Wodefold and Duke (Child support)

[2022] AATA 4680

Wodefold and Duke (Child support) [2022] AATA 4680 (31 October 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/SC023954

APPLICANT:  Ms Wodefold

OTHER PARTIES:  Child Support Registrar

Mr Duke

TRIBUNAL:Member J Leonard

DECISION DATE:  31 October 2022

DECISION:

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

·   for the period from 11 July 2020 to 30 June 2021 the adjusted taxable income of Mr Duke is varied to $114,296;

·   for the period from 1 July 2021 to 31 October 2024 the adjusted taxable income of Mr Duke is varied to $111,163; and

·   for the period from 1 August 2021 to 31 January 2023 the annual rate of child support is increased by $462 to reflect Mr Duke’s contribution to [the child]’s child care costs.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – costs of child care - 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. This review is about whether there should be a departure from the administrative assessment of child support.

2. Mr Duke and Ms Wodefold are the parents of [the child] (born June 2017). There has been a child support assessment in place since 9 July 2018 with collection by Services Australia (Child Support). Mr Duke is the parent liable to pay child support under the assessment. [The child] is recorded as being in the above primary care of Ms Wodefold.

3. For the period 11 July 2020 to 31 October 2020 Mr Duke was assessed to pay an annual rate of $1,478 based on his estimate of $46,928 and Ms Wodefold’s adjusted taxable income of $47,165. When Mr Duke’s estimate of income was reconciled , Mr Duke was assessed to pay an annual rate of $2,940 from 11 July 2020.

4. From 1 November 2020 Ms Wodefold’s 2019-20 adjusted taxable income of $54,379 was used in the assessment, however this did not change the annual rate of child support.

5. From 1 July 2021 to 31 July 2021 Mr Duke was assessed to pay an annual rate of $2,940 based on his 2019-20 adjusted taxable income of $69,323 and Ms Wodefold’s 2019-20 adjusted taxable income of $54,379. His 2019-20 adjusted taxable income was later amended to $69,173.

6. For the period 1 August 2021 to 30 April 2022 Mr Duke was assessed to pay an annual rate of $1,956 based on his 2020-21 provisional income of $55,300 and Ms Wodefold’s 2020-21 adjusted taxable income of $50,338.

7. On 29 October 2021 Ms Wodefold applied to Child Support for a change to the assessment on the basis of a parent’s income, property, financial resources or earning capacity and due to the costs of [the child]’s child care (the grounds commonly referred to as Reasons 8A, 8B and 6).

8. On 3 February 2022 Child Support made the decision to change the assessment so that:

   ·     For the period 11 July 2020 to 24 November 2020 Mr Duke’s adjusted taxable income is varied to $105,493;

   ·     For the period 25 November 2020 to 31 December 2024 Mr Duke’s adjusted taxable income is varied to $86,760; and

   ·     For the period 29 October 2021 to 31 January 2023 the annual rate payable by Mr Duke will increase by $1,146 per annum.

9. On 18 February 2022 Mr Duke objected to this decision and on 17 May 2022 Child Support Agency allowed the objection in part and made the decision to change the assessment (the objection decision) so that:

   ·     For the period 11 July 2020 to 24 November 2020 the adjusted taxable income for Mr Duke is varied to $92,000; and

   ·     For the period 25 November 2020 to 31 December 2024 Mr Duke’s adjusted taxable income is varied to $75,500; and

   ·     For the period 29 October 2021 to 31 January 2024[1] the annual rate of child support is increased by $1,500.

   [1] The Tribunal notes the inconsistent use of 31 January 2023 and 31 January 2024 in the decision.

10. On 24 May 2022 Ms Wodefold applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).

11. Child Support provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (842 pages).

12. A hearing was conducted on 13 October 2022. Mr Duke appeared by conference telephone. Ms Wodefold was represented by [Ms A], Legal Aid, and appeared by MS Teams video.

