Xander and Tackett (Child support)

[2018] AATA 4004

Xander and Tackett (Child support) [2018] AATA 4004 (24 August 2018)

DIVISION:       Social Services & Child Support Division

REVIEW NUMBER:  2018/CC013621

APPLICANT:  Mr Xander

OTHER PARTIES:  Child Support Registrar

Ms Tackett

TRIBUNAL:  Member J Cuthbert

DECISION DATE:  24 August 2018

DECISION:

The tribunal sets aside the decision under review and substitutes a decision to depart from the child support assessment from 16 August 2017 to 31 December 2018 by varying:

• Mr Xander’s adjusted taxable income to $97,000; and

• Ms Tackett’s adjusted taxable income to $45,000.

CATCHWORDS
Child support - Departure determination - Income, property, financial resources and earning capacity of the parents - 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 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

HISTORY

1. This review concerns an application for a change to a child support assessment made by Mr Xander on 16 August 2017. Mr Xander and Ms Tackett are the parents of [name] (also known as [Child 1], born 2005) and [Child 2] (born 2013). There has been a child support assessment in place, made by the Department of Human Services – Child Support since 17 December 2015. Since 15 October 2016 the child support assessment has been based on the parents sharing care of both children equally.

2. From 15 October 2016 to 31 August 2017 Mr Xander was required to pay an annual rate of child support of $5,634 based on his 2015/16 adjusted taxable income of $77,124 and Ms Tackett’s 2015/16 adjusted taxable income of $29,372. On 6 February 2017 Mr Xander’s application for a departure from the assessment was refused.

3. For the child support period starting on 1 September 2017 Mr Xander was required to pay an annual rate of child support of $7,432 based on his 2016/17 adjusted taxable income of $87,200 and a provisional income of $10,021 for Ms Tackett.

4. On 16 August 2017 Mr Xander again applied to the Department for a departure from the assessment on the grounds that Ms Tackett’s income, property, financial resources and earning capacity were not properly reflected in the assessment and his capacity to pay child support is affected by his duty to support his parents. Ms Tackett lodged a cross-application on the basis of Mr Xander’s income, property and financial resources.

5. On 24 November 2017 a decision was made to depart from the child support assessment by varying the annual rate of child support payable by Mr Xander to $6,000 from 1 November 2017 to 30 September 2018.

6. Mr Xander’s objection to that decision was disallowed on 16 February 2018. On 1 March 2018 Mr Xander lodged an application for a review of the objection decision with the tribunal.

7. The matter was heard on 25 July 2018. Mr Xander and Ms Tackett both attended the hearing by telephone. The tribunal was assisted by an interpreter in the [specified] language. The Child Support Registrar was not represented at the hearing. The tribunal had access to the statement and documents provided by the Department (folios 1 to 594); documents provided by Mr Xander (folios A1 to A55); and documents provided by Ms Tackett (B1 to B11).

8. Following the hearing further directions were issued for parties to provide further documents. Mr Xander provided documents (folios A56 to A58) and Ms Tackett provided documents (folios B12 to B56). Copies of those documents were provided to the parties for comment. Ms Tackett provided further medical evidence on 27 August 2018, after the decision was made. The tribunal determined it would have made no difference to the decision.

CONSIDERATION

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) Act 1989 (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.

2. A liable parent or a carer may apply to the Child Support Registrar (the Registrar) for a determination to depart from the child support assessment under Part 6A of the Child Support Assessment Act 1989 (the Assessment Act) (section 98B). Paragraph 98C(1)(b) provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the tribunal standing in place of the Registrar, must be satisfied:

   (i)     that one, or more than one, of the grounds for departure referred to in subsection [117](2) exists; and

   (ii)    that it would be:

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

   (B)otherwise proper;

   to make a particular determination under this Part; …

3. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Assessment Act. If satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations in section 98S of the Assessment Act. That section permits a range of determinations, including varying the annual rate of child support payable or a parent’s adjusted taxable income.

4. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409, Federal Magistrate Slack dealt with the issue of the disclosure of financial information in child support matters before the former Social Security Appeals Tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the tribunal. He stated at [31]:

   In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117).

5. Also, in Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144, Federal Magistrate Halligan stated:

   If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent’s financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that party’s financial circumstances.

Issue One – Does a ground exist to depart from the administrative assessment?

1. Mr Xander sought a departure from the administrative assessment on the grounds that Ms Tackett’s income, financial resources, property and earning capacity were greater than reflected in her adjusted taxable income.

2. The grounds for departure are set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(c)(ia) provides as a ground for departure:

   (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; or

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

3. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, 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.

