Tuffnell and Moore (Child support)

Tuffnell and Moore (Child support) [2019] AATA 1694 (15 March 2019)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/BC013915 & 2018/BC014021
APPLICANT:  Mr Tuffnell
OTHER PARTIES:  Child Support Registrar
Mrs Moore

TRIBUNAL:Member J Thomson
DECISION DATE: 15 March 2019
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Tuffnell’s adjusted taxable income is varied to $128,000 for the period 1 January 2018 to 1 October 2019.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – benefits derived from business – legitimate business expenses – whether income or benefit from family trust – 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

Mr Tuffnell and Mrs Moore are the parents of [Child 1], born 2001, and [Child 2], born 2005 (the children). The children are recorded in the Department’s records as being in the primary care of Mrs Moore.
Mr Tuffnell seeks review of an objection decision made by the Department of Human Services – Child Support (the Department) on 12 April 2018. This decision partially allowed Mr Tuffnell’s objection to a decision dated 11 December 2017 determining his adjusted taxable income for the period 1 January 2018 to 5 February 2018 as $135,000, and for the period 6 February 2018 until [Child 1] ceases to be a child of the assessment increasing the adjusted taxable income applied in the assessment for Mr Tuffnell by an additional $63,121.
The Department’s objections officer set aside the decision of 11 December 2017, and, in substitution, set Mr Tuffnell’s adjusted taxable income for the period 1 January 2018 to 30 September 2019 at $85,000.
The Tribunal heard the matter on 13 December 2018. Both parents attended the hearing via conference telephone and gave affirmed evidence. The Tribunal had before it documents provided by the Department (Exhibit 1), documents provided by Mr Tuffnell (Exhibit A), and documents provided by Mrs Moore (Exhibit B). Both parents had copies of these documents with them at hearing.
The Tribunal directed both parents to provide further submissions and documents. Both have complied with the Tribunal’s directions, and their respective submissions and documents have been added, respectively, to Exhibits A and B. Copies of those documents have been provided to the respective parents for comment. Neither parent has commented further.

ISSUES

The issue which arises in this case is:
· what income, property and financial resources Mr Tuffnell has available to him for the purposes of child support.

CONSIDERATION

In reaching its decision, the Tribunal has considered the affirmed evidence given by both parents at hearing, and the documents contained in Exhibits 1, A and B referred to above.
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 the 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 98(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 Registrar 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.