13. The Tribunal received documents folioed B1 to B71 from Mr Duke and A1 to A29 from Ms Wodefold. These were distributed to the parties prior to the hearing. The Tribunal adjourned to allow Mr Duke to provide additional documents. These were received and were numbered B72-B90. A copy was sent to [Ms A] and her response is numbered A30 to A34. The Tribunal also took into consideration the medical evidence which is numbered B91 to B95. The Tribunal made its decision on 31 October 2022.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act. Under Part 6A of the Act, the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

3. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process such that the issues for determination by this Tribunal are:

   ·     whether a ground is established to depart from the administrative assessment of child support; and if so,

   ·     whether it is just and equitable to make a particular departure determination; and if so,

   ·     whether it is otherwise proper to make a particular departure determination.

4. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

5. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held that:

   as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the formula in the ordinary run of cases.

6. In Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

7. If the Tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. Mr Duke told the Tribunal he ran his own business called [Company]. He is a qualified [Occupation]. On 15 July 2022 he transferred his shares in the company to his mother, [Ms B], for $2.00.

3. Mr Duke said he established the business in 2013, initially as a sole trader. He contracts to larger companies who require specialised [service], including local councils and [a Government agency]. He works in Queensland and NSW. Although based in the Illawarra, the vast majority of his work is out of the area.

4. When he separated from Ms Wodefold in 2018, he was working full-time and had employees. He found it too stressful as an employer and found it wasn’t worth his while. The business income reduced from around the end of 2018 when he became the only person generating the work. There was a period during the COVID-19 restrictions where he was without work and the company was in receipt of jobkeeper payments.

5. Mr Duke stated running the company was too stressful, so he sold it to his mother. His mother now handles the contract, wages, accounting and invoices. She is paid $467 per week net. He is paid $740 per week net. He has been working 30 hours a week for the past few years as he has medical conditions including bulging disc, hip dysplasia, and aches and pains.

6. Bank statements for [Bank 1] account ending 9287 show that Mr Duke paid himself $1,352 per week until November 2020 (approximately $95,493 gross per annum) and then $1,133 net per week until 23 March 2022 (approximately $76,760 gross per annum).

7. From 2 April 2022 two separate wage amounts of $738.50 and $467 are paid weekly from the business account (a total of $1,205.50 per week net). This is despite Mr Duke’s evidence that his mother commenced running the company from 1 July 2022. The changes to the wages occurred after Mr Duke objected to the original decision to vary his adjusted taxable income. Current payslips provided by Mr Duke indicate he is paid $850.50 gross per week for 30 hours of work which is paid into his [Bank 2] account ending in 4547. The payslips also identify a [Bank 3] account in the name of Mr Duke. He did not provide statements for this account.

8. Mr Duke’s personal 2021-22 income tax return shows taxable income of $42,917. He declared gross income of $45,256, allowances of $13,680 and travel expenses of $13,680. The Tribunal notes that Mr Duke makes payments of $550 to an account to meet his mortgage and home ownership expenses. He makes child support payments of $150 per week for [the child]. The Tribunal does not accept that Mr Duke’s net income is only $738.50 per week as this would leave him with only $38.50 to meet all other expenses such as groceries, clothing, entertainment and holidays. He reported making child support payments of $18,360 on his 2021-22 income tax return.[2]

   [2] Mr Duke is the parent liable to pay child support in another case.

9. The Tribunal is not satisfied that Mr Duke’s true income and financial resources are accurately reflected by his taxable income alone. The Tribunal is of the view that Mr Duke may have access to additional income not disclosed in his tax return.

10. There are certain advantages in being self-employed which are not generally available to an ordinary salary and wage earner. Such advantages may include being able to write off personal expenses against the business, reducing personal tax liabilities as a result of the way the business is structured, and being able to claim business expenses which offer a parent some personal gain. In addition, depreciation, whilst a legitimate business expense for taxation purposes, represents a notional decrease in the value of work equipment and not an actual expense incurred until such time as the equipment is actually replaced.

