Wilselhan and Wilselhan (Child support)

[2022] AATA 3068

Wilselhan and Wilselhan (Child support) [2022] AATA 3068 (16 June 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/MC022726

APPLICANT:  Mr Wilselhan

OTHER PARTIES:  Child Support Registrar

Mrs Wilselhan

TRIBUNAL:Senior Member J Longo (Presiding)

Senior Member S De Bono

DECISION DATE:  16 June 2022

DECISION:

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

• For the period 15 July 2020 to 11 October 2020, Mr Wilselhan’s adjusted taxable income is set at $29,237;

• For the period 12 October 2020 to 30 June 2021, Mr Wilselhan’s adjusted taxable income is set at $103,902; and

• For the period 1 July 2021 to 31 December 2022, Mr Wilselhan’s adjusted taxable income is set at $136,500.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – necessary commitments of self-support – a ground for departure established – decision to depart – 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 omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Wilselhan and Mrs Wilselhan are the separated parents of [Child 1] and [Child 2].  According to the records of Services Australia – Child Support (the Agency), the child support assessment was registered on 21 May 2020.  The Agency has been responsible for the collection of child support from Mr Wilselhan since that time. The care attributed to Mr Wilselhan and Mrs Wilselhan in respect of [Child 1] and [Child 2] has been 22% and 78% respectively throughout the relevant period under review.

2. Since the case was registered with the Agency, there have been several changes to the administrative assessment. The most recent administrative assessments, prior to the application for this departure determination, were as follows:

   ·     For the period 22 May 2020 to 10 September 2020, the annual rate of child support payable by Mr Wilselhan increased to $18,758 due to [Child 2] being added to the assessment and he was reflected as being in Mrs Wilselhan`s above primary care.

   ·     For the period 11 September 2020 to 7 October 2020, the annual rate of child support payable by Mr Wilselhan decreased to $902. This was due to Mr Wilselhan lodging an estimated income of $29,330. Mrs Wilselhan`s income remained as above.

   ·     For the period 8 October 2020 to 30 March 2021, the annual rate of child support payable by Mr Wilselhan increased to $31,606. This was due to the agency amending Mr Wilselhan`s estimated income to $173,453 on 7 June 2021.

3. Mr Wilselhan applied to the Agency for a departure from the administrative assessment on 23 September 2020 on the basis of, in the special circumstances of the case, it is unfair because of the income, earning capacity, property or financial resources of one or both parents (reason 8A and 8B), and because Mr Wilselhan’s necessary expenses significantly affect his capacity to support the children (reason 7).

4. On 26 July 2021, the Agency decided to depart from the administrative assessment and made a departure determination as follows:

   ·     For the period 15 July 2020 to 10 September 2020 the adjusted taxable income of Mr Wilselhan is set at $29,237.

   ·     For the period 1 July 2021 to 20 November 2022 the adjusted taxable income of Mr Wilselhan is set at $170,700.

5. Mr Wilselhan objected to the decision on 8 August 2021. An objections officer of the Agency partly allowed the objection on 12 October 2021 as follows:

   ·     For the period 15 July 2020 to 14 October 2020, Mr Wilselhan`s adjusted taxable income is set at $29,237

   ·     For the period 15 October 2020 to 30 November 2022, Mr Wilselhan`s adjusted taxable income is set at $169,979.

6. On 14 November 2021, Mr Wilselhan lodged an application to this Tribunal for review of the objections officer’s decision. Directions for this matter were made on 9 March 2022. The application was heard on 4 May 2022.

7. The Tribunal considered the documents and information, including the oral evidence of Mr Wilselhan and Mrs Wilselhan, which was provided to the parties prior to the hearing.[1] The Tribunal deferred its decision and reconvened and made its decision on 27 May 2022. Relevant aspects of the evidence and material will be referred to in the Tribunal’s decision.

   [1] Administrative Appeals Tribunal Act 1975 subsection 37(1) and section 38AA Statement and Documents provided by the Agency numbered 1 to 521; Mr Wilselhan’s documents numbered A1 to A91; and Mrs Wilselhan’s documents numbered B1 to B34.