Grounds for Departure

Subparagraph 117(2)(c)(ia) – commonly referred to as Reason 8 – 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….
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 legislation in subsection 117(2) must be guided by the qualification 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 will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial position.
Mrs Moore’s case at hearing was that she is dependent on receiving child support from Mr Tuffnell because she has 100% care of the children, one of whom, [Child 1], is severely disabled, requiring Mrs Moore’s full-time attention, restricting her ability to earn income, and affecting the health and well-being of [Child 1]’s younger sibling, [Child 2].
In her evidence to the Tribunal, she asserted that the income apportionment between Mr Tuffnell and his partner, Ms [A] from the company, [COMPANY 1], of which both Mr Tuffnell and Ms [A] are the directors and shareholders, is not reflective of Mr Tuffnell’s contribution to the company’s business activities which consists of coaching and training [athletes], and further, that he receives, or ought to receive, income from his parents’ family trust, which conducts a management rights business with respect to a [residential] complex known as [Name 1], for the gardening, general maintenance services and occasional administrative assistance he provides.
She also asserted at hearing that some of the expenses reflected in the profit and loss statements provided by Mr Tuffnell to the Tribunal with respect to [COMPANY 1], in particular, competition entrance fees and travel related expenses, were not expenses associated with the income generating operation of [COMPANY 1], but were related to his personal pursuit of his [sporting] interests.
Mrs Moore asserted that the level of expenditure reflected in Mr Tuffnell’s personal bank statements provided by him to the Tribunal evidenced a level of income and financial resources in excess of the income he declares for income tax purposes.
Mrs Moore provided medical evidence in support of [Child 1] and [Child 2]’s health issues; the Tribunal will comment on this evidence later in these reasons.
Mr Tuffnell’s evidence at hearing was to the following effect.
Since 2008, he and Ms [A] have been the directors and shareholders of the company, [COMPANY 1] which operates a [coaching] and training [business], conducting coaching and training sessions at various rented facilities in and around Brisbane.
From 13 November 2015 until he was made redundant in October 2017, Mr Tuffnell was employed by the [Employer 1]. Since his redundancy took effect [in] October 2017, his sole source of income has been derived from his activities as head coach and director of [COMPANY 1], providing weekly personalised and group [coaching] sessions, monthly website [coaching] articles and promotional videos. He gave evidence that his partner, Ms [A] assists with the coaching and training sessions and the administration of the company’s business affairs, including the setting up of its website and the management of its [Social media] account.
Promotional material provided by Mrs Moore at pages 106 to 120 of Exhibit 1 suggest that Mr Tuffnell has the pre-eminent role in the operation of [COMPANY 1]’s [coaching] business, and to that extent, he is the “face” of the business. The same promotional material provided by Mrs Moore also suggests that Mr Tuffnell combines his role as head coach with his personal pursuit of his ambitions as a competitive [sportsman], the costs and expenses associated with which are funded through his [COMPANY 1] [business].
At page 156 of Exhibit 1, Mr Tuffnell describes Ms [A]’s role in the [COMPANY 1] [business] which, while it refers to her providing coaching services, the Tribunal considers she would do so under the direction of Mr Tuffnell as head coach, and that her primary role in the business would be predominantly administrative and managerial, and to that extent subordinate to the role played by Mr Tuffnell in the conduct of the business.
Mr Tuffnell also gave evidence regarding his parents’ family trust’s management rights business, which he said employs Ms [A] in an administrative/managerial capacity. Mr Tuffnell’s evidence in this respect was that his parents, [are] the directors and shareholders of the company, [Company 2] Pty Ltd ([Company 2]) and the corporate trustee of their family trust, the Tuffnell Family Trust (the Family Trust), which holds the management rights for [Name 1], a gated residential [community]. The Family Trust also owns the manager’s unit within the complex.
Mr Tuffnell outlined the scope of Ms [A]’s managerial/administrative duties as an employee of [Company 2]. He said she is the holder of a letting agent’s real estate licence, which authorises her to take rental bookings, receive management commissions and letting fees from the owners of units within the complex on behalf of the Family Trust, and otherwise attend to the usual enquiries and management requirements of the residential complex.
The scope of Ms [A]’s managerial/administrative duties at [Name 1] complex includes general area maintenance, cleaning the swimming pool, and maintenance of the complex’s lawns and gardens. He acknowledged that when he was not otherwise engaged in coaching and training activities for [COMPANY 1], he regularly assisted Ms [A] in the provision of these services, undertaking pool cleaning, lawn mowing and general maintenance duties when she was otherwise engaged. However, he denied receiving any remuneration for the provision of these services, in cash or kind, or by way of distributions from the Family Trust.
Mr Tuffnell acknowledged that he and Ms [A] occupy the manager’s unit for which they pay rent to the Family Trust. Although Mr Tuffnell said the weekly rental, was $575, he acknowledged in evidence that he and Ms [A] were less than regular with these payments, and that their actual rental payments varied from $400-$500 per week, depending upon the level of income derived from the [COMPANY 1] business. He provided a copy of [Company 2]’s [bank] account for the period 29 December 2017 to 29 March 2018 reflecting a number of deposits of between $430 and $500 to that account, which he said were the rental payments for the manager’s unit.
At the direction of the Tribunal, the accountants for Mr Tuffnell’s [parents], provided a letter dated 9 November 2018 (see pages A252 and A253 Of Exhibit A) confirming Mr Tuffnell’s evidence in relation to his parents’ control and operation of the Family Trust’s management rights business as set out above.
In considering the Department’s earlier decision of 11 December 2017, and the objection decision of 12 April 2018, the Tribunal notes that both decision makers did not have the current financial reports for the [COMPANY 1] business in evidence before them. At the direction of the Tribunal, Mr Tuffnell has provided financial reports reflecting [COMPANY 1]’s profit and loss for the 2016/17 and 2017/18 financial years (see Exhibit 1, pages160 to 171, and Exhibit A, pages A230 to A241).
