Wallace and Howell (Child support)

[2019] AATA 1734

Wallace and Howell (Child support) [2019] AATA 1734 (21 May 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC015158

APPLICANT:  Mr Wallace

OTHER PARTIES:  Ms Howell

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  21 May 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – whether child has special needs – whether parent’s reduction in income was for the purpose of affecting the child support assessment - no ground for departure - application to depart is refused - 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

Introduction

1. Mr Wallace and Ms Howell are the parents of [Child 1] who was born in 2007 and [Child 2] who was born in 2011. A child support case was registered in 2012. Since January 2016, the Department of Human Services – Child Support (“the CSA”) has recorded Mr Wallace as providing 42% care and Ms Howell as providing 58% care to the children.

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. From 11 September 2017 the administrative assessment was based on Mr Wallace’s 2016-17 adjusted taxable income of $74,175 and Ms Howell’s 2016-17 adjusted taxable income of $49,996, and Mr Wallace was required to pay $4,046 per annum in child support. The Act also provides for a departure from the administrative assessment in certain circumstances. Mr Wallace lodged a departure application on 6 November 2017. An original decision-maker refused his application. He objected to that decision and an objections officer disallowed his objection. He sought further review by the Tribunal. I conducted a hearing on 21 May 2019. Mr Wallace was represented by [representative’s name], solicitor, of [Firm 1]. Ms Howell was represented by [name], advocate.

3. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

   (i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and

   (ii)... it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part; …

A ground for departure

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to as Reason 8, provides as a ground for departure:

   that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   …

   (ia)because of the income, property and financial resources of either parent; or

   (ib)because of the earning capacity of either parent; …

2. The Tribunal can only find that a parent’s earning capacity is greater than their actual income if the requirements of subsection 117(7B) of the Act are satisfied. That subsection states:

   In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent's caring responsibilities; or

   (ii)  the parent's state of health; and

   (c)  the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

3. On 26 March 2018, Mr Wallace objected to the original decision and stated: “I disagree with the recent assessment conducted by [the original decision-maker], more specifically relating to Ms Howell’s capacity to earn.” It is convenient to deal with that issue first.

4. Ms Howell is [an occupation]. She transferred from full-time to part-time employment in January 2016. She explained why she did so, but it is not necessary to recount that evidence here. It is sufficient to focus on paragraph 117(7B)(c). An earlier departure application culminated in the Social Security Appeals Tribunal making a departure decision which, in part, varied her adjusted taxable income to $41,492 per annum from 12 February 2014 to 31 October 2015. From 1 November 2015 the rate of child support payable reverted to the administrative assessment which was based, in part, on her 2014-15 adjusted taxable income of $51,307, and it continued to be based on that income until 31 January 2017: pages 357 and 358 of the hearing papers. If Ms Howell had reduced her earnings in January 2016 for a major purpose of affecting the rate of child support payable, one would have expected her to have lodged an estimate of her reduced income with the CSA, thereby increasing Mr Wallace’s rate of child support payable. She did not inform the CSA of her reduced earnings, and that fact is inconsistent with the suggestion that she reduced her earnings for a major purpose of affecting the rate of child support payable. Paragraph 117(7B)(c) is not satisfied in respect of her transfer from full-time to part-time employment and I cannot have regard to her earning capacity on the basis of that change in circumstances.

5. Ms Howell underwent an operation in mid‑September 2018. She provided medical certificates which state she was unable to work from 19 September 2018 to 31 December 2018. At the hearing she stated that in fact she was unable to work until early March 2019, and she offered to provide further documentation after the hearing in support of that statement. I did not consider that necessary. She also stated that she took five weeks of paid leave during her period of recuperation. According to her fortnightly payslips, her year-to-date earnings continued to increase until the fortnight ending 14 October 2018, and then they effectively ceased increasing until at least 3 March 2019. I accept her evidence that she remained unable to work for medical reasons until early March 2019. Her decision to not work from mid-September 2018 to early March 2019 was justified on the basis of her state of health. Paragraph 117(7B)(b) is not satisfied in respect of that period and I cannot have regard to her earning capacity on the basis of that change in circumstances.

6. She stated that she returned to work for “[specified] duties” in early March 2019 and has been earning $1,100 per fortnight to date. Obviously her decision to return to part-time work was not for a major purpose of affecting the rate of child support payable, and paragraph 117(7B)(c) is not satisfied in respect of that change in her circumstances.

7. To be clear, there is no evidence whatsoever to suggest that Ms Howell has ever changed her circumstances for a major purpose of affecting the rate of child support payable.

8. It appears that Ms Howell was on paid leave from mid-September 2018 to mid-October 2018. From mid-October 2018 to early March 2019, her only income was parenting payment and family tax benefit. She did not lodge an estimate of her reduced income and the administrative assessment continued to be based, in part, on her 2017-18 adjusted taxable income of $45,461: page 352 of the hearing papers. It is arguable that, at least so far as her income is concerned, the administrative assessment resulted “in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child”. However, subparagraph 117(2)(c)(ia) also requires a consideration of her property and financial resources.

9. Ms Howell’s mother passed away in June 2013. Ms Howell was one of the beneficiaries under her will. A series of events culminated in Ms Howell selling her home and purchasing what had been her parents’ home, which required her to purchase her sister’s interest in what had been their parents’ home.

10. When Ms Howell’s mother passed away, Ms Howell valued her (i.e. Ms Howell’s) home at $600,000. Her home loan balance was $330,000. She subsequently renovated her home and sold it for $785,000. After she had purchased what had been her parents’ home, which she valued at $900,000, her home loan balance was $80,000. According to that simple analysis, the value of the profit she made from the renovation and sale of her home, plus her inheritance, was approximately ($900,000 - $80,000) - ($600,000 - $330,000) = $550,000. At the hearing, both parents were agreeable to me proceeding on that basis.