Ms Tackett’s income, property and financial resources

1. Ms Tackett had been employed as [an occupation 1] since September 2015. She worked for [Agency 1] on a casual basis. Since 8 March 2018 she has been employed by [Business 1]. She told the tribunal that she works 64 hours a fortnight over five days, but that her income varies as she has taken unpaid leave due to illness. The tribunal notes that payslips provided by Ms Tackett indicate an annual salary of $41,405 and an hourly rate of $22.75, but show fluctuating hours of work. It seems that Ms Tackett generally grosses about $1,400 a fortnight. She continues to receive part payment of parenting payment as well as family tax benefit, which is not taken into account as income for child support purposes.

2. Ms Tackett’s 2015/16 adjusted taxable income was $29,272. Her income tax return records parenting payment of $5,603 and salary of $23,668. Ms Tackett’s 2016/17 adjusted taxable income is $37,496. Ms Tackett advised the tribunal that she did not retain a copy of her income tax return but said that she did not claim any income tax deductions. She provided copies of payment summaries for 2017/18 showing salary of $14,272 from [Agency 1] and $13,614 from [Business 1] as well as parenting payment of $11,717. The tribunal finds that her adjusted taxable income for 2017/18 is likely to be $39,613, slightly higher than the previous year.

3. Ms Tackett owns an apartment in [Country 1]. She states that she received income of $100 a week but the tenants vacated the property in early 2018. That income was not disclosed in Ms Tackett’s income tax return. Ms Tackett told the tribunal that she has not found new tenants as she anticipates selling the property. She said that she has no loan on the property but has to pay strata fees. She said that her net income is about $5,000 a year. Mr Xander contends that when he visited [Country 1] in May 2018 someone was living in Ms Tackett’s unit. The tribunal notes that no decision has yet been handed down in property proceedings between Ms Tackett and Mr Xander following a final hearing in October 2017.

4. In addition to the property in [Country 1] Ms Tackett has some savings and superannuation. She has no liabilities. Mr Xander asserts that Ms Tackett has a partner, [Mr A], and contends that [Mr A] provides Ms Tackett with funds and property such as a vehicle. Ms Tackett denies that she lives with [Mr A]. The tribunal notes that even if Ms Tackett is partnered with [Mr A], he has no duty to support [Child 1] and [Child 2] and his income, property and financial resources are not relevant to the child support assessment. The tribunal finds that any support he might provide Ms Tackett is of a personal nature and cannot be regarded as providing her with a financial resource which should be taken into account in the child support assessment.

5. The tribunal notes that Ms Tackett lists her personal and household expenses as totalling about $1,055 a week, including rent payable of $360. The tribunal finds that her estimated costs are consistent with her bank statements and the evidence of her income.

6. The tribunal notes that Ms Tackett’s 2016/17 adjusted taxable income of $37,496 would have been used in the assessment from 1 September 2017 to replace the provisional income were it not for the decision made on 24 November 2017 to set an annual rate of child support payable by Mr Xander. The tribunal finds that Ms Tackett’s adjusted taxable incomes adequately reflect her income from employment and parenting payment but do not include the rent she received. Her adjusted taxable incomes do not adequately reflect her actual income for that reason. The tribunal finds that since at least 1 July 2017 Ms Tackett has had income of about $45,000 a year.

Ms Tackett’s earning capacity

1. The tribunal also considered Ms Tackett’s earning capacity and the three criteria in subsection 117(7B) of the Assessment Act.

2. The tribunal finds that [Child 2] was less than one year old when Ms Tackett and Mr Xander separated. Ms Tackett was not in paid work at that time. The tribunal notes that Ms Tackett’s current payslip indicates that full-time work would be 35 hours per week. The tribunal finds that Ms Tackett is not working full-time hours. The tribunal finds that the first criterion of subsection 117(7B) of the Assessment Act is satisfied for that reason.

3. The tribunal notes that while Ms Tackett has care of the children each alternate week, she is able to utilise child care services and her ability to work is not affected. However, Ms Tackett states that a change to the children’s schools made unilaterally by Mr Xander affected her ability to work as she had a further distance to travel. Ms Tackett provided medical evidence of a shoulder injury in May and June 2017 which affected her ability to work. She also provided medical evidence of a condition which has caused her to have leave from work since May 2018. The tribunal accepts Ms Tackett’s evidence that some of the leave is unpaid as she has used all of her paid leave. The tribunal is satisfied that Ms Tackett’s ability to work has been affected by her medical conditions. It seems that the most recent condition is not yet fully diagnosed and it is unclear whether it will continue to affect Ms Tackett’s ability to work in the future. The tribunal finds that prior to May 2018 any decision made by Ms Tackett to work part-time was not justified on the basis of her caring responsibilities or her health. The second criterion of subsection 117(7B) of the Assessment Act is satisfied.

