Wiggans and Wiggans (Child support)

[2020] AATA 1015

Wiggans and Wiggans (Child support) [2020] AATA 1015 (2 March 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC017440

APPLICANT:  Mr Wiggans

OTHER PARTIES:  Child Support Registrar

Mrs Wiggans

TRIBUNAL:Member Y Webb

DECISION DATE:  2 March 2020

DECISION:

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

·The taxable incomes of Mr Wiggans and Mrs Wiggans as assessed by the Australian Taxation Office will continue to apply in the administrative formula; and

·For the period 1 April 2019 to 31 March 2021 the annual rate of child support otherwise payable by Mr Wiggans under the administrative formula assessment is increased by $1,508 per annum in relation to the younger child’s [medical] costs; and

·For the period 21 January 2019 to 25 June 2020 the cost of the child amount in the assessment is reduced such that it reflects only the costs of one child; and

·The changes already affecting the assessment decided on 6 April 2017 and 27 November 2017 continue to apply until their cessation on 21 March 2019 and 28 February 2019 respectively.

CATCHWORDS

CHILD SUPPORT – departure determination – income, earning capacity, property and financial resources of one child – special needs of second child benefits derived from business – decision under review set aside and substituted

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

REASONS FOR DECISION

BACKGROUND

1. This review relates to the issue of child support regarding the two children of Mr Wiggans and Mrs Wiggans.  The children are now aged 17 and 14.  The elder child turns 18 [in] June 2020.

2. The child support case has been registered for collection by the Department of Human Services (“Child Support Agency”) since 3 October 2012. 

3. On 21 January 2019, Mr Wiggans applied to the Child Support Agency for a change to the administrative assessment on the basis of Reasons 4 and 8A.  Mrs Wiggans cross-applied on the basis of Reason 2.

4. At the time of Mr Wiggans’s application for a change to the assessment and for the period 24 December 2018 to 28 February 2019, Mr Wiggans was assessed to pay an annual amount of child support of $9,078.  This was based on a 2017/2018 adjusted taxable income of $44,143 for Mr Wiggans and a 2017/2018 adjusted taxable income of $12,798 for Mrs Wiggans.  This amount of child support payable included an annual amount of $1,677 payable by Mr Wiggans for the period 22 March 2017 to 21 March 2019 in relation to a share of the costs of [medical] treatment for the elder child.  It also included an annual amount of $1,715 payable by Mr Wiggans for the period 1 December 2017 to 28 February 2019 in relation to a share of surgery costs for the elder child.

5. On 17 May 2019 a delegate of the Registrar decided that Reasons 2 and 4 had been established but that reason 8A had not.  The delegate determined that for the period 21 January 2019 to 31 January 2022 the adjusted taxable income of Mr Wiggans would be set at $48,120.  The delegate also decided that the two previous change of assessment decisions (which had not yet expired) should cease to have effect on 20 January 2019 and that for the period 21 January 2019 until 28 February 2019 Mr Wiggans’s child support liability should be increased by $3,392 and in the period 1 March 2019 until 21 March 2019 Mr Wiggans’s child support liability should be increased by $1,677 in relation to past special needs of the elder child.  The delegate also decided that for the period 23 May 2019 until 22 May 2021 Mr Wiggans’s child support liability should be increased by $1,508 in relation to the [medical] costs for the younger child.  The delegate also decided that for the period 21 January 2019 until 25 May 2020 the costs of the children amount should be reduced by $3,292 in relation to the elder child’s capacity to meet most of his own costs.

6. On 21 June 2019 Mr Wiggans objected to that decision.

7. On 4 September 2019 an objections office partly allowed Mr Wiggans’s objection although this resulted in an outcome which was less favourable to Mr Wiggans than the original decision.  The objections officer set aside the original decision and varied Mr Wiggans’s adjusted taxable income to $59,700 for the period 21 January 2019 until a terminating event occurred for both children and the case ends. The objections officer also decreased the cost of the child amount in the assessment to $8,088 on the basis of the elder child’s capacity to contribute to his own financial support.  The objections officer also increased the annual rate of child support payable by Mr Wiggans by $1,508 for the period 30 May 2019 to 29 May 2021 in relation to the younger child’s [medical] costs.  The objections officer also left in place (until their expiry on 28 February 2019 and 21 March 2019 respectively) the changes determined in earlier change of assessment decisions (in relation to [medical] costs and surgery costs for the elder child).