11. While this may be quite legitimate for tax purposes, the Family Court has found that such practices may not properly reflect the true financial resources or capacity of a person to contribute to the financial support of their children and may therefore be ignored. For example, in Voss & Child Support Registrar & Anor (SSAT Appeal) [2009] FMCAfam 1296, the Court commented on the common situation of a self-employed person’s taxable income not corresponding with their income or financial resources for child support purposes:

    There is a body of cases where simple reference to a person’s tax return does not provide an appropriate quantification of their capacity to provide financial support. Most commonly this occurs in cases involving the self-employed, where it is well accepted that legal structures and arrangements may generate taxable income that doesn’t properly reflect the realistic capacity of the person to provide financial support for their children.

12. In such cases, assessing child support on the basis of taxable income only can result in an unjust and inequitable level of child support.

The 2020-21 financial year

1. The 2020-21 company tax return shows total sales of $160,582 and payments to associated persons of $78,831. Mr Duke stated he had no other employees in this financial year. This is not inconsistent with bank statements showing Mr Duke paid himself $1,352 net per week to November 2020 and then $1,133 net per week for the remainder of the financial year. Total profit is $29,301. This is a resource available to Mr Duke.

2. Mr Duke acknowledged at hearing that he bought coffee while working, using the business account, but denied that other expenses such as fuel, Petbarn or JB Hi-Fi were for expenses of a personal nature. The Tribunal notes other expenses; for example, accommodation on the Gold Coast in April 2022, flights, Uber, [Retailer], [Destination] in June 2022 and monthly Spotify withdrawals. The Tribunal was not persuaded by Mr Duke’s oral evidence that other than coffee, all the expenses from the [Bank 1] account are work related. A pattern has been established whereby the business account is used to meet some of Mr Duke’s personal expenses.

3. Mr Duke denied using the company vehicle for any personal use whatsoever. He owns a car with his partner and stated he has no need to use the work vehicle for his personal use. He denied any of the motor vehicle expenses paid for by the [Bank 1] account are for personal use. The Tribunal does not accept Mr Duke’s oral evidence on this point, given his lack of credibility associated with other, more easily identifiable personal expenses paid for by the business account.

4. The Tribunal considered it is reasonable to add back 50% of the mobile phone expenses ($657) and 33% of the motor vehicle expenses ($5,507) as a personal benefit derived by Mr Duke in the 2020-21 financial year. In total, the Tribunal determines that Mr Duke had income and financial resources available to him of $114,296.[3]

   [3] $78,831 + $29,301 + $657 + $5,507 = $114,296

5. The Tribunal acknowledges there is a significant difference between the estimated income of $46,928 used in the assessment from 11 July 2020 and the proposed income and financial resources of $114,296 which, if applied to the assessment, would result in an annual rate of child support of approximately $5,833.

The 2021-22 financial year

1. In response to directions Mr Duke provided the Tribunal with a copy of 2021-22 profit and loss statement. This shows sales of $115,490 and jobkeeper payments of $33,804. Total income amounted to $131,680, a reduction from the previous year’s income of $147,323.

2. Although jobkeeper payment needs to be declared as income in a company’s tax return, it is not sales income and not subject to GST. It is not required to be reported on a company’s business activity statements (BAS).

3. Mr Duke provided the following BAS:

   ·1 July 2021 to 30 September 2021 - total sales: $36,179

   ·1 October 2021 to 31 December 2021 - total sales: $50,840

   ·1 January 2022 to 31 March 2022 total- sales: $26,576

   ·1 April 2022 to 30 June 2022 total - sales: $37,004

   oTotal $150,599

4. Mr Duke stated he is not an accountant and could not explain why total sales of $115,490 as recorded in the profit and loss was not consistent with the total sales of $150,599 as reflected in the BAS. The difficulty in determining a parent’s income for the purposes of child support due to a lack of full and frank disclosure by that parent has been considered judicially on a number of occasions.[4] In the absence of a satisfactory explanation, the Tribunal prefers the sales figures as set out in the BAS and finds that total sales were $150,599.

