Windley and Primrose (Child support)
[2023] AATA 1048
•9 March 2023
Windley and Primrose (Child support) [2023] AATA 1048 (9 March 2023)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2022/SC024201
APPLICANT: Mr Windley
OTHER PARTIES: Child Support Registrar
Ms Primrose
TRIBUNAL:Senior Member K Dordevic
DECISION DATE: 9 March 2023
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
Mr Windley’s adjusted taxable income is varied to $140,000 for the period 1 July 2021 to 30 September 2022; and
The annual rate of child support payable by Mr Windley is increased by:
o $1,682 per annum for the period 1 July 2021 to 30 June 2022;
o $8,130 per annum for the period 29 December 2021 to 13 February 2023 in respect of the child’s care costs; and
o $7,100 per annum for the period 13 February 2023 to 25 January 2025 in respect of the child’s care costs.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of both parents – special needs of children – costs of the children include child care costs - 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
The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.
This review is about the rate of child support payable by Mr Windley (the father) to Ms Primrose (the mother) for their son, who is in the sole care of Ms Primrose. The case was registered with Services Australia – Child Support (the Agency) on 15 October 2019 and has been collected by the Agency since 12 November 2020.
The mother lodged a change of assessment application on 18 October 2021. On 14 February 2022 a senior case officer determined that for the period 1 December 2021 to 31 October 2022, the father’s adjusted taxable income is varied to $97,002.
The mother sought a review of that decision on 14 March 2022. On 22 June 2022 an objections officer allowed the objection in part, determining that for the period 1 December 2021 to 31 October 2022 the father’s adjusted taxable income is varied to $104,187 and for the period 1 January 2022 to 31 December 2022 the annual rate payable by the father was increased by $1,825 in recognition of his contribution towards the child’s child care costs.
On 4 July 2022 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). A directions hearing was scheduled to take place on 28 October 2022. The father notified the Tribunal on 27 October 2022 that he wished to withdraw his application. The matter was dismissed on the same day.
On 7 November 2022 the mother sought reinstatement of the application. Following receipt of written submissions from the father on 21 November 2022, the Tribunal granted the reinstatement request. A telephone directions hearing was scheduled to take place on 15 December 2022. At the father’s request the directions hearing was rescheduled to 22 December 2022. The direction hearing took place on that date and directions were issued, requiring compliance by 1 February 2023.
The Tribunal heard the matter on 22 February 2023. The mother and father appeared by MS Teams audio. The Child Support Registrar was not represented at the hearing. The Tribunal has considered the sworn evidence of the mother and father. The Tribunal also considered the documentation provided by the Agency (folios 1 to 518), the father (folios A1 to A26) and the mother (folios B1 to B33).
The matter was deferred and on the day of hearing the Tribunal issued post-hearing directions requiring compliance by 1 March 2023. The father was directed to provide evidence to substantiate his work-related expenses and his current payslips. The mother was directed to provide a statement of her financial circumstances and evidence of her costs associated with the child’s care and medical needs. Both the mother and father complied within the requisite timeframe and the additional documents were exchanged (folios A27 to A38 and B34 to B60). Neither parent exercised the opportunity to provide a written response to the additional documents by close of business on 8 March 2023.
The Tribunal reached its decision on 9 March 2023.
ISSUES
A ground for departure
10.Subparagraph 117(2)(b)(ib) of the Act provides a ground for departure:
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected: …
(ib) because of high child care costs in relation to the child; …
11.Subsection 117(3B) of the Act says that costs can only be considered high if, during the child support period, they total more than 5% of the parent’s adjusted taxable income.
The Tribunal makes the following findings in respect of the child’s care arrangements. The child commenced attending [Child care 1] on 31 August 2020 on a full-time basis. During the period 31 August to 18 December 2020 the mother’s out-of-pocket expenses were $2,222.83.[1] From 4 January to 12 February 2021 the child attended [Child care 2] on a full-time basis, with the mother’s out-of-pocket expenses totalling $930.60.[2] The child was then enrolled at [Child care 3] for the period 1 February to 9 May 2021, with a daily fee of $124 and child rebate of $93.33. The Tribunal calculates that the mother’s total out-of-pocket expenses during this period were $1,502.83.[3]
[1] Noting at folios 217 to 231, that receipts for the weeks beginning 2 and 23 November 2020 are not in evidence, the Tribunal calculated the out of pocket expenses on the weeks preceding these dates, which are less than the weeks following. By way of example, the out of pocket expenses in the week of 26 October 2022 were $102.03, and $124.55 in the week beginning 10 November 2020.