8. On 18 September 2019 Mr Wiggans requested review by the Administrative Appeals Tribunal (“the Tribunal”). A telephone directions hearing was conducted with both parents on 16 January 2020.

9. Mr Wiggans and Mrs Wiggans attended the hearing by way of a telephone conference on 27 February 2020.  Both parents gave sworn evidence.

10. The Tribunal deferred making a decision pending the receipt of the income protection policy from Mr Wiggans confirming that the policy provided cover to age 55.  Mr Wiggans provided that document.

11. On 2 March 2020 the Tribunal reconvened and made its decision.

ISSUES

1. The central issues for the Tribunal to determine in this case are:

   · Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (Assessment Act) exists; and if so,

   ·      Whether it would be:

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

   (b)   otherwise proper

   to make a particular determination to depart from the administrative assessment of child support.

DOCUMENTARY EVIDENCE

1. The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule.  The Tribunal had regard to all of this evidence, and refers specifically to particular items in this statement of reasons.

CONSIDERATION

The child support law

1. The legislation relevant to this review is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by the liable parent is usually based on an administrative formula assessment under Part 5 of the Assessment Act.  This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.

3. A parent may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B).  Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process as described in paragraph 12 above.

4. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether the ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” in the case. If satisfied that there are “special circumstances” and 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 Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.

5. The phrase “special circumstances of the case” is not defined in the Assessment Act.  In the case of Gyselman and Gyselman (Gyselman),[1] the Full Court of the Family Court of Australia held that:

   Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.

   Whilst it is not possible to define with precision the meaning of that term, 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.

   [1] (1992) FLC 92-279

6. Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to the Registrar and therefore the Tribunal must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision. 

Does a ground or grounds exist to depart from the administrative formula assessment?

1. In considering whether a ground or grounds exist which justify departing from the administrative formula assessment, the Tribunal considered the evidence and submissions provided by the parents at the hearing in addition to the extensive information contained within the documentation provided by the Child Support Agency as well as the documentation provided by the parents.

Reason 4

1. The legislative grounds corresponding to Mr Wiggans’s application in relation to Reason 4 are set out in subparagraph 117(2)(c)(i)  of the Assessment Act.  The test is whether:

   …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: [paragraph 117(2)(c)]

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

2. The notes of the Child Support Agency record that Mr Wiggans stated that he believed that the elder child was working as an [Occupation 1] and earning above $500 per week.[2] 

   [2] C1- page 89

3. In response Mrs Wiggans stated that the elder child was working but had not yet started an [Occupation 1].  She stated that he receives a low income and she provided a payslip from his employment.  She stated in her response that the elder child pays board to her of $50 per week which she stated does not cover his food.[3]

   [3] C1-page 126

4. At the hearing Mrs Wiggans stated that the elder child is no longer working for the [previous business] but instead is working as [ Occupation 2].  She stated that his income varies as he works on a casual basis.  However, on average he earns about the same as the income he was earning from the [previous] employer.  She stated that the elder child has been working more or less continuously since the beginning of 2019.  She stated that she no longer charges him board and that currently (since the beginning of 2020) the elder child has been living with Mrs Wiggans’ brother.  She stated that when she relocates after Easter the eldest child will resume living with her.

5. The payslip which Mrs Wiggans had previously provided for the pay period 18 March 2019 to 24 March 2019 showed that the eldest child earned a gross weekly amount of $502.36 and that his year to date income was $16,662.24. It also showed that the annual salary was $26,123.[4]

   [4] C1-page 142

6. The Tribunal is satisfied that the eldest child is working regularly on an ongoing basis and that he is earning approximately $500 per week or approximately $26,000 per year.  The Tribunal referred to the Child Support Guide which provides guidance in relation to Reason 4.  Generally a child’s income will not be considered sufficient to warrant a change to the assessment unless it is regular and exceeds the equivalent of the maximum rate of youth allowance payable to a child under 18 years of age and living at home plus the income-free threshold applicable to students/apprentices.  For example as at 1 January 2019 a child would generally need to earn at least a weekly amount of $343.10 and at 1 January 2020 a weekly amount of at least $345.10 for the earnings to be considered significant enough to warrant a change to the assessment. The Tribunal is satisfied that the eldest child is earning income in excess of the youth allowance figure.

