Wearne and Watts (Child support)

Wearne and Watts (Child support) [2023] AATA 3306 (15 August 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/SC025651
APPLICANT:  Mr Wearne
OTHER PARTIES:  Child Support Registrar
Ms Watts

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 15 August 2023
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

for the period from 21 July 2022 to 30 September 2024 the adjusted taxable income of Mr Wearne is varied to $105,168;
for the period from 21 July 2022 to 31 December 2022 the annual rate of child support payable by Mr Wearne is increased by $11,926;
for the period from 1 January 2023 to 3 November 2023 the annual rate of child support payable by Mr Wearne is increased by $15,016; and
for the period from 1 January 2024 to 31 December 2024 the annual rate of child support payable by Mr Wearne is increased by $11,839.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – costs of the children include private education – 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

This review is about whether or not there should be a departure from the administrative assessment of child support.
Mr Wearne and Ms Watts are the parents of [Child 1] (born July 2005) and [Child 2] (born September 2009). There has been a child support assessment in place since 2 May 2019 and Mr Wearne is the parent liable to pay child support.
The following administrative assessments are under consideration:
· for the period from 1 December 2021 to 6 September 2022 Mr Wearne was assessed to pay an annual rate of $7,504 based on a 2020-21 adjusted taxable income of $57,963 for Mr Wearne and a provisional 2020-21 adjusted taxable income for Ms Watts of $141,257; and
· for the period from 7 September 2022 to 28 February 2023 Mr Wearne was assessed to pay an annual rate of $8,204 based on a 2020-21 adjusted taxable income of $57,963 for Mr Wearne and a provisional 2020-21 adjusted taxable income for Ms Watts of $141,257.
The Tribunal notes the increase in the annual rate payable from 7 September 2022 was due to [Child 2] turning 13 years of age.
On 21 July 2022 Ms Watts applied to Services Australia – Child Support (Child Support) for a change to the assessment on the basis of the special needs of the child (the ground more commonly referred to as Reason 2), the high costs of caring for, educating or training the child (Reason 3) and a parent’s income, property and financial resources (Reason 8A).
On 19 October 2022 Child Support made the decision to change the assessment (the original decision) so that:
·     for the period from 1 July 2022 to 31 December 2023 the adjusted taxable income of Mr Wearne is set at $94,950;
·     for the period from 1 July 2022 to 31 December 2023 the adjusted taxable income of Ms Watts is set at $160,000;
·     for the period from 1 July 2022 to 31 December 2022 the annual rate of child support payable by Mr Wearne will increase by $10,654; and
·     for the period from 1 January 2023 to 31 December 2023 the annual rate payable by Mr Wearne will increase by $10,873.
On 11 November 2022 Mr Wearne objected to this decision and on 25 January 2023 Child Support allowed the objection in part and made the decision that for the period from 1 July 2022 to 31 December 2024 the annual rate of child support is set at $24,000 (the objection decision).
On 22 February 2023 Mr Wearne applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 20 June 2023. Mr Wearne and Ms Watts attended by Microsoft Teams audio. Prior to the directions hearing Child Support provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (438 pages).
Mr Wearne and Ms Watts were directed to provide further information and both complied to the satisfaction of the Tribunal.
A hearing was held on 15 August 2023. Mr Wearne and Ms Watts gave evidence on affirmation by Microsoft Teams audio. Prior to the hearing the Tribunal received documents folioed A1 to A54 from Mr Wearne and B1 to B74 from Ms Watts and these were distributed to the parties. Additional documents were also received from Child Support (pages 439–470).
At the directions hearing and at the commencement of the hearing the Tribunal sought clarification from Mr Wearne and Ms Watts as to the reasons for their applications. Mr Wearne said Child Support had assessed the financial resources available to Ms Watts based on incomplete information. Mr Wearne told the Tribunal a number of errors and incorrect assumptions had been made by Child Support in relation to his expenses and the decision left him unable to meet his current financial commitments. Mr Wearne said he was particularly concerned about the cost of private school fees for the children. Mr Wearne also expressed concern about the backdating of the decision. Ms Watts said she was satisfied with the decision made by Child Support and was looking for certainty for both parents in relation to the level of child support for the children.
Following the hearing, at the request of the Tribunal, Ms Watts provided a copy of her final tax return for 2022-23. This was received on 25 August 2023 (B75–B97). While this document made no difference to the decision of the Tribunal a copy was nonetheless sent to the parties for completeness.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act, the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process such that the issues for determination by this Tribunal are:
·     whether or not a ground is established to depart from the administrative assessment of child support; and if so,
·     whether or not it is just and equitable to make a particular departure determination; and if so,
·     whether or not it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held that:
as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.
In Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

In circumstances where more than one ground for departure is put forward, the Tribunal need only be satisfied that one ground is established before going on to determine whether or not a particular determination is just and equitable and otherwise proper.