4. The tribunal then considered Ms Tackett’s motivations for not working full-time. Ms Tackett told the tribunal that while she has qualifications in [a different occupation] from [Country 1] they are 10 years old and not recognised in Australia. She said that her lack of English language skills and the need to support the children led her to find work in the [occupation 1] sector which involved part-time work. She has since completed a [related qualification] and is intending to gain further qualifications by studying while working. The tribunal accepts that Ms Tackett returned to work prior to the start of the child support assessment and has since increased her work hours. The tribunal finds that the third criterion of subsection 117(7B) of the Assessment Act is not satisfied as the tribunal is satisfied that the effect on the child support assessment is not a major purpose of Ms Tackett’s decision to work part-time. As a consequence the tribunal is unable to determine whether Ms Tackett has any unused earning capacity.

Do the existing assessments provide a result which is unjust and inequitable?

Mr Xander’s income, property, financial resources and earning capacity

1. In order to determine whether Ms Tackett’s income results in child support assessments which are an unjust and inequitable determination of the financial support she should receive for the children, the tribunal considered whether Mr Xander’s adjusted taxable income is indicative of his income, property, financial resources and earning capacity.

2. Mr Xander is employed by [Agency 2] on a full-time basis as an [occupation]. His payslip to 17 May 2018 records a gross salary of $91,356 which is consistent with his year to date income of $80,930. The tribunal notes that Mr Xander has entered into a salary sacrifice arrangement which reduces his taxable income.

3. Mr Xander’s 2016/17 amended adjusted taxable income of $80,350 consists of his salary of $77,284 and reportable fringe benefits of $17,666, less deductions claimed totalling $14,600. The deductions include $1,650 for work related car expenses and $5,000 for “care of parents” as well as “stamp duty of $6,900 for buying land in [his region]”.

4. The tribunal finds that the expenses claimed for the care of Mr Xander’s parents and stamp duty are not allowable income tax deductions. Mr Xander told the tribunal that he claimed the amounts as he gave his parents are a “gift or donation” as required by [Country 1] law. He said that someone told him he could claim the stamp duty. The tribunal finds that the deductions totalling $11,900 should be ignored for child support purposes. 

5. Mr Xander also owns an apartment in [Country 1]. He states that his nephew lives there and that no rent is received. He told the tribunal that his nephew looks after the property and performs any necessary repairs. Mr Xander states that before he and Ms Tackett separated, her [relatives] lived in the unit. He suggests that the unit is in disrepair due to the block having a lift and said that the strata fees would be 50% higher than those paid by Ms Tackett. Ms Tackett told the tribunal that Mr Xander’s nephew is working and would have the capacity to pay rent. She suggested that rent he receives is being paid to Mr Xander’s parents.

6. Ms Tackett states that Mr Xander also has investments in [Country 1] which are not disclosed. However, he did not provide any evidence to support her assertions.

7. Mr Xander sold a property he owned in [a named town] for $350,000 in April 2017. He had purchased the house for $319,900 in July 2014. He also sold land that he owned in [another town] for $360,000 in August 2017 and told the tribunal that he made a capital gain of $3,000. Although some of the proceeds of sale of the properties are held in a trust account pending the finalisation of the property proceedings, Ms Tackett asserts that Mr Xander also utilised some of the proceeds for his own purposes. The tribunal notes that those issues will be dealt with in the property proceedings.

8. In August 2018 Mr Xander finalised the purchase of a house in [another suburb] for $455,000. He borrowed $364,000 from [a bank] and provided a statutory declaration from [Mr A] which states that on 23 May 2018 he had given Mr Xander $50,000 in cash and would give him a further $50,000 on order to purchase a property. Mr Xander told the tribunal that he would repay [Mr A] when he is able to sell the apartment in [Country 1]. Mr Xander did not provide the tribunal with a copy of the home loan application as directed. The tribunal infers that any disclosure may have provided information about Mr Xander’s income or assets which would be adverse to his interests in these proceedings. The tribunal notes that the repayments on the [bank] loan are greater than the rent that Mr Xander was previously paying.

9. The tribunal finds that Mr Xander’s income, property and financial resources are not properly reflected in his adjusted taxable incomes as he has claimed income tax deductions which are not allowable and he is either receiving rent from his property in [Country 1], or has the ability to do so. The tribunal finds that since at least 1 July 2017 he has had income of about $97,000 a year.

