Tranter and Harlan (Child support)

[2019] AATA 1736

Tranter and Harlan (Child support) [2019] AATA 1736 (30 April 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC014826

APPLICANT:  Mr Tranter

OTHER PARTIES:  Child Support Registrar

Ms Harlan

TRIBUNAL:Member S Letch

DECISION DATE:  30 April 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - income, property and financial resources of the child - decision under review affirmed

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 Tranter and Ms Harlan are the parents of [Child 1], born April 2000. Mr Tranter has been assessed by the Department of Human Services (the Department) as liable to pay child support to Ms Harlan.

2. For the period 1 December 2016 to 28 February 2018, Mr Tranter is assessed to pay an annual rate of child support of $16,379. This assessment is based on Mr Tranter’s provisional 2015/16 income of $119,366 and a 2015/16 adjusted taxable income of $63,027 for Ms Harlan.

3. On 11 December 2017, Mr Tranter applied for a change of assessment under what the Department refers to as reason 4 on the basis of [Child 1’s] income. On 5 January 2018, the Department made a decision to vary Mr Tranter’s adjusted taxable income to $140,000 for the period 17 November 2017 and until the end of the child support case.  

4. On 8 May 2018, Mr Tranter objected to the decision. On 24 July 2018, an objections officer decided to disallow Mr Tranter’s objection.

5. On 17 August 2018, Mr Tranter sought further review by the Tribunal. The Tribunal’s hearing took place on 11 March 2019.  

6. In reaching its decision, the Tribunal has considered the sworn evidence given by both parties; the documentation provided by the Department (Exhibit 1), and additional information provided by Mr Tranter and Ms Harlan.   

CONSIDERATION

The legislative framework

1. 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.

2. 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)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

4. 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?

11.Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by the Department 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

…

12.Subparagraph 117(2)(c)(i) of the Act, commonly referred to by the Department as reason 4, 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:

…

(i)  because of the income, earning capacity, property and financial resources of the child; or

…

13.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. Whilst 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 Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

1. Mr Tranter told the Tribunal that he is not satisfied that Ms Harlan’ income is accurate. He also considers that [Child 1] was earning an income which renders the assessment unfair, and questions the evidence about his apprenticeship arrangements. In short, Ms Harlan told the Tribunal that she agrees with the decision of the objections officer.

2. Additional materials submitted by Ms Harlan prior to the hearing had not been supplied to Mr Tranter (documents, so far as they were relevant,  were supplied to Mr Tranter after the hearing; he made some written submissions in response, referred to later in these reasons). The Tribunal drew Mr Tranter’s attention to the contents of a statutory declaration by [Child 1] dated 19 February 2019 in which he says he earned a total of $5,400 after tax up until his 18^th birthday. He says he has received financial assistance from his mother as he is not able to afford to support himself. He advises that after a brief trial in November 2017, he took off December 2017 and January 2018 to decide whether to continue, or to embark on study.

3. Mr Tranter indicated that “it did not make sense” that [Child 1] would sign documents on 5 November 2017 and not start immediately.  Ms Harlan told the Tribunal this issue had been discussed through mediations with Mr Tranter on numerous occasions and he does “not seem willing to understand simple facts”. She said that [Child 1] undertook a trial with his apprenticeship in November 2017 whilst he waited to find out whether he would be accepted into university. In late January 2018, he decided to sign the contract to accept the apprenticeship. Ms Harlan pointed to the supporting documents she supplied evidencing the chronology of [Child 1’s] apprenticeship arrangements. She said the employer had a discretion to “backdate” the start date of the apprenticeship to the week of the trial, which they elected to do for [Child 1’s] benefit. 

4. The Tribunal referred Mr Tranter to the letter from [her employer] supplied by Ms Harlan advising that Ms Harlan had no overseas service during the 2016/17 or 2017/18 financial years. Mr Tranter, having earlier alleged Ms Harlan had undertaken overseas service she had not disclosed, did not seek to take that issue any further during the hearing.

5. The Tribunal referred Mr Tranter to the additional materials submitted by Ms Harlan including her “PAYG” income information, which revealed that she was receiving roughly $70,000 per annum from 1 July 2017, and that from February 2018 – when Ms Harlan gave evidence she had been “medically discharged” – her income was roughly $63,000 from a pension.  Mr Tranter indicated during the hearing he would wait to see the materials.  