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
Mr Wearne told the Tribunal he worked for [Company 1] but also gave occasional [specified service] to an [specified business]. Mr Wearne said his salary at [Company 1] was approximately $94,000 per annum and he did not expect this to change significantly in the current financial year. Mr Wearne said after relocating to Sydney in December 2021 he also started receiving rental income from a property in [City 1]. Mr Wearne said this income varied as keeping tenants was difficult but the property was currently leased until January 2024.
In response to directions Mr Wearne provided the Tribunal with a copy of his individual tax return for 2022-23. It shows total income of $113,203 comprised of salaries from [Company 1] and [Company 2] totalling $107,797, net rental income of $12,400 and minor interest and dividend income. After allowing for work-related and other deductions Mr Wearne had an adjusted taxable income of $105,168 in 2022-23.
The Tribunal notes that Mr Wearne had an adjusted taxable income of $85,053 in 2021-22.
Mr Wearne explained that his salary had increased in March 2022 following a promotion at [Company 1]. Mr Wearne pointed out that when he first moved to Sydney he received a $20,000 gift from his mother to help meet some of his expenses. Mr Wearne added that he was initially living in a property owned by his mother but after he was forced to move at short notice in February 2022 she provided him with some further financial assistance. Mr Wearne said he had received $400 a fortnight from his mother to assist with his private rental costs but this ceased around six to eight months after he moved out. Mr Wearne said his mother continued to help him financially from time to time.
Mr Wearne also provided the Tribunal with a Statement of Financial Circumstances received on 27 February 2023. Mr Wearne lists household expenditure and personal expenditure totalling $2,520 per week. This includes $800 in rent, $500 for child support, $444 in income tax, $286 in mortgage payments, $200 in food and $135 in medication costs. Mr Wearne declares total assets valued at $758,000 including his property valued at $700,000, a [motor vehicle] worth $18,000, household contents of $30,000, cash of $8,000 and a small amount of personal property. His liabilities total $323,588 including a mortgage of $296,273, a HECS debt of $25,815 and a credit card debt of $1,500. Mr Wearne has superannuation of $249,084.
Mr Wearne told the Tribunal that he had provided an update of his expenses which included reduced costs for his diabetes medication. Mr Wearne said his mortgage repayments would increase in February 2024 when he came off fixed interest repayments.
The Tribunal notes in evidence from Mr Wearne received on 30 July 2023 a current budget showing total monthly expenditure of $9,582. This includes monthly mortgage costs of $1,145. Mr Wearne predicts his monthly mortgage costs to be $1,758 from February 2024.
The Tribunal finds that Mr Wearne had an adjusted taxable income of $105,168 in 2022-23. The Tribunal is satisfied this is an accurate representation of the income, property and financial resources available to him for the purposes of child support.
The Tribunal also considered the income, property and financial resources of Ms Watts.
Ms Watts told the Tribunal she worked at [Company 3] and her annual salary was approximately $150,000. Ms Watts said this was based on a reassessment undertaken in March 2023 and she was not expecting any significant changes in the current financial year.
In response to directions Ms Watts provided the Tribunal with a copy of her draft individual tax return for 2022-23. It shows total income of $157,840 comprised of her salary from [Company 3] of $157,450, dividends totalling $290, gross interest of $49 and supplement income of $51. After allowing for work-related and other deductions Ms Watts had an adjusted taxable income of $133,011 in 2022-23.
Ms Watts explained that she was waiting on further information before she could finalise her individual tax return for 2022-23. Ms Watts this would not make a material difference to her adjusted taxable income in 2022-23. The final tax return for 2022-23, as provided by Ms Watts following the hearing, shows an adjusted taxable income of $133,296.