CONSIDERATION

The legislative framework and issues for the Tribunal to determine

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three-step process to be satisfied prior to a departure determination being made: that there is a ground for a departure from the administrative assessment; that it is just and equitable to depart; and that it is otherwise proper. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Reason 8: Mr Wilselhan and Mrs Wilselhan’s income, property, financial resources and earning capacity

1. Subparagraphs 117(2)(c)(ia) & (ib) of the Assessment Act provides that a ground for departure from an administrative assessment exists if:

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

   …

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

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

10.The term “special circumstances” is not defined in the Assessment Act. In Gyselman v Gyselman [1992] FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

11.In considering the above, the Tribunal is mindful of the requirement of satisfying subsection 117(7A) of the Assessment Act having regard to the capacity of the parent to derive an income but disregarding the capacity of anyone who does not have a legal duty to maintain the child. To this end, the Tribunal has considered Mr Wilselhan’s and Mrs Wilselhan’s circumstances as the parents of [Child 1] and [Child 2].

1. A parent’s earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Assessment Act. This section requires the Tribunal to consider three matters in determining that the parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment:

   ·     Whether the parent is:

   onot working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or

   ohas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or

   ohas changed their occupation, industry or working pattern (subparagraph117(7B)(a)(iii)); and

   ·     If the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii)); and

   ·     If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

2. Mr Wilselhan did reduce his working hours when he became unemployed in May 2020 and the basis for this decision was not due to health or caring responsibilities but rather due to Mr Wilselhan intending to work in [Country 1]. However, the Tribunal is satisfied that this change was not for the purpose of affecting the administrative assessment of child support, as at the time of the changes in his employment, Mr Wilselhan was intending to take up a full-time employment opportunity in [Country 1] but was unable to do so due to the onset of the COVID-19 pandemic and the closure of international borders. Accordingly, it is not open to the Tribunal to determine an earning capacity in respect of Mr Wilselhan as a ground for departure from the administrative assessment.

14.The Tribunal has also examined Mr Wilselhan’s income from May 2020. Mr Wilselhan told the Tribunal, as stated above, that he stopped working and had taken 9 months leave without pay to work in [Country 1]. He maintained an on-going position with the [workplace] he was employed with during this period. Mr Wilselhan said he was unable to travel to [Country 1] due to the COVID-19 pandemic. He became aware he was unable to travel in early February 2020. The position in [Country 1] was meant to be for three terms - term 1, 2 and 3 in 2020. As he had taken leave without pay, he was unable to return to his position as [Occupation 1] because his position had been filled for the period he was on leave. Consequently, he was without work until 12 October 2020, the commencement of term 4, when he returned to this position. From July 2020, during the period of his unemployment, he was in receipt of jobseeker payment until he returned to work in October 2020.

15.Mr Wilselhan stated that he then commenced employment with [Employer 1],  [as] a full-time [Occupation 1]. According to Mr Wilselhan’s payslips provided to the Tribunal[2],  they show salary, including superannuation, of $159,519 per annum. Mr Wilselhan stated that he received a one-off payment of about $13,000 to pay for visas and relocation costs for his position in [Country 1] but no other income prior to returning to full-time employment in October 2020.  

[2] Pages A26 to A28, Mr Wilselhan’s documents to the Tribunal.

16.Mr Wilselhan stated that prior to receiving jobseeker payment, he was funding his own costs of living expenses by borrowing money as well as accessing savings. Mr Wilselhan did not dispute the departure determination of his income during the period he was not working, however, he disagreed with the assessment of his adjusted taxable income once he returned to employment. Mr Wilselhan stated that the assessment of child support should be based on his tax assessment for the 2020/2021 financial year.

17.Mr Wilselhan provided a copy of his income tax return for the 2020/2021 financial year[3], after the hearing and this was also sent to Mrs Wilselhan for further submissions. The 2020/2021 income tax return showed gross income of $104,539, which included a period in which Mr Wilselhan was not working until October 2020. As stated above, Mr Wilselhan’s current full-time salary of $159,519 includes his employer superannuation contributions. Mr Wilselhan conceded in his evidence to the Tribunal, which the Tribunal accepts, that his salary excluding his employer superannuation payments is approximately $146,000 per annum (or around $5,615 per fortnight).