7. Neither parent referred to any particularly high costs which the eldest child incurs and which may militate against changing the assessment. 

8. The Tribunal is satisfied that the level of income of the elder child creates a special circumstance and renders the child support assessment unfair.

9. The Tribunal therefore finds that Reason 4 has been established.

10. In relation to the claim that Reason 2 and Reason 8A are also relevant in this case the approach of the Federal Circuit Court of Australia in these cases has been to limit the analysis about particular grounds once it was evident that one had been established, and to thereafter focus on the “just and equitable” considerations.  The Tribunal adopts that approach in its reasoning in this matter. 

Would it be just and equitable to depart from the administrative assessment?

1. Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain.  The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must be taken into account.

2. Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment.  The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act.  This requires an assessment of the duty of the parents towards the child; the needs of the child; any income, earning capacity and financial resources of the child; the income, earning capacity and financial resources of the parents, self-support commitments and an evaluation of hardship on the parents (and/or the child) if the Tribunal increased or decreased the amount of child support payable.

3. In considering these issues, the Full Family Court, in the case of Gyselman, stated that:

   However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section [117] (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).

4. Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act:

The proper needs of the child

1. In determining the proper needs of the child, subsection 117(6) of the Act requires the Tribunal to have regard to the manner in which the parents expected the child to be cared for, educated and trained as well as a consideration of any special needs of the child.

2. The Tribunal first considered whether the youngest child has special needs.  The term “special needs” is not defined in the legislation.  In the matter of Lightfoot v Hampson[5] the Full Court of the Family Court of Australia held that: “’…special needs of the child’ encompasses a wide range of needs of a child which are seen as ‘special’ in the sense of necessary or at least desirable for that child’s welfare but outside the ‘normal’ needs of a child which would be catered for within the formula.”

   [5] Lightfoot v Hampson (1996) 20 Fam LR 69

3. Mrs Wiggans in her cross-application stated that the younger child, would, in the next few months be having [treatments].  She stated (on 16 April 2019) that she had in November 2018, asked Mr Wiggans to pay half of the cost of this [medical] treatment originally quoted to cost $6,700[6].

   [6] C1-page 127

4. Mrs Wiggans provided a letter from the [specialist] Dr [A], dated 2 May 2019, which advised that the younger child:

   …[Medical condition deleted]

5. The [specialist] quoted a discounted fee (if paid in full by the specified date of 30 May 2019) of $6,030.  Mrs Wiggans provided documentation verifying the cost and the payment plan.[7]

   [7] C1- page 156

6. Mrs Wiggans provided confirmation that she had paid the $6,030 in two instalments of $3,015 with one bank transfer payment on 11 May 2019 and the second bank transfer payment on 14 May 2019[8].

   [8] C1- pages 170-171

7. Mr Wiggans contended that court orders made in 2014 gave him equal shared responsibility for the children but that Mrs Wiggans had gone ahead with [treatment] for the younger child without his consent and in his view, against the final court orders.  He asserted that the [treatment] was not an emergency and could have been undertaken through the public [hospital].  Mr Wiggans stated at the hearing that he believes that Mrs Wiggans did not explore other avenues and while she did send him some text messages she went ahead with the [medical] treatment without his consent.

8. The Tribunal considered the letter of 2 May 2019 from Dr [A] and it is satisfied that it reflects Dr [A]’s professional opinion and that it verifies that the [medical] treatment is both necessary and [desirable]. 

9. The Tribunal is also satisfied that the discounted cost of the [medical] treatment was $6,030 and that Mrs Wiggans has paid this amount in two equal instalments of $3,015.  The Tribunal also accepts Mrs Wiggans’ statement that she does not hold any private health insurance and therefore she received no rebates in relation to the cost of $6,030.

10. In relation to the issue of whether he was consulted, the Tribunal finds that Mrs Wiggans did contact Mr Wiggans seeking that he share the cost of the [medical] treatment but the matter was not resolved and the request was not granted.[9]

    [9] B54, B56- B59

11. In light of the Tribunal’s decision that the [medical] treatment was necessary and medically desirable, the Tribunal is satisfied that it is reasonable that Mr Wiggans contributes to the cost of the treatment.  The Tribunal will determine the proportions of the payments of the parents after considering the financial circumstances of both parents.