The Tribunal notes that Ms Watts had an adjusted taxable income of $142,521 in 2021-22. Ms Watts said she had had a reportable superannuation contribution in 2021-22 which was not the case in 2022-23. Ms Watts pointed out she had also received a salary increase in 2022-23.
Ms Watts told the Tribunal she had sold the family home in October 2021 and after paying off the mortgage the equity was being used to offset a mortgage on another property. Ms Watts said she was drawing on this equity to help meet the costs of educating the children including the arrears. The Tribunal notes in evidence from Child Support that, according to Mr Wearne, the family home was sold for approximately $930,000. Ms Watts has submitted that the home was subject to a mortgage of approximately $500,000.
Ms Watts also provided the Tribunal with a Statement of Financial Circumstances received on 25 March 2023. Ms Watts lists total weekly household expenditure of $3,748 including rent of $700, mortgage payments of $345, strata fees of $218, motor vehicle costs totalling $177, motor vehicle repayments of $178 and education expenses for the children of $1,025. Her personal expenditure totals $1,015 per week. Ms Watts declares total assets valued at $370,752 including a one third share in a property valued at $280,500, funds in banks totalling $15,930, share investments of $19,504, a [motor vehicle] valued at $52,817 and household contents of $2,000. Her liabilities total $292,185 including a mortgage of $232,310, motor vehicle finance of $48,970 and credit card debts of $10,904. Ms Watts has superannuation of $300,315.
Ms Watts said the real estate she owned a one third share in was a property her mother had lived in for around 16 years. Ms Watts said she received no rental income from the property and claimed no expenses. This is confirmed in her tax returns for both 2021-22 and 2022-23.
The Tribunal finds that Ms Watts had an adjusted taxable income of $133,296 in 2022-23. The Tribunal is satisfied this is an accurate representation of the income, property and financial resources available to her for the purposes of child support.
Mr Wearne has informed the Tribunal he received a gift from his mother of $20,000 in early 2022 to assist with his expenses. Mr Wearne also received rental assistance from his mother of $400 per fortnight for six to eight months and continues to receive financial support from time to time. Ms Watts has said when she sold the family home she used the equity to offset mortgage costs on another property and meet the costs of private school fees for the children. The Tribunal might ordinarily consider both parents are in receipt of additional resources for the purposes of child support. In such circumstances, however, the Tribunal has treated the parents equally and not considered these benefits in its determination of their broader income, property and financial resources.
The administrative assessment in place at the time Ms Watts made her application for a change on 21 July 2022 was based on an adjusted taxable income of $57,963 for Mr Wearne and a provisional adjusted taxable income for Ms Watts of $141,257.
The Tribunal has found that Mr Wearne had an adjusted taxable income of $105,168 in 2022-23. When this amount is applied in the child support formula, the annual rate of child support payable by Mr Wearne would be approximately $16,698. The Tribunal has also found that Ms Watts had an adjusted taxable income of $133,296 in 2022-23. Applying this amount in the child support formula, along with the adjusted taxable income of $105,168 for Mr Wearne, makes very little difference to the amount of child support payable by Mr Wearne. As a consequence, even though Ms Watts is being assessed on a higher provisional income, the Tribunal is satisfied Ms Watts is properly assessed under the usual administrative process.
The Tribunal finds the annual rate of child support payable by Mr Wearne when using his adjusted taxable income of $105,168 to be significantly more than his liability under the administrative assessment. The Tribunal is satisfied that special circumstances exist and the application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Mr Wearne. On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