[3] Pages A87 to A91, Mr Wilselhan’s documents to the Tribunal.

18.In relation to Mr Wilselhan’s income, Mrs Wilselhan agreed that Mr Wilselhan should be assessed on his taxable income. She stated that she did not agree Mr Wilselhan received funds for his overseas employment to pay for his expenses, as she understood these were paid by the school and therefore he did not have this expense.

1. Based on the findings above, it is clear that there is a significant discrepancy between Mr Wilselhan’s income from when he made his application for the departure determination. The administrative assessment prior to September 2020 was based on Mr Wilselhan’s 2018/2019 adjusted taxable income of $105,941. This was considerably more than Mr Wilselhan’s income during this period, as he had stopped working and subsequently found himself unemployed until October 2020 when he was able to return to full-time employment.

2. Consequently, the Tribunal is satisfied that the administrative assessment has not produced a fair outcome and accordingly, the Tribunal finds that special circumstances do exist in this case which make the determination of the level of financial support to be provided by Mr Wilselhan to be unjust and inequitable. As such, the Tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Assessment Act.

Other grounds

21.The Tribunal also notes that Mr Wilselhan sought a departure from the administrative assessment in the special circumstances of the case, necessary expenses significantly affect his capacity to support the children (reason 7). However, the Tribunal has already determined that there is a ground to depart from the administrative assessment based on the considerations above. The Tribunal will therefore consider the submissions on these issues in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Wilselhan, Mrs Wilselhan and [Child 1] and [Child 2] to make a particular departure determination?

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. This in turn requires the Tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Assessment Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application (Gyselman).

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

1. The Tribunal found earlier that Mr Wilselhan’s income from May 2020 was from a one-off payment and then jobseeker payment until he returned to work in October 2020. This was calculated by the Agency to represent an annualised amount of $29,237. Mr Wilselhan then returned to full-time employment at the start of term 4 on 12 October 2020 and his annual salary, less employer superannuation was $146,000. The Tribunal has found that his adjusted taxable income, as determined in his income tax return for 2020/2021, of $103,902 appropriately reflects his income from 12 October 2020 and the remainder of the financial period. The Tribunal finds that his annual salary of $146,000 should then be used as the basis of assessing the child support payable.

2. In respect of Mrs Wilselhan, she stated in her evidence that she was previously on unpaid maternity leave but has subsequently resigned from this position and is currently studying with the plan to return to work during school hours. This has not yet occurred. No proof of these studies has been provided to the Agency or the Tribunal. Mr Wilselhan has noted this lack of evidence in his written submissions. Additionally, Mr Wilselhan has also submitted statements that Mrs Wilselhan is currently working and alleges that she is receiving undeclared income. No evidence was presented which supported Mr Wilselhan’s assertions. Apart from Mrs Wilselhan’s Centrelink payments, for which Mrs Wilselhan provided income statements from Centrelink, there was no further information before the Tribunal which indicated that Mrs Wilselhan was receiving additional income and so the Tribunal was unable to conclude that Mrs Wilselhan had access to additional income as submitted by Mr Wilselhan.

3. Similarly, Mr Wilselhan also made written submissions that Mrs Wilselhan has capacity to work and has made no attempt to find work. A parent’s earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Assessment Act. This section requires the Tribunal to consider the parent’s change in circumstances, the reason for this change and whether the change occurred to affect the amount of child support payable in determining whether that parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment. Given that Mrs Wilselhan was not working prior to separation, her circumstances have not changed and therefore it does not meet the requirements under subsection 117(7B) of the Assessment Act.

4. The Tribunal has considered Mr Wilselhan’s reason 7 submissions, relating to the necessary expenses for self-support, in the context of his income, property and financial resources. Mr Wilselhan submitted that his requirement to repay outstanding debts, of which he provided a summary to the Tribunal[4]. Included in these debts by Mr Wilselhan are court costs for an unsuccessful Supreme Court appeal. Mr Wilselhan estimated that these costs are around $150,000 but there is no decision on the actual amount. The other debts referred to by Mr Wilselhan include a personal loan from NAB of around $20,000 and a St George Bank loan of about $21,000 for a motor vehicle which he was previously salary sacrificing. Mr Wilselhan stated that the car was sold but the sale price did not cover the cost of the loan and so consequently he was liable for the shortfall. Mr Wilselhan submitted that these debts should be taken into account when assessing his child support liability.