[2] At folios 232 to 234.
[3] At folios 378 to 384.
From 26 April until at least 7 June 2021[4] the mother incurred no out-of-pocket child care expenses, as the Additional Child Care Subsidy (ACCS) covered the total daily fee. There are no child care transaction records for the period 8 June to 28 December 2021 in evidence. It is noted that the objection decision refers to this being a 12-week funding program, with a further application due in September 2021.[5] Whilst there are in evidence sign in sheets from 15 September 2021 (provided by the father) that confirm the daily fee was $129,[6] there is no evidence as to the child care subsidy or ACCS received. At hearing the mother was asked to specify the period that ACCS met her full child care costs. She explained that she could not recall but thought that it was likely consistent with the period that there are no receipts in evidence. Thus, in the absence of evidence to the contrary, the Tribunal finds that the mother incurred no out-of-pocket child care expenses during the period 8 June to 28 December 2021.
[4] At folio 384.
[5] At folio 8.
[6] At folios A17 to A19.
However, from 29 December 2021 the child care receipts reflect that the child attended [Child care 4] at an out-of-pocket cost of $30.28 from 29 to 31 December 2021 and $34.86 per day thereafter. The mother’s out-of-pocket expenses remained consistent until 11 July 2022, rising to $304.60 per week as a result of a decrease in her child care subsidy, reducing to $236.13 per week from 3 October 2022 and to $195.55 per week from 9 January 2023. The Tribunal finds that the mother’s out-of-pocket child care expenses were $11,282.22 for the period 29 December 2021 to 13 February 2023.[7]
[7] At folios 402, B18 to B23 and B55 to B58.
The mother also provided evidence of direct payments made from her savings account with descriptors including women’s names and often a reference to babysitting. The bank statements in evidence indicate that she transferred a total of $2,555 in such payments during the period 5 September 2020 to 20 September 2021.[8] As the Tribunal understands, the father’s position is that this care was not necessary and in any event, he was willing and able to care for the child during these periods.
[8] At folios 240 to 265.
The Tribunal accepts the mother’s evidence that she was required to organise individual care for the child when he was too ill to attend child care, when she was required to travel for work or work outside child care hours. The Tribunal is persuaded that the bank statements evidence the mother’s out-of-pocket costs associated with babysitting for the child.
The Tribunal finds that the child is under 12 years of age. Given the mother’s work arrangements it is reasonable and necessary that the child attends child care. Whilst the father is correct in pointing out that the signing in and out child care record indicates that the child does not always attend full days of care, this is not relevant in circumstances where there is no dispute that the mother works on a full-time basis. Furthermore, the full fees are payable irrespective of the child’s hours of attendance.
To ascertain the 5% threshold, the law requires the Tribunal to calculate the mother’s administratively assessed adjusted taxable income, being $58,660 (her 2021 adjusted taxable income) for the relevant child support period 1 September 2021 to 30 November 2022, a period of 456 days. This equation produces an annualised figure ($72,284.82) and 5% of that annualised figure is used to determine the threshold. In this case, the 5% threshold equates to $3,664. During the same period, the mother incurred net child care costs of $9,163.83 ($8,833.83 in child care + $330 in babysitting expenses).
That the costs incurred by the mother exceed the threshold constitutes special circumstances as her costs of maintaining the child are significantly affected by her high child care costs. The Tribunal concludes that the ground provided for in subparagraph 117(2)(b)(ib) of the Act is established.
Just and equitable
The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.
The mother reports that her health is compromised, incurring some out-of-pocket costs. Having regard to the limited medical expenses evidence on this point, the Tribunal was not persuaded that this rendered the administrative assessment unfair or unjust.