The Tribunal intends adopting these financial reports provided by Mr Tuffnell for the 2016/17 and 2017/18 financial years at pages A230 to A241 of Exhibit A, and his former employer, [Employer 1]’s facsimile transmission of 22 November 2017 and payroll summary at pages 147 to 153 of Exhibit 1 as the basis for determining Mr Tuffnell’s adjusted taxable income for the period under consideration, 1 January 2018 to 30 September 2019.
Mr Tuffnell provided a copy of Ms [A]’s 2016/17 income tax return at pages A330 to A332 of Exhibit A, reflecting gross income derived by her in that financial year from her employment with [Company 2] ($12,240), and [COMPANY 1] ($18,801). That income tax return also reflects Mr Tuffnell’s taxable income for that year of $87,000, received from his employer, [Employer 1].
Mr Tuffnell did not provide a copy of his 2017/18 income tax return, disclosing the income he received from [Employer 1] from 1 July 2017 up to the date of his redundancy [in] October 2017, included in the redundancy package he received totalling approximately $17,822.62, (see page 147 of Exhibit 1). However, at page A334 of Exhibit A, Ms [A]’s 2017/18 income tax return discloses Mr Tuffnell’s taxable income for that year as $45,000.
His gross taxable income for the period 1 July 2017 to the date of his redundancy on 23 October 2017 is recorded at pages 151 and 152 of Exhibit 1 in [Employer 1]’s payroll summary. According to the summary, Mr Tuffnell received a gross monthly taxable salary of $6,769.49 for the months of July to October 2017, a total of $27,077.96 ($6,769.49 x 4 = $27,077.96). In November 2017, an overpayment adjustment of $1,852.48 was made to his income for the July to October 2017 period, reducing his gross income for that period to $25,225.48. In addition, as part of his redundancy package, he received an annual leave payment of $2,019.45 and a gross lump sum redundancy payment of $15,970.14 which, when added to his gross income for the period, amounts to a total of $43,215.16. The Tribunal finds that Mr Tuffnell’s income and financial resources, including his redundancy pay-out for that period was approximately $43,215.07.
His [COMPANY 1] PAYG payment summary (A229 of Exhibit A) reflects his 2018 [COMPANY 1] gross income was $20,125. This income is based on the 2017/18 performance of Mr Tuffnell’s company, [COMPANY 1], the 2017/18 financial reports for which he provided to the Tribunal (see pages A231 to A241 of Exhibit A).
The Tribunal has reviewed this material, in particular, the profit and loss statement, depreciation schedule and balance sheet. With respect to the profit and loss statement, the Tribunal considers the following expense items for the 2017/18 financial year listed at page A235 of Exhibit A should be adjusted to reflect personal use, or alternatively disallowed as legitimate business expenses, and added back to the [COMPANY 1] profit for this year for the reasons set out below:
Amortisation – $215
Depreciation – $3,853
Entertainment expenses – $3,167
Meeting expenses – $911
Motor Vehicle expenses – $6,482
[Sports] Entry fees – $1,165
Travelling expenses – $15,303
Wages – $50,080.
Amortisation is a non-cash expense, and as such, the Tribunal considers this amount of $215 should be added back to the profit.
The depreciation item of $3,853 is also a non-cash expense. The supporting depreciation schedule at pages A240 and A241, lists items comprising [various items]. These appear to be items connected with Mr Tuffnell’s sporting pursuits as an active [competitor], and unlikely to be used exclusively for his [coaching] business. The Tribunal considers it reasonable to assume that Mr Tuffnell’s clientele would have their own [equipment] for training and coaching purposes.
Mr Tuffnell sought to justify the depreciation expense in relation to the [specified equipments] on the basis that he and Ms [A] attend a number of [sporting] events throughout the year, either as competitors in their own right, or as supporters of competitors for whom they provide coaching services. There was no evidence to suggest that either Mr Tuffnell or Ms [A] were paid by their [COMPANY 1] clients to support them at these events, or, indeed, to attend the events, and to that extent, most of the equipment reflected in the [COMPANY 1] depreciation schedule would not be used in the course of actually generating income for the company, and therefore is not a legitimate business expense, at least for child support purposes.
Accordingly, the Tribunal considers the depreciation item of $3,853 should be added back to the [COMPANY 1] profit.
The evidence given by Mr Tuffnell at hearing regarding the entertainment expenses ($3,167) and meeting expenses ($911) was to the effect that they relate to social functions following training sessions, and to that extent are not, strictly speaking, business related expenses. Accordingly, the Tribunal intends adding back these expenses, totalling $4,078, to the [COMPANY 1] profit.
Regarding the Hire fees item, Mr Tuffnell provided copies of invoices reflecting the cost of hiring [training] venues and equipment (see pages A352 to A390 of Exhibit A) at which he conducts his coaching sessions. The Tribunal accepts these expenses are legitimate business expenses.
The Tribunal also accepts that Mr Tuffnell would need the use of his motor vehicle to travel to the various venues reflected in the invoices referred to in the preceding paragraph at which he and Ms [A] conduct their coaching sessions on behalf of [COMPANY 1]. However, as conceded by Mr Tuffnell at hearing, there is also significant personal use attached to the use of that vehicle both with respect to his attendance at [sporting] events in which he and/or Ms [A] are actually competing, or otherwise attending in an unpaid supportive role.
There was also evidence before the Tribunal of Mr Tuffnell participating in private recreational activities whilst conducting training camps at various [locations], and elsewhere, which is in evidence provided by Ms [A] at page 254 of Exhibit 1, and Mrs Moore at pages 106, 109, 113, 114 and 117 of Exhibit 1. The Tribunal will therefore attribute 50% of the motor vehicle expense item of $6,482 to private use, and add back $3,241 to the [COMPANY 1] profit.
The Tribunal considers the [Sports] entry fees item of $1,165 a personal expense incurred in connection with Mr Tuffnell’s sporting [pursuits], and not a business expense. Accordingly, the amount of $1,165 should be added back to the [COMPANY 1] profit.
Mr Tuffnell’s evidence in support of the travel expenses item of $15,303 was not convincing. The travel expenses related to his and Ms [A]’s attendance at [sporting] events during the course of the 2017/18 financial year at various locations in [Australia].
As noted above, he said he and Ms [A] competed in some of these events, and on other occasions, they attended in a supporting role. There was no evidence that he nor Ms [A] were remunerated for their services at these events, and accordingly, the Tribunal considers the travel costs items relating to his and Ms [A]’s attendance at these events relate to his and Ms [A]’s personal [sporting] pursuits, or their activities as spectators at such events, and not an expense incurred in the course of earning income.