   [4] Pages A22 to A23 of Mr Wilselhan’s documents to the Tribunal.

5. Mr Wilselhan indicated in his Statement of Financial Circumstances that he was paying $700 towards these liabilities. However, in response to the Tribunal’s questions regarding these repayments, he stated that he is not currently paying any of these loans, but that this amount is what he should be paying. The consideration of a parent’s capacity to provide financial support for the children and whether that should be reduced because of commitments of the parent necessary to enable them to support themselves requires that these commitments, in this case the debts outlined by Mr Wilselhan, are being paid and reduce their capacity to provide financial support for the children. Mr Wilselhan is not paying these debts. It is unclear whether he will pay these debts or whether the liability for these debts will be shared with Mrs Wilselhan, as he claims they are prior to separation. As there is no current commitment for these costs, the Tribunal has not considered them in the context of this departure determination.

28.As has been discussed, and is stated in his Statement of Financial Circumstances, Mr Wilselhan is currently working on a full-time basis as [Occupation 1]. Mr Wilselhan’s Statement of Financial Circumstances shows his income as $1,940 per week[5], however at hearing he stated that this is the nett amount he receives from employment. His payslips provided to the Tribunal[6], confirm that his gross income is $2,793 per week. Mr Wilselhan’s annual salary is $146,000 per annum or $5,615 per fortnight. Apart from salary from employment, he has no other income. The Tribunal notes that Mr Wilselhan is salary sacrificing the ongoing costs associated with his motor vehicle and this is itemised in his payslips.

29.Mr Wilselhan’s Statement of Financial Circumstances also shows personal weekly expenditure of $2,505, which includes income tax, superannuation, child support payments and debt repayments. As discussed above, $700 per week as itemised for debt repayment are not actually incurred. Additionally, Mr Wilselhan has include his employer superannuation contributions as personal expenditure.

30.His household expenditure of $2,130 per week also includes $300 per week car lease expenses. In his Statement of Financial Circumstances, he lists household contents ($10,000) and $400,000 in superannuation. In regard to his liabilities, Mr Wilselhan indicated a number of credit card debts totalling $135,000. While not listed, Mr Wilselhan stated that he also owes $150,000 in court costs which has not been settled.

31.Mrs Wilselhan’s Statement of Financial Circumstances shows gross income of $1,000 per week which is made up of parenting payment and child support. Mrs Wilselhan is also in receipt of family assistance payment; however, this is excluded as income for the purpose of the Act.

32.Her household expenditure is $1,233 per week, which she is able to meet with her Centrelink payments, family assistance payments and child support. She has not listed any personal expenditure. In relation to Mrs Wilselhan’s assets, she listed savings ($174); a car (valued at $17,000); household contents ($5,000). Mrs Wilselhan discloses credit card liability of $7,326, which she stated is with a debt collector and she intends to enter into a repayment schedule for this debt. She also stated that she has around $17,000 in superannuation.

[5] Page A12, Mr Wilselhan’s documents to the Tribunal.  

[6] Pages A26 to A28, Mr Wilselhan’s documents to the Tribunal.

The needs of the children

1. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Wilselhan and Mrs Wilselhan have the primary duty to financially support [Child 1] and [Child 2] and that contributing to their costs should take priority over all other costs other than their “necessary” costs of self-support.

2. In determining the proper needs of the child, subsection 117(6) of the Assessment Act also 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. It was undisputed that [Child 1] and [Child 2] are in good health and have no special needs.

3. Based on the incomes of Mr Wilselhan as discussed above in paragraph 23 and 24 above, including Mrs Wilselhan’s Centrelink payments as discussed, the Costs of the Children Table estimates that [Child 1] and [Child 2]’s costs are, in 2020 and 2021, $28,369 and $34,965 respectively. This is significantly less than the costs of [Child 1] and [Child 2] as estimated by the parents and indicates that their needs are prioritised and that their “necessary” and “discretionary” needs are being provided for. 