   [4] Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409 sets out that the Tribunal should not be unduly cautious about making findings in circumstances where it is not satisfied that proper disclosure has been made. Morse & Potts (SSAT Appeal) [2010] FMCAfam 1305 sets out that the onus remains on the applicant to present their financial affairs and records in a manner which is both transparent and readily understandable.

5. The company’s expenditure increased from $117,842 in 2020-21 to $188,217 in 2021-22 Depreciation increased from $3,677 to $47,400. Mr Duke explained that in 2021-22 the company bought a vehicle for $31,200 which was then fitted out with toolboxes, and recovery gear. The total cost was written off in full in the 2021-22 financial year. It is listed as a non-current liability of $40,372 on the balance sheet.

6. Taking the business loss of $56,535 the Tribunal will add back the $44,000 for depreciation as there is no evidence to suggest Mr Duke is setting aside funds to replace his vehicle or equipment. This would leave an amount of $3,400 for depreciation in the 2021-22 financial year which is consistent with the amount claimed in the 2020-21 financial year. This would leave the company with a loss of $12,535.

7. The Tribunal has found, however, that there is a difference of $35,109 between the profit and loss statement and the income as set out in the BAS statements. Taking this into account leaves the company with a profit of $22,574 in 2021-22.

8. The Tribunal accepts the company would have some legitimate business expenses; however, donations of $953 in the 2021-22 financial year should not take precedence over Mr Duke’s duty to support his child.

9. Mr Duke has claimed $31,220 in motor vehicle expenses. The Tribunal will allow approximately two-thirds as business expenses and add back $10,000 for personal use together with an amount of $879 for mobile phone use.

10. Having regard to the grossed-up wage of $76,760, profit, donations and personal benefit derived from the motor vehicle and phone expenses being met by the company, the Tribunal determinates Mr Duke would have income and financial resources of approximately $111,163[5] available to him in the 2021-22 financial year. This would result in an annual rate of child support of approximately $5,599.

    [5] $76,760 + $950+ $22,574+$10,000+ $879 = $111,163

11. The Tribunal finds this to be significantly more than his liability under the administrative assessment. The Tribunal determines there are special circumstances and application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Mr Duke in respect of the child.

12. On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

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

1. As the Tribunal finds there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the child, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider the matters which are as set out in subsection 117(4) of the Act.

Ms Wodefold

1. Ms Wodefold is working casually. She had [surgery] in February 2022 and her income reduced. She provided recent payslips which show that her gross income varies, depending upon the number of hours she works. She declares her income to Centrelink and is in receipt of a part-rate parenting payment. She has full-time care of [the child], and it is difficult to increase her hours to start at 6.30 am due to her caring responsibilities.

2. The intent of the legislation in relation to earning capacity is primarily to protect against a situation where, after an assessment of child support is issued, a parent has deliberately reduced their income and this has had a significant effect on the assessment. It is not designed to assess a parent on their potential earnings or what a parent might be able to do.

1. Ms Wodefold is under the care of a neurologist and had issues with the COVID-19 vaccine which also made it difficult for her to work without being fully vaccinated. She incurred out-of-pocket medical expenses totalling approximately $450 in May/June 2022. These out-of-pocket expenses are not ongoing and in the Tribunal’s view, do not warrant a change to the self-support amount used in the assessment. Other than a motor vehicle, Ms Wodefold has no significant assets. She is in rental accommodation and has savings of approximately $7,000.

2. The Tribunal is satisfied the income, property and financial resources available to Ms Wodefold are fairly represented in the administrative assessment of child support.

3. Ms Wodefold provided evidence of the out-of-pocket expenses she incurs in relation to [the child]’s child care. At the time she lodged the departure application she was working four days per week. [The child] was attending child care five days per week but reduced to four days due to the fees increasing.

4. 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 childcare costs in relation to the child; …

5. 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.

6. In the period 1 July 2020 to 30 June 2021 the gap fees for 223 days of care was $4,718.62; an average of $21.16 per day. In the period 1 July 2021 to 21 November 2021 the gap fees were $1,898.05 for 144 days of care; an average of $13.18 per day.