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

As the Tribunal finds there is a ground to depart from the administrative assessment of child support, the next step is to consider whether or not it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider the matters discussed below,[1] which are as set out in subsection 117(4) of the Act:
[1] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares(SSAT Appeal) [2008] FMCAfam 886.
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii)any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
(A)the liable parent; or
(B)any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

The nature of the duty of a parent to maintain a child (as stated in section 3 of the Act)

Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments. In this case, the parents have a duty to support [Child 1] and [Child 2].

The Tribunal was not made aware that either parent has a legal responsibility to any other child or person.

The proper needs of the child

In relation to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).
Ms Watts told the Tribunal that [Child 1] and [Child 2] were being educated at [School 1] with both parents having agreed to the children attending a private school. Ms Watts said [Child 1] commenced most recently in Year 5 and was currently in Year 12 while [Child 2] commenced in Year 1 and was currently in Year 8. Ms Watts said she was meeting the full cost of the children attending [School 1] and had been since 1 August 2021. She said prior to this Mr Wearne’s father had been paying the majority of the fees. Ms Watts said Mr Wearne was refusing to contribute to this cost.
The Tribunal notes in evidence from Child Support a 2022 fee schedule for [School 1] showing annual tuition fees of $25,640 for a Year 11 student and of $24,517 for a Year 7 student. The Tribunal also notes a statement of account from [School 1] showing monthly tuition fees for [Child 1] of $2,564 and monthly tuition fees for [Child 2] of $2,451.70 as at 31 January 2022. The school website provides a 2023 fee schedule showing tuition fees for a Year 12 student of $27,420 and tuition fees for a Year 8 student of $25,670.[2] In response to directions Ms Watts provided the Tribunal with a statement of account from [School 1] showing a balance of $0 as at 28 June 2023. Monthly tuition fees for [Child 1] are $2,742 and $2,567 for [Child 2].
[2] [Source deleted].
Ms Watts said she paid the fees in 10 monthly instalments each year. Ms Watts confirmed there was a sibling discount of 10 per cent applied to the fees for [Child 2] in 2022 and 2023. Ms Watts said, nonetheless, the total cost was significant and she could not continue to afford the fees on her own without drawing on the equity from the sale of the family home.
Mr Wearne told the Tribunal he did not dispute that both parents had agreed to the children attending [School 1]. Mr Wearne explained he had only done so on the basis that his father would meet a large proportion of the costs associated with their private education. Mr Wearne said his father paid the fees up until the end of July 2021 but no longer wished to assist. Mr Wearne pointed out that as Ms Watts had full parental responsibility for the children she was not required to take account of his views and he felt this negated the issue of mutual consent. Mr Wearne submitted that, in any case, he could not afford private school fees.
The Tribunal is satisfied, based on the evidence provided, there was a mutual expectation between the parents that [Child 1] and [Child 2] be educated at a private school.
The cost of fees for [Child 1] to attend in 2022 was $25,640 and in 2023 is $27,420. The cost of fees for [Child 2] to attend, including the sibling discount, was $22,065.30 in 2022 and $23,103 in 2023. The Tribunal accepts that, in some circumstances, expectations may change due to financial considerations, however, the Tribunal is satisfied the underlying mutual expectation is not diminished in this case. The Tribunal acknowledges that Mr Wearne submits he cannot afford to contribute to the education costs and will consider his concern when making a just and equitable determination.
Ms Watts told the Tribunal that both [Child 1] and [Child 2] had special needs and there were significant costs arising from these special needs.
Ms Watts said the costs associated with [Child 1]’s needs were met primarily through the NDIS and had been since he was around seven years old. She said this did not cover all his costs such as paediatric appointments and medications. Ms Watts said she was also in receipt of a carer allowance[3] for [Child 1] from Services Australia which ended on his 16^th birthday and then recommenced on 21 January 2023. Ms Watts said when the carer allowance recommenced she discovered she also had access to a health care card for [Child 1] which reduced the out of pocket expenses for his medications. Ms Watts said in light of these new developments she was satisfied for the Tribunal not to consider the costs associated with [Child 1]’s special needs.
[3] This is a non-taxable supplementary payment to assist with caring for someone who requires daily support. It is not included in Ms Watts’ adjusted taxable income.
Ms Watts said the costs associated with [Child 2]’s special needs had been met primarily though the NDIS since October 2022. Ms Watts explained she had also had access to a health care card for [Child 2] from the end of January 2023 which reduced the out of pocket expenses for her medications. Ms Watts said although she had incurred significant out of pocket costs for [Child 2] prior to receiving NDIS funding she was satisfied for the Tribunal not to consider these further given her current circumstances.
The Tribunal finds that, apart from the extra costs identified in relation to private school fees, it is appropriate to otherwise calculate the costs of the children’s needs by reference to the Costs of the Children Table (provided for in section 155 of the Act).

The income, earning capacity, property and financial resources of the child

The Tribunal is satisfied that [Child 1] and [Child 2] have no income, earning capacity, property and financial resources which should be taken into account for the purpose of child support.

The income, property, financial resources and earning capacity of each parent

The Tribunal has already considered in detail the income, property and financial resources of both parents.
The Tribunal is satisfied that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for either parent in this case.