Mr Wiggans’ income, property, financial resources and earning capacity

1. Mr Wiggans is self-employed.  In the 2017/2018 year Mr Wiggans’ income was derived from two sources:  he was the operating his [business] through a trust and company structure [and] he was in receipt of income protection insurance payments for a long-standing back injury.  The Wiggans Family Trust (“the Trust”) Financial Statements for 2018[10] show that the gross income was $26,647.66 (comprising $23,680.66 in gross receipts and $2,967 in interest received).  After expenses of $29,041.66 the loss was $2,394.  The Trust tax return for 2018 also showed business income of $23,680 and interest of $2,697 and slightly different expenses total of $28,771 with an overall business loss of $5,091[11].  The objections officer took issue with Mr Wiggans’ business expenses deciding that they were somewhat inflated but Mr Wiggans was very adamant that that was not the case and that all of his business expenses were genuine and that the high motor vehicle expenses were due to theft and the costs of repairs.  The Tribunal found both Mr Wiggans and Mrs Wiggans to be honest and credible in their statements and the Tribunal accepts that both were truthful.  The Tribunal is not persuaded that Mr Wiggans was deliberately inflating his expenses.

   [10] A19

   [11] C1-page 60

1. Mr Wiggans’ individual tax return for 2018 showed that his taxable income was $44,143[12] and the Tribunal accepts that this was the gross amount of income received from the income protection insurance policy in the 2017/2018 year.  Given the business losses this amount of $44,143 from the income protection insurer was Mr Wiggans’ taxable income as determined by the Australian Taxation Office for the 2017/2018 year.[13]

   [12] C1-page 59

   [13] C1-page 347

2. In the 2018/2019 year Mr Wiggans received gross income from three sources.  It accepts that he closed the company [in] March 2019 (the ASIC confirmation document was provided[14]) but that he still was operating the company/trust structure for part of the 2018/2019 year.  The Trust tax return for 2019 shows that the gross income from the business was $10,784, interest was $2,427 and after expenses of $16,935 the business loss was $3,724.  The Tribunal accepts that these figures were an accurate reflection of the business’s finances.

   [14] A32

3. Following the de-registration of the company the Tribunal accepts that Mr Wiggans commenced operating a [business] as a sole trader.  In the 2018/2019 year his individual tax return shows that he received business income of $5,660 with business expenses of $9,929 and an overall loss of $4,269.  It shows that he also received gross interest of $1,729 and that his taxable income was $55,633 predominantly comprising the income protection insurance payments.[15]  The Tribunal accepts that these figures were an accurate reflection of Mr Wiggans’ income from the sole trader activities and from the income protection insurance payments and interest.

   [15] A36-A43

4. Since the commencement of the 2019/2020 financial year Mr Wiggans provided details of his profit and loss statements for the sole trader business for the period 1 July 2019 to December 2019.  These showed that in the July to September 2019 quarter he earned no income but incurred expenses (including insurance, car expenses, phone and bank fees) totalling approximately $795. In the October to December 2019 quarter he received gross income of $4,950 and incurred expenses of $4,478.94 with an overall net profit for the three month period of $215.89.[16] 

   [16] A33-A34

5. Mr Wiggans also told the Tribunal that while he estimated at the time that he completed his Statement of Financial Circumstances that he would receive approximately $44,000 of income protection payments in the 2019/2020 year; he is now expecting that the $37,000 which he has received between July 2019 and February 2020 will be all of the income protection insurance he will receive.  He explained that he turned [age] years old in [year] and the policy terminated on him turning [a specified age].  Mr Wiggans provided a copy of an excerpt from the [insurance] Policy Schedule which confirmed that the benefit period was “to age [age]”.[17]  The Tribunal accepts Mr Wiggans’ statements that he has to date in the current financial year received $37,000 in income protection payments.

   [17] A58

6. The Tribunal also accepts that Mr Wiggans is following up with [the insurance company]to ascertain whether he will be entitled to claim any other benefits such as a lump sum but that to date he has not received a response. 

7. The Tribunal accepts that without the income protection insurance payments (or some other type of payment such as a lump sum or access to his superannuation) Mr Wiggans’ capacity to earn a reasonable income from the [sole] trader business seems unlikely.  The Tribunal accepts that due to his injury he is restricted to light [work] and although he has earned a very small profit in the September to December 2019 quarter the Tribunal accepts that the likelihood of a significant increase in his income from working seems remote.  