A detailed breakdown of his 2017/18 travel related expenses schedule was provided at pages A245 to A 251 of Exhibit A.
He gave evidence at hearing of his travel to [overseas] and [in Australia] as the “life guide” for a prominent blind [competitor], [who] was competing in a number of world-class [events] at those destinations.
On these occasions, his airfares, accommodation and some of his meal expenses were funded by his client, but he was not otherwise remunerated for his services. He said he agreed to offset his professional fees against the extensive publicity he expected to gain from his association with his client.
Mr Tuffnell gave evidence that while he was in [Country 1], he was offered the opportunity to attend a one-week coaching camp conducted by a world-renowned [coach]. Mr Tuffnell said he paid for his airfare from [Country 1], (where he had been assisting his blind [client]), to [a city in Country 2]. The breakdown of travel expenses provided by Mr Tuffnell at page A245 reflects his expenditure on food, car and bike hire, and accommodation. The Tribunal considers the accommodation and car hire expenses legitimate business related expenses associated with his attendance at the [coaching] course as part of the development of his [coaching] skills, but not the food and bike hire items; the [Social media] evidence before the Tribunal at page 106 of Exhibit 1 suggests the bike hire was for personal recreational use, and not connected with the coaching camp.
Mr Tuffnell also gave evidence of his attendance [in Australia] to compete in the annual [competition]. His costs associated with this event, and his subsequent trip to South Australia, where he voluntarily participated as a professional [coach] in [a] training camp, for which he said he was not remunerated, are also reflected in the travel schedule. These instances appear to be of a personal nature, and although Mr Tuffnell considered they had some promotional value to his [COMPANY 1] business, most of the items reflected in the travel costs schedule appear to relate to food and beverages of a personal nature.
The Tribunal considers a reasonable apportionment of these expenses for business purposes would be approximate to 20% ($3,061) of the $15,303 claimed, and accordingly, the difference of $12,242 will be added back to the [COMPANY 1] profit.
At hearing, Mr Tuffnell acknowledged that the wages component of the expenses reflected the salaries he and Ms [A] received from the coaching business for the 2017/2018 financial year, and that they should be added back to the [COMPANY 1] profit to arrive at the actual distributable profit of the business.
The total of the expense items to be added back to the [COMPANY 1] profit is therefore as follows:
Amortisation – $215
Depreciation – $3,853
Entertainment expenses – $3,167
Meeting expenses – $911
Motor Vehicle expenses – $3,241 (50% of $6,482)
[Sports] Entry fees – $1,165
Travelling expenses – $12,242 (80% of $15,303)
Wages – $50,080.
Total adjustment – $74,874
The [COMPANY 1] gross profit from trading recorded at page A234 of Exhibit A was $176,734. The total of expenses recorded at page A235 of Exhibit A was $155,802. Adjusting the expenses to reflect the expense items referred to above totalling $74,874 results in reduced expenses of $80,928, and an increase in the profit before income tax from $20,932 to $96,034. The adjusted profit before tax for [COMPANY 1] for the 2017/18 financial year will therefore be $96,034.
The Tribunal will now turn its attention to the apportionment of the [COMPANY 1] profit as between the directors, Mr Tuffnell and Ms [A]. The Tribunal finds the evidence is that Mr Tuffnell is the “face” of the [COMPANY 1] business operation, and as head coach, proficient in [coaching], the dominant attraction for its clientele. Ms [A]’s role, notwithstanding her significant administrative contribution to the company’s operation, and her participation in the coaching activities of the business, is subordinate to that of Mr Tuffnell. The [Social media] evidence before the Tribunal, referred to above, features Mr Tuffnell as the author of the articles published on the [COMPANY 1] website and its [Social media] facility, identifying Mr Tuffnell as the figurehead of the [COMPANY 1] [coaching] and training business. Accordingly, it is appropriate that Mr Tuffnell’s position should command a higher apportionment of the [COMPANY 1] business profits.
The Tribunal considers an apportionment of 70% of the 2017/18 financial year’s distributable profit before tax, or $67,223.80 (rounded up to $67,224) should be attributed to Mr Tuffnell as an appropriate reflection of his overall contribution to the operation of the business, and finds accordingly.
The Tribunal also considers some apportionment of the income paid to Ms [A] by [Company 2] for her services as regards pool cleaning and garden maintenance to recognise Mr Tuffnell’s acknowledged assistance with the provision of those services is warranted.
However, the Tribunal notes Mr Tuffnell’s submissions at page A329 of Exhibit A indicate that no wages were paid by [Company 2] to Ms [A] for the 2017/18 financial year, nor is it intended any wages will be paid for the 2018/19 financial year. At the Tribunal’s request, Mr Tuffnell’s parents’ [accountant], provided a letter dated 14 March 2019 to the Tribunal, post hearing (see Exhibit C1), confirming Ms [A] was paid gross wages of $22,920 by the Family Trust during the financial year ended 30 June 2017, but was not paid any wages in the 2017/18 financial year.
The balance sheet for [COMPANY 1] at page A237 of Exhibit A reflects retained earnings for the 2016/17 financial year of $25,146. The Tribunal finds this amount to be a financial resource available to Mr Tuffnell, his 70% share of which would amount to $17,602.
For the reasons which appear below regarding the special needs of the child [Child 1], and the impact of those special needs on Mrs Moore and her capacity to provide support for the children, [Child 1] and [Child 2], the Tribunal considers it just and equitable that Mr Tuffnell’s share of the retained profits of the [COMPANY 1] business for the 2016/17 financial year should be taken into account as a financial resource available to him for child support purposes for the 2017/18 financial year.
The Tribunal will therefore add the amount of $17,602 to Mr Tuffnell’s 70% share of the adjusted [COMPANY 1] income of $67,224, increasing his income and financial resources available to him from his [COMPANY 1] business for child support to $84,826.
The Tribunal has also found his taxable income from [Employer 1] for the period 1 July 2017 to 23 October 2017, including his redundancy related payments, was $43,215.07.
The combined total of his gross [COMPANY 1] and [Employer 1] incomes, and redundancy payment and for the 2017/18 financial year plus his share of the [COMPANY 1] retained profits from the 2016/17 financial year available for child support is therefore $128,041.07 (rounded down to $128,000).
The child support assessment in place at the time of Mrs Moore’s application for change of assessment on 23 October 2017 determined by the Tribunal on 20 September 2016 for the period 2 December 2015 to 31 December 2017 was to the following effect:

for the period 2 December 2015 to 6 July 2016, Mr Tuffnell was assessed to pay an annual rate of child support of $27,362, based on the adjusted taxable income of $135,000 set by the Tribunal for Mr Tuffnell and Mrs Moore’s 2014/15 adjusted taxable income of $20,740;
for the period 7 July 2016 to 31 August 2016, Mr Tuffnell was assessed to pay child support at the annual rate of $23,920, based on the adjusted taxable income of $135,000 set by the Tribunal for Mr Tuffnell, and Mrs Moore’s 2014/15 adjusted taxable income of $20,740;
for the period 1 September 2016 to 31 August 2017, Mr Tuffnell was assessed to pay child support at an annual rate of $23,900, based on the adjusted taxable income of $135,000 set by the Tribunal for Mr Tuffnell, and Mrs Moore’s 2015/16 adjusted taxable income of $21,087;
for the period 1 September 2017 to 31 December 2017, Mr Tuffnell was assessed to pay child support at an annual rate of $23,842 based on the adjusted taxable income of $135,000 set by the Tribunal for Mr Tuffnell, and Mrs Moore’s 2016/17 adjusted taxable income of $21,386.

As the Tribunal has found Mr Tuffnell’s income for the 2017/18 financial year was $128,000, and not significantly different from that determined by the Tribunal in its earlier decision for that financial year, The Tribunal will not disturb the assessment for the period 2 December 2015 to 31 December 2017 based on Mr Tuffnell’s adjusted taxable income of $135,000.
The current assessments are as follows:
· for the period 1 January 2018 to 25 January 2018, Mr Tuffnell was assessed to pay child support at an annual rate of $15,489 based on Mr Tuffnell’s 2016/17 adjusted taxable income of $94,831, and Mrs Moore’s 2016/17 adjusted taxable income of $21,386;
· for the period 26 January 2018 to 30 November 2018, Mr Tuffnell was assessed to pay child support at an annual rate of $16,982, based on his 2016/17 adjusted taxable income of $94,831, and Mrs Moore’s 2016/17 adjusted taxable income of $21,386.
As the Tribunal has found Mr Tuffnell’s income for the 2017/18 financial year was $128,000, his income of $94,831 used in the assessment of child support for the period 1 January to 30 November 2018 makes the assessment unjust and inequitable, the case special, and a ground for departure established.