The Tribunal next turned its attention to the mother’s income and financial resources. The mother provided, post hearing, a Statement of Financial Circumstances form. She works on a full-time basis as [an Occupation 1] in a commercial [Business]. She declares weekly income of $2,065 and reports savings of $6,797, household contents valued at $5,000, superannuation of $197,526 and a motor vehicle valued at $34,500. Her liabilities include a personal loan of $15,979 and credit card liability of $6,689. Her personal expenditure is $804 per week and she estimates weekly household expenses of $1,091. The Tribunal accepts the mother’s evidence that she incurs significant medical costs in respect her older child (who is subject to a separate administrative assessment). However, the Tribunal is not persuaded that it is appropriate to depart from the administrative assessment on this basis notwithstanding the fact that these costs impact on her capacity to support the child of this assessment. Instead, it is more appropriate that the mother seek additional support from the father of the child.
The mother’s adjusted taxable income has increased significantly in recent years. Her 2020 to 2022 taxable incomes are $29,822, $58,660 and $63,329respectively. The mother’s declaration as to her current earnings indicate that her gross income will be about $107,403; allowing for similar deductions would suggest a 2023 adjusted taxable income of about $103,000. The Tribunal is satisfied that this increase in her income will be reflected in the administrative assessment by operation of the child support provisions.
The father reports that he is in good health. He provided a Statement of Financial Circumstances form dated 30 January 2023. He reports that he has been employed as [an Occupation 1] for the previous four months, with weekly income of $2,800 and total average weekly income of $3,000. At hearing he confirmed that he simply averaged out his weekly income over a period to determine this average income. He reports no real property, savings of $4,060, a motor vehicle valued at $45,000, a caravan valued at $36,000, household contents valued at $5,000 and $192,000 in superannuation. He reports credit card liabilities of $10,500, a personal loan of $4,000 and a lease of $36,000 in respect of the caravan. He reports weekly personal expenditure of $1,452, which presumably includes his income tax liability in addition to his child support liability of $229, health insurance premium of $198 and credit card repayments of $150. The Tribunal notes that this may understate his personal expenditure, given that his payslips in evidence indicate that his PAYG withholdings exceed this on average. The father declares household expenditure of $1,400 per week, though it is noted that he claims all costs are his personally and it is unclear as to whether these claimed expenses also relate to his wife. At hearing he stated that he transfers about $500 per week into his solicitor’s trust fund for the upcoming property and parenting proceedings, which he estimates will cost about $43,000.
The father explained that until October 2022 he was working as a FIFO worker. In recognition of his work arrangements, he received a non-taxable allowance of $710 per week to cover his food, travel and accommodation. There is in evidence a payslip for the period 7 to 13 March 2022; he worked four days in this week and received net income (excluding the allowance) of $1,895.93. It indicates that his year to date income was $121,894.65.
The father was directed to provide his 2022 income tax return, which indicated that he received a gross salary of $144,724. He claimed $41,691 in work-related expenses, including travel of $29,059, car expenses of $3,600, clothing of $681 and other work-related expenses of $3,634. His 2022 adjusted taxable income was $107,481 which is reflected in the assessment from 16 August 2022.
In an objection decision dated 2 September 2021[9] a summary of the father’s payslips for the period 28 June 2021 to 8 August 2021 indicated that he earned $19,241.60 during this 35 day period, in circumstances where he had lodged an income estimate of $74,000.
[9] At folio 174.
The father’s evidence is that he received a tax-free allowance of $36,920, which is not reflected in the gross earnings declared in his 2022 income tax return. He also testified that in addition to expending the total allowance received he incurred further work-related expenses totalling $36,974, including $3,600 in work-related travel expenses, $29,059 in travel expenses, work-related clothing expenses of $681 and other work-related expenses of $3,634.[10] At hearing the father was invited to explain the work-related expenses claimed. He testified that it included tooling, tools, petrol, depreciation on his caravan, service and statement fess associated with the loan for his caravan.
[10] At folio A15.