7. [The child] is currently attending child care four days per week. On her Statement of Financial Circumstances dated 10 June 2022 Ms Wodefold stated her child minding expenses are $89.32 per week. [The child] will commence school in February 2023. Ms Wodefold expects to incur costs for before and after school care from February 2023.

8. The relevant child support period commences on 1 August 2021 and ends on 31 October 2022. For the child support period commencing 1 August 2021 Ms Wodefold’s adjusted taxable income was $50,338. From 11 March 2022 Ms Wodefold provided an estimate of income of $22,796 and this is used in the assessment for the remainder of the child support period ending on 31 October 2022.

9. Ms Wodefold’s income over the 457-day child support period is taken to be $45,359. In this case, the 5% threshold equates to $2,268. The Tribunal finds that Ms Wodefold’s out-of-pocket child care expenses were approximately $3,427 ($13.18 per day x 4 days x 65 weeks). This exceeds the threshold by approximately $1,159 over the 457-child support period or $925 per annum; ($1,159 /457 x 365 days).

10. The Tribunal is satisfied that Ms Wodefold incurs reasonable and necessary costs associated with child care. For the child support period commencing 1 August 2021, the costs exceed the threshold which constitutes special circumstances and her costs of maintaining the child are significantly affected by her child care costs. The Tribunal proposes to increase the annual rate of child support payable by Mr Duke by 50% of the amount exceeding the threshold; $462 per annum.

Mr Duke

1. In addition to Mr Duke’s income and financial resources detailed above, he has a share portfolio valued at approximately $29,000.

2. Mr Duke submitted there was a change from 15 July 2022 when he transferred his shares in the company to his mother for $2 which is all the shares were worth as the company is in decline. This is not supported by the financial statements.

3. Mr Duke stated his mother has no experience as an [Occupation], but she is good at networking and has experience running a charity. She is still living on the Gold Coast but is running his business remotely. She has received wages of $467 per week since April 2022 as he had to train her in the administrative tasks. He submitted he works 30 hours per week and the only income that should be attributed to him is his wage of $850.50 per week.

4. The Tribunal does not accept his argument. It is Mr Duke who has the skills and knowledge to operate his business. Income generated by [Company] is, in the opinion of the Tribunal, entirely through his efforts and expertise while ownership of the business is a vehicle for the alienation of that income.

5. In relation to alienation of income, the Child Support Guide at 2.6.14 states, relevantly:

   A reduction of a parent's taxable income by alienation of personal services income or other income will result in an artificially reduced or increased child support liability.

   Generally, income is alienated when the income generated or derived by a person is attributed to others and, consequently, reduces the first person's taxable income. Personal services income, or income derived through personal exertion, can be defined as income that an individual earns predominantly as a direct reward for their personal efforts. Personal services income paid to a company, trust or partnership is also alienation of income.

   If a parent is involved in alienation of their personal services income, this may indicate that they have additional income or financial resources that make the current child support assessment unjust and inequitable (CSA Act section 117(2)(c)(ia)).

6. Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a Tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation.

7. Mr Duke stated he can only work 30 hours a week as an [Occupation] due to medical issues. He provided a letter dated 28 October 2022 from [Dr C] who stated that Mr Duke has recently had an MRI which shows a disc protrusion in the lumbar spine. [Dr C] stated Mr Duke experiences episodic lower back pain during which time he needs to avoid aggravating activities.

8. Mr Duke’s oral evidence is that he has been working 30 hours a week for the last few years. The evidence from [Dr C] is that the “flare ups are episodic”. There is no medical evidence that Mr Duke’s claims that he works part-time on an ongoing basis is justified by his diagnosed medical condition. This leaves open the possibility that Mr Duke could be assessed on the basis of a higher earning capacity having regard to the factors set out in subsection 117(7B) of the Act. However, the Tribunal was not persuaded that Mr Duke consistently works 30 hours per week. No doubt there are some administrative tasks that require his attention related to the running of his business, however since he advised that his mother has taken over that responsibility, his stated hours of employment have not changed. The Tribunal was not satisfied that the payslips provide an accurate indication of Mr Duke’s hours of employment. Mr Duke has his own company and is in the position of being able to control his own work hours and income.