8. In relation to financial resources, Mr Wiggans has significant savings of approximately $187,000 as a result of property settlement proceedings some years ago.

9. In relation to his expenses Mr Wiggans’ Statement of Financial Circumstances provides a guide to his expenses but at the hearing Mr Wiggans amended some items because he had mistakenly entered his monthly expenses in some items rather than his weekly expenses.  Taking those amendments into consideration his household expenses he estimated to be approximately $603 per week or approximately $31,356 per annum.  He owes income tax on his income protection payments of approximately $3,000 and estimates that his weekly income tax liability is $153.84 (approximately $8,000 per year).  He advised that he no longer holds private health insurance.  His current rate of child support (from 1 March 2019) is $187.15 per week decreasing to $155.01 per week from 22 March 2019 and increasing to $183.91 per week from 30 May 2019. 

Ms Wiggans’ income, property, financial resources and earning capacity

1. Mrs Wiggans is [self-employed].  She advised and the Tribunal accepts that she works full-time in this business and that her income varies depending on the season (she is busier in the summer months).  Mrs Wiggans’ income tax return for the 2017/2018 year shows that her gross income from self-employment was $39,745 and her expenses were $27,482 resulting in a net income from the business of $12,263.[18]  She received interest of $535. Her taxable income was $12,798. 

   [18] C1-pages 252-256

2. In the 2018/2019 year Mrs Wiggans provided a copy of her income tax return.[19]  This disclosed that her gross income from the business was $46,689.15 and that she incurred expenses of $24,994 resulting in a net profit of $21,695 which with interest of $158.44 resulted in a taxable income of $21,853.  Mrs Wiggans provided a Profit and Loss Statement for the 2018/2019 year[20] detailing a breakdown of her expenses and a further more detailed itemisation of her expenses[21] and the Tribunal accepts those figures as accurate.

   [19] B63-B66

   [20] B12

   [21] B13-B15

3. Mrs Wiggans’ bank balances disclose that she has some savings of approximately $19,000.[22] In addition to the child support payments Mrs Wiggans receives family tax benefit of approximately $230 per week.  She provided a Centrelink letter confirming these payments.[23]

   [22] B32 and B36

   [23] B19

4. In relation to her household expenses Mrs Wiggans’largest expense is her weekly rent of $320.  Her other expenses are unremarkable although the private school education fees cost Mrs Wiggans $28.30 per week (these are not shared with Mr Wiggans).  Her total household expenses per week are approximately $942. 

The parents’ earning capacity

1. Mr Wiggans’ income has fluctuated and he has made business losses for the last few years.  However, his capacity to earn has been affected by ongoing health issues.  The fact that Mr Wiggans has been receiving income protection insurance payments for some time corroborates his statements regarding his partial incapacity for work.  In those circumstances the Tribunal is satisfied that his earnings were not arranged to deliberately affect the child support assessment.  In relation to Mrs Wiggans the Tribunal finds that she is working full-time in her [business] and that in the 2018/2019 year her income increased. The Tribunal is satisfied that she is exercising her full earning capacity.

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

1. The Tribunal has already made findings in relation to the income of the elder child in paragraphs 21 to 29 of these reasons.  The Tribunal is satisfied that the eldest child is working regularly on an ongoing basis and that he is earning approximately $500 per week and that the that the eldest child is earning income in excess of the youth allowance figure and has done so since January 2019.  The Tribunal considers that in these circumstances the costs of child amount in the child support assessment should be reduced to reflect that only one child is assessed rather than two. 

2. In relation to the younger child, who is 14 years old, the Tribunal finds, based on Mrs Wiggans’ statements that he has no significant income, property or financial resources of his own.

Necessary commitments to support themselves or others

1. The Tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children.  This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities and some loans.  In Mee and Ferguson[24] the Full Court of the Family Court stated at paragraph 128:

   Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one's cloth to meet that commitment during the years when it applies.

   [24] [1986] FamCA 3.

2. Mrs Wiggans did not raise any issues in relation to self-support.  Mr Wiggans referred to medical expenses which he has incurred.  He provided a receipt for a specialist consultation ($240); a receipt for a [scan] ($49) and a [referral] letter to a [specialist].  The Tribunal accepts that Mr Wiggans has [specified]issues requiring attention.  However, the Tribunal does not consider that the costs are out of the ordinary or that they are at a level that would justify a variation to the self-support costs in the child support formula.