Any hardship that would be caused

The Tribunal has found Mr Wearne is more fairly assessed on his 2022-23 adjusted taxable income of $105,168.
Mr Wearne has declared total household and personal expenditure of approximately $131,040 per annum but according to the more recent figures he provided this has now fallen to approximately $114,989 per annum. This recent figure includes child support of $32,604. Mr Wearne also anticipates his total household and personal expenditure to be approximately $126,180 per annum by February 2024 as a result of increased mortgage costs. This figure also includes child support of $32,604. The Tribunal does not otherwise consider Mr Wearne has any expenses that would be viewed as out of the ordinary.
Mr Wearne told the Tribunal his two biggest expenses were his rent and mortgage payments. Mr Wearne said he was a modest spender and did not go out much. Mr Wearne said he was receiving financial support from his family to survive.
The Tribunal has found Ms Watts had an adjusted taxable income of $133,296 in 2022-23. Ms Watts also receives a carer allowance, however, this is not included as taxable income.
Ms Watts has total household expenditure of approximately $194,896 per annum, however, this includes an amount of $53,300 for the cost of educating [Child 1] and [Child 2] at [School 1]. It also includes annual medical expenses of approximately $7,852, the majority of which would presumably be met either through the NDIS or by utilising the carer allowance. Her personal expenditure totals approximately $52,780 per annum with a significant proportion of this being income tax payments.
Ms Watts said she led a frugal life and her focus was on the children and their needs. Ms Watts told the Tribunal while her expenses outweighed her income she would continue to draw on the equity from the sale of the family home.
The Tribunal notes that in making her application for a departure from the administrative assessment on 21 July 2022 Ms Watts sought to have any change apply from 1 July 2021. Ms Watts explained that due to protracted Family Court proceedings and extended periods of home schooling she was unable to apply sooner.
The Tribunal is limited to making a determination in respect of a day in a period that is not more than 18 months prior to the date the change of assessment application was made (paragraph 98S(3B)(a) of the Act). The Tribunal must decide whether or not it is just and equitable to backdate the determination.
Ms Watts applied for a change of assessment on 21 July 2022 and the earliest date from which a change could be made is, therefore, 21 January 2021. The Tribunal is of the broad view that retrospectively changing entitlements should be avoided without compelling reasons. As there was nothing preventing Ms Watts from applying sooner the Tribunal finds it just and equitable to commence the departure determination from 21 July 2022 and not an earlier date. In reaching this conclusion the Tribunal is also mindful that backdating the assessment prior to this date would create significant arrears for Mr Wearne.
As previously noted the administrative assessment in place at the time Ms Watts made her application for a change of assessment was based on an adjusted taxable income amount of $57,963 for Mr Wearne. When applying the adjusted taxable income amount for Mr Wearne of $105,168 the annual rate of child support payable would be approximately $16,698.
The Tribunal has also found there are additional costs to be taken into account in relation to the children’s education. The cost to Ms Watts of tuition fees for [Child 1] and [Child 2] was approximately $47,705 in 2022 and approximately $50,523 in 2023.
Having considered the interest of both parents the Tribunal proposes to make the following determination:
·     for the period from 21 July 2022 to 30 September 2024 the adjusted taxable income of Mr Wearne is varied to $105,168;
·     for the period from 21 July 2022 to 31 December 2022 the annual rate of child support payable by Mr Wearne is increased by $11,926;
·     for the period from 1 January 2023 to 3 November 2023 the annual rate of child support payable by Mr Wearne is increased by $15,016; and
·     for the period from 1 January 2024 to 31 December 2024 the annual rate of child support payable by Mr Wearne is increased by $11,839.
The Tribunal has varied the income of Mr Wearne until 30 September 2024. This will allow him time to file his tax return for 2023-24. After 30 September 2024 he will be assessed according to the usual administrative formula. Under the decision of the Tribunal the annual rate of child support alone payable by Mr Wearne will be approximately $16,698 (rising to $18,282 from the time [Child 2] turned 13 years of age).