Just and equitable

The requirement to consider whether a departure would be just and equitable 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.
Both parents provided Statements of Financial Circumstances (SOFCs).

Mr Tuffnell’s SOFC

Mr Tuffnell’s SOFC, dated 4 May 2018, disclosed a gross average weekly income of $767, annualised to $39,884 derived from his directorship of [COMPANY 1] as the head [coach] and trainer.
He listed his spouse, [Ms A] as an income earner residing in his household, earning an average gross weekly income of $767, annualised to $39,884, which, he said in evidence, was her income from [Company 2], the corporate trustee of his parents’ property management trust. The PAYG payment summaries provided by Mr Tuffnell at pages A226 and A227 of Exhibit A for the financial years ended 2017 and 2018 reflect Ms [A]’s gross income is for those years at $18,801 and $29,955 respectively, derived from her employment with [COMPANY 1]. As noted above, [Company 2]’s accountant, [provided] evidence that Ms [A] did not receive any income from that source in the 2017/18 financial year. The Tribunal therefore concludes that Ms [A]’s gross income for that year from [COMPANY 1], consistent with the [COMPANY 1] profits apportionment referred to above would have been approximately $28,810 (30% of $96,034 = $28,810).
He listed assets to a total value of $7,685, comprising modest bank savings, his half interest in a [car], which she values at $3,000, and household contents valued at $4,000. He ascribes a nil value to the [COMPANY 1] business, the balance sheet for which as at 30 June 2018 reflects assets totalling $61,503, including various [items] and the [motor] vehicle referred to above valued at $7,858 and a scooter.
Mr Tuffnell lists his superannuation entitlement [at] $52,257.
His liabilities, totalling $7,497, comprise income tax debt of $100 and [credit] card debts totalling $7,397.
The weekly personal expenditure he listed totalling $462 was unremarkable, comprising his Life and Permanent Disability insurance premium, child support, income tax contributions and credit card repayments.
Mr Tuffnell lists total weekly household expenditure of $1,548, including rent and electricity charges for the Family Trust’s unit at [Name 1] apartment complex he and Ms [A] occupy. The expenses he listed were largely unremarkable, and except for the variations in weekly rental remitted by Ms [A] and the occasional irregularity with which it was paid, Mrs Moore did not seriously challenge Mr Tuffnell’s listed weekly expenses.