9. Given the Tribunal’s findings in relation to the income and financial resources available to Mr Duke, the Tribunal finds that he does not have an unused earning capacity that needs to be taken into consideration in the assessment.

10. Mr Duke purchased a property with his partner in May 2021 for approximately $780,000. They each pay half of the mortgage. They purchased a new car and he helps his partner to make repayments if he can afford to.

11. Bank statements for Mr Duke’s personal account show regular withdrawals for Oz Lotteries and expenses associated with a holiday to the [destination] in August 2022 and also in September 2022. The Tribunal is of the view that Mr Duke’s stated average household expenses of $720 per week understates his expenses and spending.

12. Mr Duke has a responsibility to support other children from another relationship and this is appropriately taken into consideration in the child support assessment.

13. The Tribunal is satisfied that [the child] has no income, earning capacity, property or financial resources of her own.

Any hardship that would be caused

1. Mr Duke is currently self-employed and the Tribunal has found that at the time Ms Wodefold made her change of assessment application he had access to income and financial resources equivalent to a person with an adjusted taxable income of approximately $111,163. As of 15 September 2022, Mr Duke had child support arrears of $227.37 owing. The Tribunal is of the view that the proposed departure determination would not cause Mr Duke financial hardship.

2. Ms Wodefold is currently working in a casual role and she relies on government benefits. Her financial circumstances are strained. The Tribunal is of the view that the proposed departure determination would better assist Ms Wodefold to provide for [the child].

3. The Tribunal is limited to making a determination in respect of a day in a period that is not more than 18 months prior to the date the change of assessment application was made (paragraph 98S(3B)(a) of the Act). The Tribunal must decide whether it is just and equitable to backdate the determination (prior to the change of assessment application date).

4. Ms Wodefold applied for a change to the assessment on 29 October 2021. The Tribunal is of the view that it is appropriate to retrospectively change the assessment to 11 July 2020 when Mr Duke provided an estimate of his income of $46,928. In respect of the proposed determination to change the assessment in respect of [the child]’s high child care fees, the Tribunal is of the view that this change should take place from the beginning of the relevant child support period; 1 August 2021.

5. The Tribunal proposes to make the following determination:

   ·   for the period from 11 July 2020 to 3 June 2021 the adjusted taxable income of Mr is varied to $114,296;

   ·   for the period from 1 July 2021 to 31 October 2024 the adjusted taxable income of Mr Duke is varied to $111,163; and

   ·   for the period from 1 August 2021 to 31 January 2023 the annual rate of child support is increased by $462 to reflect Mr Duke’s contribution to [the child]’s child care costs.

1. The Tribunal has decided to extend the period of departure to 31 October 2024 in respect of Mr Duke’s adjusted taxable income as it is unlikely Mr Duke’s tax returns will properly reflect his actual earnings and financial resources.

2. The Tribunal is satisfied its proposed determination is just and equitable.

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

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for children to be primarily supported by their parents rather than by government assistance.

2. Ms Wodefold currently receives government benefits in the form of family tax benefit. The effect of the Tribunal’s decision may decrease the cost to the community as the family tax benefit payable to Ms Wodefold is likely to fall to reflect the increased payments from Mr Duke compared to the formula assessed rate of child support. The Tribunal is therefore satisfied the change of assessment is otherwise proper in the terms of the Act.

DECISION

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

·   for the period from 11 July 2020 to 30 June 2021 the adjusted taxable income of Mr Duke is varied to $114,296;

·   for the period from 1 July 2021 to 31 October 2024 the adjusted taxable income of Mr Duke is varied to $111,163; and

·   for the period from 1 August 2021 to 31 January 2023 the annual rate of child support is increased by $462 to reflect Mr Duke’s contribution to [the child]’s child care costs.