Post-hearing directions were issued directing the father to provide evidence to substantiate the work-related expenses claimed in his 2021/2022 income tax return. In response, the father provided the following summary, without corroborating evidence to substantiate the claims:
| Personal Protective Equipment | |
| Boots | $ 139.70 |
| Socks | $ 31.00 |
| Long pants | $ 60.00 |
| Tolls | $ 468.14 |
| Dash Cam (depreciation) | $ 402.00 |
| Caravan set up | |
| Electrical Lead Parts | $ 15.26 |
| Jack | $ 119.00 |
| Webber BBQ (depreciation) | $ 349.00 |
| Mounting Tape | $ 27.20 |
| Steel shelving support | $ 21.90 |
| 12 Volt battery | $ 29.00 |
| Items to replace sink mixer | $ 21.49 |
| Electric Knife | $ 59.00 |
| Gas burner | $ 68.25 |
| Fuses | $ 4.00 |
| Cooking pans | $ 14.00 |
| Water Pump | $ 59.99 |
| Silicon | $ 16.05 |
| Surface Spray/Insect Repellent | $ 61.12 |
| Battery charger | $ 237.60 |
| Brake Pads | $ 110.00 |
| Outdoor Seat | $ 69.99 |
| Shower tap replacement | $ 213.12 |
| Van cleaning | $ 104.85 |
| Tap fittings | $ 196.72 |
| Padlock and chain | $ 130.00 |
| Battery terminals | $ 16.00 |
| Citrus press | $ 29.95 |
| Gas bottle fitter | $ 100.88 |
| Storage containers | $ 77.50 |
| Laundry fees | $ 300.00 |
| New laptop (depreciation) | $ 2,218.00 |
| Laptop bag | $ 29.58 |
| Microsoft word | $ 99.00 |
| Caravan purchase (depreciation) | $ 60,000.00 |
| Caravan Rego | $ 337.00 |
| Caravan insurance | $ 1,189.58 |
| Caravan Loan interest & fees | $ 2,739.87 |
| Car travel DMV 32D | 5000 km |
| Car fridge (depreciation) | $ 1,685.00 |
| Accommodation | $ 7,710.00 |
| Food and living | $ 7,761.03 |
| iPad (depreciation) | $ 767.00 |
| Protective Phone Cover | $ 81.81 |
| Phone insurance | $ 47.97 |
| Phone & Internet | $ 2,368.12 |
| $ 90,586.67 |
The above deductions do not correlate with the claimed deductions in the father’s corresponding tax return. The Tribunal finds that the father has not provided, as he was directed to do, corroborating evidence to support his claimed work expenses. As outlined above, the father received a tax-free allowance of $36,920 and claimed a further $36,974 in work-related expenses, that is, in addition to the expenses met from his tax-free allowance. The Tribunal carefully considered the father’s submissions regarding the rise in cost of living not being commensurate with a rise in the tax-free work allowance as well as the supporting evidence he provided on this point. The Tribunal is not persuaded that all of the above expenses are necessary work expenses related to the father’s employment, notwithstanding the fact that they may have brought him comfort whilst working away from home. Disregarding the most obvious examples of non-work-related expenses (his caravan set-up costs including a citrus press and an outdoor seat) there is nothing to suggest that the father required the use of a personal laptop or iPad.
Accepting that his work-related expenses may have exceed his work allowance, the Tribunal finds that it is just and equitable to make allowance for the work-related clothing ($681) and other work-related car expenses ($3,600) claimed in his tax return. In making this finding, the Tribunal notes that the father provided no corroborating evidence that he incurred travel costs of $29,059 and other work-related expenses of $3,634 as declared in his income tax return. It is on this basis that the Tribunal finds that the father’s income and financial resources in the 2022 financial year were in the vicinity of $140,000.
The mother submits that the child’s special needs render the administrative assessment unfair. The father does not dispute, and the specialist medical evidence indicates, that the child underwent a tonsillectomy, adenoidectomy and the insertion of grommets on 1 March 2021 and requires ongoing assessment by an ear, nose and throat specialist. There is in evidence an email from the father to the mother whereby he gives consent to the surgery taking place, but stating that he is unable to contribute to the costs whilst she and the children remain living in the former martial home.[11]
[11] At folio B24.
The Tribunal is satisfied that the child’s needs are sufficiently special in that they are necessary for the child’s welfare and outside the needs generally catered for with the administrative assessment: Lightfoot and Hampson (1996) 20 Fam LR 69. The Tribunal next considered the mother’s out-of-pocket expenses.
The Tribunal finds on the basis of the corroborating evidence that the mother incurred total out-of-pocket costs associated with the child’s surgery, specialist consultation and hearing assessments of $2,402.90[12] during the period 29 January 2021 to 31 January 2023. The Tribunal is satisfied that these costs were directly incurred as a result of the child’s special needs and given the mother’s income and financial resources, it is just and equitable that the father contribute to these costs. Further, given the mother’s income, these costs represent a significant impost on her capacity to support the child.