Is there any hardship to either parent or the children by the making of, or refusal to make, an order?

1. Mr Wiggans emphasised that whatever decision the Tribunal makes, it needs to be affordable for him.  He stated that he is very concerned that he won’t be able to afford to pay child support or his other expenses if he is not eligible for any more income protection insurance payments or any other lump sum payment.  He is concerned that he may need to apply for Centrelink benefits and that this will seriously affect his capacity to pay child support at the current rate which is based on an adjusted taxable income of $59,700.  He stated that due to his health issues he does not have the capacity to earn very much and his business has been running at a loss for a number of years.

2. In relation to hardship, Mrs Wiggans explained that she is a low-income earner.  She pays all of the school fees for the younger child and she submitted that over the years Mr Wiggans has, except where he has been ordered otherwise, made no contribution other than the child support assessment to the financial needs of the children.  She stated that she has been the parent who has funded all of the children’s school costs, technology requirements, uniforms and extracurricular activities as well as their recreational activities.  She stated that she has found it very difficult to make ends meet and is working hard doing the best she can.  She stated that she is unsure how long she can continue her current work as it takes a heavy toll on her hands and arms after years of work.  She stated that because she is relocating after Easter she is still unsure if she will continue with the [business] or whether she will re-train for work in [another]industry.   

Proposed determination

1. The Tribunal has carefully considered the extent to which Mr Wiggans should contribute to the [medical] costs for the younger child.  The Tribunal is satisfied that it would be fair and equitable for both parents to contribute 50% of the costs of the [medical] treatment.  The Tribunal proposes that due to the uncertainty of future income for Mr Wiggans, his contribution should be spread over a two-year period commencing from 1 April 2019 after the contributions to the elder child’s [medical] costs and surgery costs have been ceased.  This will mean that the annual rate of child support payable by Mr Wiggans will increase by $1,508 for the period 1 April 2019 to 31 March 2021.

2. The Tribunal acknowledges that the objections officer decided to vary Mr Wiggans’ adjusted taxable income until a terminating event has occurred for both children and the case ends.   However, the Tribunal considers that the administrative formula assessment based on the parents’ taxable incomes as assessed by the Australian Taxation Office should apply in the usual way unless there is a very good reason to substitute a different income amount. 

3. In this case the Tribunal was satisfied that both parents’ taxable incomes as determined by the Australian Taxation Office reasonably and accurately reflected the parents’ financial circumstances.  On that basis, and because both parents’ future incomes are very uncertain the Tribunal considers it would be just and equitable if the child support assessment continued - from 21 January 2019 - to be calculated on the parents’ adjusted taxable incomes as determined by the Australian Taxation Office.  If either or both parents’ incomes decrease in the future, this will allow them to lodge an estimate of income so that the assessment remains fair.

4. The Tribunal notes that the two previous change of assessment decisions continue to apply until 28 February 2019 (increasing Mr Wiggans’ annual liability by $1,715) and until 21 March 2019 (increasing Mr Wiggans’ annual liability by $1,677).  The Tribunal considers it is just and equitable if these decisions run their full course and the Tribunal does not propose to make amendments to these decisions which were both made in 2017.

5. As previously indicated, the Tribunal proposes to reduce the costs of the child in the formula until the elder child ceases to be an eligible child of the assessment on 25 June 2020. In view of the 2017/2018 adjusted taxable incomes of the parents this will mean that the cost of the child amount in the assessment will be reduced to $4,510.  This will apply from 21 January 2019 when Mr Wiggans made his application for a change to the assessment until the 2018/2019 adjusted taxable incomes are used in the assessment at which time the cost of the child amount in the assessment will be reduced to approximately $7,037 (a reduction of approximately $1,837) until [date] 2020 which is the day prior to the elder child’s 18th birthday and the end of the case for the elder child.

6. Once the 2018/2019 adjusted taxable incomes are used in the child support assessment ($55,633 for Mr Wiggans and $21,853 for Mrs Wiggans) Mr Wiggans’ annual child support liability will increase to approximately $7,037 plus $1,508 for the younger child’s [medical] costs until 31 March 2021) = $8,545 per annum or approximately $164 per week.  However, thereafter the child support liability is very approximate as the adjusted taxable incomes for the 2019/2020 year are as yet unknown and if significantly different from the 2018/2019 year it will result in a different amount of liability.