The Tribunal has found there was a mutual expectation between the parents that [Child 1] and [Child 2] be educated at a private school. In such circumstances the Tribunal would usually consider it fair for Mr Wearne and Ms Watts to share equally in the cost of tuition fees. The Tribunal acknowledges, however, that Mr Wearne is not in a financial position to contribute half of the fees particularly given his father has met a significant majority of this cost in the past. This is a new impost for both parents to manage. The Tribunal is also conscious there is a difference in the incomes of the parents with Mr Wearne’s income being approximately 44 per cent of their combined incomes. In light of this the Tribunal considers it just and equitable for Mr Wearne to make a 25 per cent contribution towards the cost of educating the children at [School 1] for part of the 2022 school year and the full 2023 school year.
Under the decision of the Tribunal the annual amount of child support and school tuition fees payable by Mr Wearne will be approximately $28,624 from 21 July 2022 [to] September 2022. This will increase to approximately $30,208 [from] September 2022 when [Child 2] turns 13 years of age.
The Tribunal notes that [Child 1] ceases to be a child of the assessment from 3 November 2023. So that Mr Wearne meets his 25 per cent contribution towards the cost of tuition fees in 2023 the Tribunal has increased the annual rate of child support by $15,016 from 1 January 2023 to 3 November 2023 (his 25 per cent contribution of $12,630 divided by 307 days in the period multiplied by 365 days in the year). Under the decision of the Tribunal the annual amount of child support and school tuition fees payable by Mr Wearne will be approximately $33,298 from 1 January 2023 to 3 November 2023.
From 4 November 2023 Mr Wearne will be required to pay child support for [Child 2] only with the annual rate being approximately $12,076.
[Child 2] is to continue her education at [School 1] as a Year 9 student in 2024. The Tribunal notes the tuition fees for a Year 9 student increased by 3.5 per cent between 2022 and 2023. Assuming a similar increase the Tribunal has calculated the cost of tuition fees for [Child 2] to be approximately $26,908 in 2024. This no longer includes a sibling discount as [Child 1] will have completed his schooling. The Tribunal considers it fair for Mr Wearne to meet a larger proportion of the tuition fees for [Child 2] in 2024 as he will no longer be paying child support and school fees for [Child 1]. The Tribunal has adopted an income-based approach when determining the amount of tuition fees payable by each parent with Mr Wearne contributing 44 per cent of the cost and Ms Watts 56 per cent.
Under the decision of the Tribunal the annual amount of child support and school tuition fees payable by Mr Wearne will be approximately $23,915 from 1 January 2024.
The Tribunal acknowledges that Mr Wearne is meeting a considerable financial burden for what is effectively the second half of 2022 and most of 2023. The annual rate of child support and school fees payable falls from late 2023 once [Child 1] is no longer a child of the assessment but Mr Wearne also anticipates his expenses will increase early in 2024 due to rising mortgage costs. Nonetheless it is the primary duty of parents to maintain their children to the extent of their capacity to do so and that duty takes priority over all commitments of the parents other than their necessary commitments of self-support. The Tribunal notes that Mr Wearne has declared $8,000 in cash at bank and continues to receive some financial support from his parents to help meet his living expenses.
Under the decision of the Tribunal Ms Watts will bear a much larger proportion of the cost of tuition fees for [Child 1] and [Child 2] for part of 2022 and most of 2023. This will change in 2024. Ms Watts has told the Tribunal she will continue to draw down on the equity from the family home in circumstances where her expenses exceed her income. The Tribunal notes that Ms Watts has declared cash at bank of $15,930.
While the decision of the Tribunal is likely to cause Mr Wearne and Ms Watts some hardship the Tribunal considers this unavoidable given the joint decision to educate [Child 1] and [Child 2] in the private school system. The Tribunal is otherwise satisfied its proposed determination is just and equitable.
If it is intended for [Child 2] to continue at [School 1] beyond the 2024 school year then a new change of assessment application will need to be progressed in order to account for the relevant costs.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be otherwise proper to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
Neither parent 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 that:

for the period from 21 July 2022 to 30 September 2024 the adjusted taxable income of Mr Wearne is varied to $105,168;
for the period from 21 July 2022 to 31 December 2022 the annual rate of child support payable by Mr Wearne is increased by $11,926;
for the period from 1 January 2023 to 3 November 2023 the annual rate of child support payable by Mr Wearne is increased by $15,016; and
for the period from 1 January 2024 to 31 December 2024 the annual rate of child support payable by Mr Wearne is increased by $11,839.

[2023] AATA 3306

15 August 2023

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Costs

Statutory Construction