Conclusion

1. After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Wilselhan, Mrs Wilselhan and the needs of [Child 1] and [Child 2], the Tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Assessment Act. The Tribunal may make one of the determinations set out in section 98S of the Assessment Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support.

2. It is clear that Mrs Wilselhan requires the assistance of Mr Wilselhan to meet the needs of [Child 1] and [Child 2]. It is also open to both parties to prioritise the “necessary” needs of [Child 1] and [Child 2], noting that Mr Wilselhan has allowed for discretionary expenses in relation to holidays which while they are not being incurred he would like to expend for their benefit. These, however, cannot take precedence over the children’s necessary needs. 

3. The Tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). While in this case, the Tribunal is limited to considering any backdating, it has determined that it is not appropriate for any departure to be made prior to July 2020. Furthermore, given that the administrative assessment at that time commenced in May 2020, there is reason to make a departure earlier than this date. 

4. The Tribunal considered the circumstances of the parties and on balance, that there should be a graduated return in child support assessed reflecting Mr Wilselhan and Mrs Wilselhan’s respective incomes. The Tribunal has accepted that part of the initial departure determination for Mr Wilselhan and decided that it was appropriate to set his adjusted taxable income at $29,237 for the period that he was not employed until 11 October 2020. In respect of the period from 12 October 2020, the Tribunal has determined his adjusted taxable income of $103,902 which was his income as determined in his 2020/2021 income tax return as this reflected his partial return to full-time employment for this financial year. The Tribunal has determined Mr Wilselhan’s income from 1 July 2021 on the basis of an adjusted taxable income of $136,500. This lower amount allows for Mr Wilselhan’s employer superannuation contributions from his total remuneration and an estimate of his ongoing work-related expenses based on the previous financial period but for the entire financial year.

5. In relation to an end period, the Tribunal is cognisant of the preference of the parties for a degree of certainty going forward. However, the Tribunal is also cognisant that Mr Wilselhan is a salaried employee and his income will be, apart from the recent period, reflected in his adjusted taxable income when he lodges his income tax return annually.  Accordingly, the Tribunal proposes to end the departure decision on 31 December 2022.  At this time the 2021/22 financial circumstances of the parties should be available for scrutiny. 

6. Subsection 117(4) of the Assessment Act requires the Tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.

7. According to Agency records, Mr Wilselhan’s child support arrears on 20 November 2021 were $15,529.  Assuming he has paid his assessed child support to date and made no additional contributions to the arrears, the Tribunal calculates that his arrears will reduce. While Mr Wilselhan submitted that he has no surplus at the end of each week, the Tribunal is satisfied that he has access to sufficient income to meet a weekly child support liability in respect of [Child 1] and [Child 2] of around $478 per week, in addition to the reduced arrears, without incurring any hardship. The Tribunal notes again Mr Wilselhan’s legal duty to prioritise the needs of [Child 1] and [Child 2].

8. The Tribunal notes that while they have ongoing household costs, she is living rent free presently but has considered alternative accommodation. It is open to her to prioritise the “necessary” costs of [Child 1] and [Child 2], as it is for Mr Wilselhan to do, and that if she does find work, as she has indicated is her intention, this will further assist in meeting the household costs and the children’s costs. Despite Mrs Wilselhan having some debts, the Tribunal does not consider that these debts, and the reduction in the child support payable by Mr Wilselhan will cause hardship to her or to [Child 1] and [Child 2].

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

44.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 Assessment 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.

45.Mrs Wilselhan was in receipt of FTB throughout the relevant period.  As such, the Tribunal’s decision will reduce the impact on the public purse as the amount of child support payable reduces the amount of FTB received. Therefore, the Tribunal considers that it is otherwise proper to make the particular proposed determination.

46.It is open to either party to lodge a further change of assessment application should the future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

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

• For the period 15 July 2020 to 11 October 2020, Mr Wilselhan’s adjusted taxable income is set at $29,237;

• For the period 12 October 2020 to 30 June 2021, Mr Wilselhan’s adjusted taxable income is set at $103,902; and

• For the period 1 July 2021 to 31 December 2022, Mr Wilselhan’s adjusted taxable income is set at $136,500.