7. The Tribunal considers this proposed determination is fair, just and equitable and that it balances the needs and financial capacities of both parents.

Is it otherwise proper to depart from the administrative assessment? 

1. The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment.  Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:

   (a)    the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)    the effect that the making of the order would have on:

   (i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. In determining whether it would be “otherwise proper” to make a particular order under the Assessment Act, the Tribunal must have regard to the matters stated in subsection 117(5) of the Assessment Act.  Paragraph 117(5)(a) of the Assessment Act reflects the fact that the Assessment Act clearly states (in section 3) that it is the primary duty of the parents to support the child. That duty should not be abandoned to the social security system.

3. The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman).  It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.  The Tribunal is satisfied that Mrs Wiggans needs financial assistance for the special needs costs of the children and that Mr Wiggans is able and can afford to contribute to those costs.

4. Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income-tested benefit such as family tax benefit.    

5. Mrs Wiggans advised that she is aware of the impact of child support payments on that benefit.

6. The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.

DECISION

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

·The taxable incomes of Mr Wiggans and Mrs Wiggans as assessed by the Australian Taxation Office will continue to apply in the administrative formula; and

·For the period 1 April 2019 to 31 March 2021 the annual rate of child support otherwise payable by Mr Wiggans under the administrative formula assessment is increased by $1,508 per annum in relation to the younger child’s [medical] costs; and

·For the period 21 January 2019 to 25 June 2020 the cost of the child amount in the assessment is reduced such that it reflects only the costs of one child; and

·The changes already affecting the assessment decided on 6 April 2017 and 27 November 2017 continue to apply until their cessation on 21 March 2019 and 28 February 2019 respectively.

List of Exhibits

1. Department of Human Services – Child Support Agency marked as C exhibits:

   ·     CSA’s large bundle of 376 pages marked as exhibit– C1

   ·     CSA’s smaller bundle from pages 377 – 420 marked as exhibit – C2

2. Mr Wiggans has provided the following documents marked as A exhibits:

   ·     A1-A10                Statement of Financial Circumstances

   ·     A11-A18               Trust Tax Return 2018

   ·     A19-A20               Wiggans Family Trust Profit and Loss and Balance Sheet 2018

   ·     A21-A22               Cover sheet and excerpt from Mr Wiggans’ individual tax return 2018

   ·     A23-A25               Medical receipts

   ·     A25-A27               Written submission

   ·     A28-A29               Court orders

   ·     A30-A31               Written submission

   ·     A32  Letter re income protection payments and ASIC letter

   ·      A33-A34              Profit and Loss statements  July 2019 – Dec 2019

   ·     A35-A44               Individual tax return 2019

   ·     A45-A50               Trust tax return 2019

   ·     A51-A52               Profit and Loss and Balance Sheet Dec 2018

   ·     A53 -A56              Tax declaration forms re Trust 2016-2019

   ·     A57 -A58              [The insurance company]policy document and cover page                

1. Mrs Wiggans has provided the following documents marked as B exhibits:

   ·     B1–B2                Tribunal’s directions

   ·     B3-B11                Statement of Financial Circumstances dated 2 October 2019

   ·     B12  Profit and Loss Statement for 2018/2019 year

   ·     B13-B15               Breakdown of all expenses 2018/2019

   ·     B16 -B17               Notice of assessment 30 June 2019

   ·     B18  Superannuation balance as at 30 June 2018

   ·     B19   Centrelink letter re family assistance

   ·     B20-B29               Statement of Financial Circumstances dated 30 Jan 2020

   ·     B30- B31             Written submission

   ·     B32 -B39              Bank balances

   ·     B40-B41               Centrelink letter re family assistance

   ·     B42-B43               Notice of Assessment 30 June 2019

   ·     B44  Profit and Loss Statement 2018/2019

   ·     B45-B50               Breakdown of all expenses 2017/2018 and 2018/2019

   ·     B51  Superannuation balance

   ·     B52  Letter from Dr [A] – [specialist]

   ·     B53  Letter from [School 1] to Mrs Wiggans re fees

   ·     B54-B61               Text messages between Mrs Wiggans and Mr Wiggans

   ·     B62  Tribunal letter to Mrs Wiggans

   ·     B63-B66               Income tax return 2018/2019