6. Mr Tranter told the Tribunal that the CSA had decided to increase his income for child support “without any evidence”. He indicated that they ought to have applied his actual taxable income of $136,267, and they failed to correct it. He advised he has net rental property losses, and he also receives a non-taxable payment of some $12,000 per annum.

7. Mr Tranter told the Tribunal he presently has a [medical] issue and is not at work, so his financial position is “not the best at the moment”; he has associated medical costs. He did not identify any other particularly unusual expenses. He indicated he has “money sitting in account” to meet outstanding child support liability of some $1,000 if he is held to be liable for that amount.

8. Ms Harlan told the Tribunal that [Child 1] is presently earning less than $450 week – it is very difficult to survive in Sydney on that level of income. She said most of her pension goes to “barely keeping herself in her house, and barely supporting [Child 1] in his apprenticeship” She said Mr Tranter does not give [Child 1] any financial support whatsoever.   

9. In his written submission to the Tribunal, Mr Tranter submitted there was still “no proof” of [Child 1’s] earnings, and that Ms Harlan should supply more evidence, including payslips. His submission includes assertions and allegations either not relevant to the issues under review, or unsupported by evidence.

[Child 1’s] income

1. The Tribunal accepted [Child 1’s] statutory declaration, supported by sworn evidence from Ms Harlan, that [Child 1] undertook a one week trial in November 2017; the best evidence in the form of information obtained by the CSA is that upon commencement in late January 2018 and until the end of the child support case when [Child 1] turned 18 in April 2018, [Child 1] was earning approximately $320 per week. This sum is less than the applicable threshold set out in the policy guidelines (at least $340 per week); the Tribunal finds no basis to depart from the assessment under reason 4.

Mr Tranter’s income

1. At the time of Ms Harlan’s application for a change of assessment, the child support assessment was based on Mr Tranter’s 2015/16 provisional 2015/16 taxable income of $119,366. By the time of the objection decision, his 2016/17 taxable income was available to the decision-maker. This amounted to $136,267. The Tribunal observes Mr Tranter has net rental property losses in addition to a non-taxable payment of around $12,000 per annum. His financial capacity clearly exceeded $119,366.

2. Accordingly, it would be unfair in the circumstances of the case not to assess Mr Tranter on his 2015/16 provisional income; there is a material difference in his liability for child support were he to be assessed on at least $136,267.  The formula result is unfair. As a result, in the special circumstances of the case, a ground to depart is established. 

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

1. 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.

2. The objections officer, in disallowing Mr Tranter’s objection, determined his income should be assessed as $140,000 (as found by the original decision-maker). Ms Harlan did not submit a higher figure should apply. In the circumstances, the Tribunal is satisfied varying Mr Tranter’s income to $140,000 is not an unfair representation of his financial capacity. The Tribunal agrees with the CSA and will not disturb that finding.

3. The Tribunal accepted Ms Harlan’ evidence, supported by the evidence, that in November 2017, she was deriving approximately $70,000 per annum, reduced to around $63,000 from February 2018. The income applied in the assessment was $63,027. The Tribunal observes that applying a figure of $70,000 only has a small impact on the assessment. In the Tribunal’s assessment, the sum of $63,027 applied to the assessment appropriately reflected Ms Harlan’ financial capacity. No adjustment will be made by the Tribunal to the formula assessment of Ms Harlan’ income.

4. Mr Tranter told the Tribunal that he presently has a [medical] issue and has medical costs; however, he has funds set aside to meet the outstanding liability. The Tribunal is satisfied that Mr Tranter, who receives a comparatively high level of income, will not suffer any financial hardship in meeting his child support obligation. Ms Harlan’ financial position is much more difficult; she struggles to support herself and [Child 1], who receives a very low income as an apprentice. Mr Tranter provides no ongoing financial assistance for [Child 1].

5. In the Tribunal’s assessment, it would be just and equitable to vary Mr Tranter’s income to $140,000 from 17 November 2017 until the child support case ended in April 2018.

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

1. 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.

2. 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.

3. As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decision under review is affirmed.