[12] At folios 267 to 272, 400 to 401 and B60.
The Tribunal has already made its findings in respect of the father’s 2022 income and financial resources, which are significantly more than his adjusted taxable income. The parties’ relative income percentages are 30% (the mother) and 70% (the father) based on the mother’s 2022 adjusted taxable incomes and the father’s income and financial resources in the same period of $140,000. In such circumstances, the Tribunal is satisfied that it is both just and equitable that the father contribute $1,682 towards the child’s special needs. The Tribunal is satisfied that the father’s annual rate should be increased by this sum in the 2022 financial year. Whilst this will create arrears for the father, the Tribunal is satisfied that he has sufficient income to meet this expense. Furthermore, the mother required these funds to adequately meet the needs of the child. The Tribunal reached this conclusion after taking into account the father’s testimony that the mother continues to live in the former marital home, for which he was paying the mortgage. The Tribunal notes that the property proceedings are still afoot and it is more appropriately dealt with in that forum.
The Tribunal has already had regard to the costs associated with the child’s care. The father’s position in this regard is that he is willing to make a contribution to the child care fees, but not for days when he has not attended at all or not for the full day. He suggests that in recognition of this he should only contribute 30% of the mother’s out-of-pocket child care costs. Alternatively, he stated that 30% would be too much in a context where he has offered to increase his care of the child. Further, he would prefer that the payments are paid directly to the child care provider.
The mother seeks a contribution from the father towards the child’s care costs from 1 July 2022. As outlined above, there is no evidence of the child care costs the mother incurred during the period 14 June to 28 December 2021. In addition, the Tribunal has already determined that the mother’s out-of-pocket expenses were $11,612.22 for the period 29 December 2021 to 13 February 2023,[13] including $330 in babysitting costs. Applying the parents’ relevant income percentages would result in the father being liable to contribute $8,130 towards the child’s care costs during this period. Given the father’s income and financial resources, the Tribunal is not persuaded that this aspect of the decision will place him in a position of hardship. It is apparent that the need for the child to attend care will remain unchanged until at least January 2025. Taking into account the mother’s evidence that her income will continue to increase (and so her child care subsidy will reduce) the best evidence is that her out-of-pocket costs will be at least $196 per week[14] ($10,192 per annum). The Tribunal is satisfied that the father’s annual rate of child support should be increased by $7,100 per annum from 14 February 2023 to 25 January 2025 to reflect his contribution to this cost.
[13] At folios 402, B18 to B23 and B55 to B58.
[14] At folios B56 to B58.
The father’s employment changed in October 2022. His payslips indicate his base salary is $94,592, but that regular overtime is available. The Tribunal is satisfied that from 1 October 2022 it is appropriate for the formula assessment to apply.
It seems unlikely that the circumstances of either party will alter significantly during this period. The extended departure period will provide certainty to both parties.
The Tribunal is satisfied that the administrative assessment is unfair given the mother’s high child care costs, the child’s special needs and the father’s income and financial resources and this all results in an unjust and inequitable level of child support given the circumstances of each parent. For all the reasons above, the Tribunal finds it just and equitable to depart from the administrative assessment.
Otherwise proper
The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits.
The mother receives family tax benefit in respect of the child. Changing the child support payable by the father will likely affect the mother’s rate of family tax benefit, depending on how Centrelink treats the increase in the administratively assessed rate of child support. As there has been an increase to the annual rate on the basis of the child’s special needs, Centrelink may determine that this increase in the child support payable should be excluded from the maintenance income amount. It is open to the mother to provide a copy of this decision to Centrelink so it may determine if the increase in the rate of child support payable should be excluded from the maintenance income amount used to calculate her entitlement to family tax benefit.
The determination is otherwise proper.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
Mr Windley’s adjusted taxable income is varied to $140,000 for the period 1 July 2021 to 30 September 2022; and
The annual rate of child support payable by Mr Windley is increased by:
o $1,682 per annum for the period 1 July 2021 to 30 June 2022;
o $8,130 per annum for the period 29 December 2021 to 13 February 2023 in respect of the child’s care costs; and
o $7,100 per annum for the period 13 February 2023 to 25 January 2025 in respect of the child’s care costs.
Key Legal Topics
Areas of Law
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Family Law
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Administrative Law
Legal Concepts
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Judicial Review
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Costs
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Procedural Fairness
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