Mrs Moore’s SOFC

Mrs Moore’s SOFC, dated 8 May 2018, listed her gross weekly income as $795.60, comprising carer payment, carer allowance and family tax benefit A and B totalling $670.60, and child support paid by Mr Tuffnell of $125. Mr Tuffnell did not challenge Mrs Moore’s income.
She lists assets totalling $47,336.30, comprising bank savings of $19,336.39, a disability modified [vehicle] valued at $25,000, and household contents to a value of $3,000.
She reports BT superannuation of $153,213, and no liabilities. Her weekly personal expenditure totalling $61.86, comprising life insurance and health insurance premiums was unremarkable. Her average weekly household expenses totalling $1,165 were also unremarkable, and not challenged by Mr Tuffnell.
Mrs Moore gave evidence at hearing of special needs relating to the children, [Child 1] and [Child 2]. She provided a copy of a report from Dr [B], the senior medical officer/consultant at [a] Hospital, Brisbane dated 31 August 2018 (see Exhibit B 14).
Dr [B] is [Child 1]’s [treating doctor] and has been treating him since he was four years of age. The report describes [Child 1] as having been born prematurely [and has medical conditions].
[Child 1] also has a gastro feeding PEG to assist with his feeding. He is also incontinent in both aspects, has very poor mobility and is reliant on his sole carer, Mrs Moore, for all his daily needs, including bathing and feeding. He also has severe intellectual impairment, and has very high needs 24 hours per day.
Dr [B] describes the consequential effect of [Child 1]’s condition and his needs on Mrs Moore as very restrictive on her, and stressful, particularly when [Child 1] suffers [illness]. This has precipitated a diagnosed condition of severe depression in Mrs Moore over many years, affecting her general health.
The report opines that, for Mrs Moore to continue to care for [Child 1] into the future, she will require a support team consisting of therapists (physio, speech and OT), and to have trained support workers to assist at home and also the ability to have a homestay for [Child 1]. Dr [B] also notes that, as a consequence of [Child 1]’s condition and its effect upon his mother, Mrs Moore, [Child 1]’s younger brother, [Child 2] suffers from anxiety and severe migraines, and is also impeded by [Child 1]’s disabilities.
The Tribunal is satisfied that in the circumstances outlined above, Mrs Moore has little or no capacity for gainful employment, and is dependent upon Mr Tuffnell for child support.
The Tribunal has given consideration to the issue of Mr Tuffnell’s income earning capacity, and is satisfied that no ground has been established to suggest he has an unexercised capacity to earn income, and that the Tribunal’s determination as to his income and financial resources as set out in the reasons above is reflective of his actual income and financial resources available for child support.

Otherwise Proper

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. Varying the income of Mr Tuffnell on which child support is calculated from that used in the administrative assessment, based on his income and financial resources which are not reflected in the administrative assessment will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

Conclusions

The Tribunal has found Mr Tuffnell’s income and financial resources for the 2017/18 financial year was $128,000 compared with an income of $94,831 used in the child support assessment for that period, making the assessment unjust and inequitable, and consequently, a ground for departure from the administrative assessment of child support payable by Mr Tuffnell established.
Mr Tuffnell did not challenge Mrs Moore’s financial circumstances as outlined in her SOFC, summarised above, nor did he challenge her lack of income earning capacity due to the high level of care she is required to provide for their child, [Child 1].
There was no evidence to suggest that Mr Tuffnell and Ms [A]’s company, [COMPANY 1], will not continue to generate income at the level currently reflected in the company’s 2017/18 financial reports referred to above into the future. The Tribunal notes that Mr Tuffnell’s income and resources for the 2017/18 financial year were augmented by the redundancy related payments of approximately $18,000 he received from [Employer 1]. The evidence at hearing also suggests he and Ms [A] enjoy good health, and have the capacity to increase their [coaching] and training business’ income into the future.
The Tribunal therefore intends setting aside the decision under review and varying Mr Tuffnell’s adjusted taxable income to $128,000 for the period 1 January 2018 to 1 October 2019, by which time the company’s trading results for the 2018/19 financial year should be available, and the Department can make an appropriate determination as to his taxable income for child support purposes from that date onward. Such an outcome is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Tuffnell’s adjusted taxable income is varied to $128,000 for the period 1 January 2018 to 1 October 2019.

[2019] AATA 1694

15 March 2019

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Remedies

Jurisdiction