination will change that.

89.Using an income of $136,000 for the father means his rate of child support will be about $13,850 a year, compared to $11,937 as it was when the mother lodged her change of assessment application. As that was almost a year ago, this variation to his income will create arrears for the father of about $2,000.

Other issues pertaining to the parents’ incomes, property and financial resources

90.Subsection 117(7B) of the Act prescribes the circumstances in which a parent’s earning capacity may be taken into account; certain criteria have to be met. These include that the parent has failed to demonstrate that decisions made about their work arrangements were not substantially motivated by the effect they would have on the rate of child support.

91.There was no suggestion by either parent that the other had made decisions about their work arrangements that were substantially motivated by the effect they would have on the rate of child support.

92.The father has worked full-time in his business for a number of years. The mother has been in receipt of DSP for a number of years.  The tribunal concluded that it need not consider the application of subsection 117(7B) of the Act in relation to either parent any further.

93.The tribunal is required to have regard to the commitments of each parent that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain (paragraph 117(4)(e) of the Act). The costs related to the father’s two other children have been factored into the child support assessment. As noted earlier, the mother said that costs associated with her health are covered by her health insurance if they are not bulk-billed.     

Costs related to the children

94.In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs they may have (subsection 117(6) of the Act).

95.The child attends a private school. There is an agreement that the mother pays for the school fees. The father included a copy of an undated page from an affidavit which appears to have been signed by the mother. It states, “If [Child 1] attends [School 1] I will pay all school fees with the help of [Child 1]’s maternal grandparents who have offered to contribute to [Child 1]’s education”.

96.The mother said she has an arrangement with the school which allowed her to pay the fees in instalments as and when she could afford them. She referred to the arrangement as a debt for life, suggesting she would be paying off a debt of school fees after the child left the school. The mother was not seeking a contribution to school fees from the father. The tribunal will not consider this cost any further.

97.The tribunal has discussed the child’s special needs at some length. As to whether the father should be required to make a contribution to them at this time, the tribunal has determined he should not as its determination about his adjusted taxable income has increased the rate of child support going forward and created arrears of child support of about $2,000.

98.Given the mother paid the costs she incurred for the child’s special needs more than eight months ago, in combination with the arrears the father will be required to pay, the tribunal concludes that on balance it is not fair or equitable to the father to make a determination that will increase his arrears further.

99.With regard to general costs associated with the children, the tribunal notes that the father did not allocate any of his household expenses between the adults of his household and the children. Given this, the tribunal considers it appropriate to rely on the Costs of the Children Table available from the CSA’s website.[10] 

[10] For the parents’ information, a Costs of Children Table is available at the Services Australia website which can be found at align="left">Hardship

100.The tribunal is required to consider any hardship its determination might cause and is guided by Gyselman and Gyselman[11] in this respect:

This requires the Court to balance the “hardship” which the parents or the children may suffer as a result of either making or refusing to make the order. It is a recognition of the circumstance that in this area there is likely to be hardship both ways and the Court is required to take into account the balance of that hardship and give it the weight which is appropriate to the circumstances of the individual case.

[11] [1991] FamCA 93

101.Based on their SFCs and their respective incomes, it is apparent that the mother is in a more difficult position financially. She has assistance from the school by allowing her time to pay the school fees, and from her parents. Her home appears to be secure as she owns it outright.

102.The father is in a better situation financially. As noted, he recorded that he has over $12,000 in his bank accounts and over $24,000 invested in shares. On the other hand, he has to pay $14,000 in tax and with his wife is paying off a personal loan from [Bank 1]. Also, to the father’s advantage, it is often the case that a person running their own business has more flexibility in managing their finances than a person on a low, fixed income.

103.Both parents’ SFCs showed that the household income was sufficient to cover their outgoings. The tribunal is satisfied that neither parent will suffer hardship because of its determination. 

Any other relevant matters

104.The tribunal may take into account any other matters it considers relevant in making a particular departure determination (subsection 117(9) of the Act).

105.The father provided an analysis of the mother’s income and expenditure showing that she had the capacity to cover additional costs related to the child. That is not the basis for making a departure decision according to the legislation. In broad terms each parent is required to contribute to the costs of maintaining the child, according to their income, property and financial circumstances. Other factors are taken into account as set out above (for example, the amount a parent is required to pay in child support is reduced if they care for other children).

106.The tribunal has found that the father’s financial situation is better reflected by an adjustable taxable income of $136,000 and that this has been the case since 1 July 2018. However, he has been assessed for child support on an income of $115,438 from 1 June 2019. That benefits him by about $160 a month. If the tribunal started its determination from 1 June 2019 rather than 2 December 2019 to reflect the higher income, that would increase his arrears by about $1,000.

107.The tribunal has decided to start its determination from 2 December 2019, being the date the mother lodged her change of assessment application as generally parents should be able to rely on the assessment of child support in place at the time when organising their finances, until such time as it becomes possible there might be a change in the assessment.

108.The tribunal recognises that if it backdated its determination to 1 June 2019 and found that the father should make a contribution to the special needs costs as well, he would have arrears of about $3,500 rather than of about $2,000. The tribunal’s decision on this point benefits the father. The mother will benefit from this decision as the rate of child support will increase by about $160 a month going forward and arrears of about $2,000 will be payable to her. (The tribunal would emphasise that its estimates of rates of child support are just estimates and the CSA will issue assessment notices in due course.) 

109.The tribunal is of the view that its determination strikes a balance that is fair and equitable to both parents and the child, given the parents’ respective financial situations.

110.The tribunal has ended its determination on 4 October 2023 which is the day before the child turns 18 years old, and the possible end date of this case.  This gives the parents some certainty into the future. 

111.Of course, it is open to either parent to apply for a change of assessment if their circumstances change before the case ends.

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

112.The requirement to consider whether a departure determination would be otherwise proper is concerned with what is fair to the community; it is preferable for a child or children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Act means that the tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for a child or children, may be affected by the level of child support.

113.The mother is 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

The tribunal sets aside the decision under review and, in substitution, decides as follows:

·     From 2 December 2019 to 4 October 2023, Mr Thierry’s adjusted taxable income is varied to $136,000.