11. Ms Howell’s decision to acquire what had been her parents’ home, and to use the proceeds of sale of her previous home plus her inheritance to reduce her home loan, is unremarkable. Her increased home equity does not assist her in meeting the children’s day‑to-day expenses. Nevertheless, the fact that she received those additional funds is a relevant consideration. I noted those matters during the hearing and suggested that, on one very broad view of her income, property and financial resources, the administratively assessed rate of child support payable during the months following her surgery was not unjust or inequitable. Ms Howell replied, “That’s fine.” In my opinion, that concession was properly made, and, in respect of that past period, the administratively assessed rate of child support payable was not unjust and inequitable on the basis of Ms Howell’s income, property and financial resources. Reason 8 is not established in respect of Ms Howell.

12. Mr Wallace is an [occupation 1]. He is employed on a full-time basis by an unrelated third party. He also operates a business as a sole trader. During 2017-18 he received remuneration from his employer of $74,183 + $1,110 + $2,500 = $77,793. His business produced a profit of $2,259. He incurred some personal tax-deductible expenses. His 2017-18 adjusted taxable income was $79,085. Ms Howell conceded that Mr Wallace’s income and financial resources were fairly reflected for child support purposes in his adjusted taxable incomes as assessed by the Australian Taxation Office from time to time. In my opinion, that concession was properly made. Reason 8 is not established in respect of Mr Wallace.

13. Subparagraph 117(2)(b)(ia) of the Act, commonly referred to as Reason 2, provides as a ground for departure:

    that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

    …   

    (ia)because of special needs of the child …

14. In 2017, [Child 1] was diagnosed as suffering from [a condition]. [Child 1’s] general practitioner authorised a mental health care plan, and [Child 1] was initially treated by a psychologist. She was also treated by a [specialist 1].

15. At the hearing, Mr Wallace acknowledged that [Child 1] previously had a special need, but he submitted that her condition had been treated by the end of 2017. He did not provide any medical evidence in support of that submission. Ms Howell submitted that [Child 1] continued to have a special need. She did not provide any medical evidence from [Child 1’s] psychologist or [specialist 1]. She did provide a report of [Child 1’s] counsellor, [Counsellor A]. Ms Howell was under the impression that [Counsellor A] is a psychologist, but [Counsellor A] refers to herself as a counsellor, and not a psychologist. Further, Ms Howell received Medicare rebates in respect of [Child 1’s] psychologist’s fees, and she does not receive Medicare rebates in respect of [Counsellor A’s] fees. On the available evidence, I find that [Counsellor A] is a counsellor. [Counsellor A] stated in February 2018 that [Child 1] was suffering from anxiety and would require at least monthly appointments for the foreseeable future. “If her anxiety symptoms worsen, session frequency will need to increase to weekly or fortnightly.” The infrequency of the sessions suggests that, at least when the report was written, [Child 1’s] symptoms were less serious. It transpired that [Child 1] received monthly sessions for a few months, and then the sessions became less frequent.

16. A portion of the population suffers from anxiety. A subset of that portion of the population would benefit from treatment, and a subset of that subset can be properly said to need treatment. The evidence suggests that, at least from 2018 onwards, [Child 1] probably continued to benefit from treatment, but the evidence does not establish that she needed treatment, i.e. it does not establish that she had a special need. Reason 2 is not established in respect of [Child 1].

17. Further, Ms Howell provided a Medicare schedule for a three-year period ending 24 March 2019. To calculate her out-of-pocket costs I considered the period from 6 November 2017 (which was when Mr Wallace lodged his departure application) to 24 March 2019, which is a period of 504 days. During that period, Ms Howell’s out-of-pocket costs in respect of [Child 1’s] consultations with the [specialist 1] were $88.45. Her out-of-pocket costs in respect of [Child 1’s] ten consultations with [Counsellor A] were $150 x 10 = $1,500. According to that information, Ms Howell’s annual out-of-pocket costs are approximately ($88 + $1,500) / 504 x 365 = $1,150. However, one of the requirements of Reason 2 is that there are special circumstances. If a parent elects to utilise more expensive treatments when comparable less expensive treatments are available, and the less expensive treatments might not significantly affect the costs of maintaining the child, Reason 2 might not be established. [Child 1’s] psychologist charged $270.00 per session, but with Medicare rebates, the out-of-pocket costs of the first two sessions were $145.50 per session, and the out-of-pocket costs of the subsequent sessions were $29.10 per session: page B77 of the hearing papers. It is not immediately apparent that if [Child 1’s] general practitioner had authorised another mental health care plan, and [Child 1] had been treated by a psychologist or other medical professional in respect of whom Medicare rebates were payable, Ms Howell’s out-of-pocket costs would have significantly affected the costs of maintaining [Child 1].

18. Ms Howell submitted that [Child 2] has special needs. Her out-of-pocket costs in respect of [Child 2’s] consultations with a paediatrician during the period from 6 November 2017 to 24 March 2019 totalled $162, which equates to approximately $117 per annum. Those costs do not significantly affect the costs of maintaining [Child 2], and Reason 2 is not established in respect of [Child 2].

19. There are no other potential grounds for departure. Paragraph 98C(1)(b) of the Act is not satisfied. The decision to refuse Mr Wallace’s departure application was correct and will be affirmed.

20. Hopefully that draws a line in the sand so far as the history of this matter is concerned. If Ms Howell’s current income is less than the income being used in the administrative assessment, she has the option of lodging an estimate of her income with the CSA.

DECISION

The decision under review is affirmed.