10. Mr Xander works full-time. His capacity to work is not limited by the care he provides for the children. The tribunal finds that the first criterion of subsection 117(7B) of the Assessment Act is not satisfied and as a consequence the tribunal is unable to determine that Mr Xander has any unused earning capacity.

Are there special circumstances for which to depart from the assessment?

1. Taking into account the objects of the Assessment Act (section 4), including that children should share in the standard of living of both their parents, the tribunal finds that the income of Ms Tackett provides special circumstances for which to depart from the assessment. Even if Mr Xander’s actual income is taken into account, he would be liable to pay less child support if the assessment was based on Ms Tackett’s income, property and financial resources rather than her adjusted taxable income. The tribunal finds that the assessment is unfair to Mr Xander and to the children for that reason, and that a ground is established to depart from the assessment under subparagraph 117(2)(c)(ia) of the Assessment Act.

Issue Two – Would a departure from the administrative assessment be just and equitable?

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 just and equitable to depart from the assessment having regard to the matters set out in subsection 117(4) of the Assessment Act.

1. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. In accordance with the objects set out in section 4 of the Assessment Act, the children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.

The children’s needs

1. [Child 1] is 13 years old and [Child 2] is five. The children attend public schools. [Child 2] started school in 2018 and attended pre-school in 2017. Both parents utilise before and after school care for [Child 2]. The amounts Ms Tackett pays fluctuate. From the evidence she provided it was unclear what her current out of pocket costs for child care are. It is also not clear whether her total costs are more than 5% of her income. In any event, as both parents incur costs the tribunal finds that it would not be just and equitable to make any departure from the assessment on that basis.

2. Mr Xander has enrolled [Child 1] in [language] classes costing about $460 a year and [a youth organisation] costing $255 a year. The tribunal notes his evidence that there was no agreement with Ms Tackett that [Child 1] would attend these activities although she does take [Child 1] to those activities if he is in her care. The tribunal finds that the costs Mr Xander has noted are not out of the ordinary range of expenses that parents may incur for the care of children. The tribunal notes that both parents have costs of accommodation, food, travel, entertainment etc. in respect of the children. The tribunal finds that amounts spent by Mr Xander in relation to [Child 1’s] extra-curricular activities should not affect the child support assessment.

3. From the evidence provided, the tribunal is satisfied that the costs related to the care of the children are not out of the ordinary range of expenses for children of their ages.

The children’s income, property, financial resources and earning capacity

1. The tribunal has no evidence that any of the children have any income, property or financial resources or any unused earning capacity that needs to be taken into account in the child support assessment.

The parents’ duty to support others

1. The tribunal has no evidence that Ms Tackett has a duty to support any other person apart from [Child 1] and [Child 2].

2. Mr Xander asserts that the support he provides to his elderly parents in [Country 1] should be taken into account in the assessment. He contends that he is obliged to do so under [Country 1] law and stated that he provides support of $100 a week. He said that his [siblings] are unable to provide much financial support and estimated that he provides 80% of his parents’ support He said that he does this by giving them cash when he is in [Country 1] and suggested that he builds up cash to take overseas by storing savings at home. The tribunal finds that Mr Xander’s evidence in that regard is not consistent with his bank statements and the spending patterns and withdrawals shown.

3. Ms Tackett stated that Mr Xander did provide some assistance to his parents before their separation. However, she contends that Mr Xander’s [siblings] also share in the costs and that he would only be paying the equivalent of $400 a year. She asserts that Mr Xander has a savings account in [Country 1] and that Mr Xander’s parents have access to that account.

4. It is not clear to the tribunal the extent to which Mr Xander provides financial support to his parents. However, the tribunal finds that under Australian law he does not have a duty to provide financial support to his parents. The tribunal finds that any support Mr Xander does provide cannot take priority over his duty to support [Child 1] and [Child 2].

The income, property, financial resources and earning capacity of Ms Tackett

1. The income, property, financial resources and earning capacity of Ms Tackett have been discussed above.

Ms Tackett’s necessary commitments

1. The tribunal is satisfied that Ms Tackett is just able to meet her reasonable and necessary expenses and those she has for the children.

The income, property, financial resources and earning capacity of Mr Xander

1. The income, property, financial resources and earning capacity of Mr Xander have been discussed above.

Mr Xander’s necessary commitments

1. Mr Xander receives family tax benefit of about $70 a week. The evidence he provided to the tribunal indicates that he is able to meet his reasonable and necessary costs as well as some discretionary expenses.

Terms and period of departure

1. Mr Xander made his departure application on 16 August 2017. The tribunal notes that his earlier application for a departure was refused on 6 February 2017 and that he did not lodge an objection to that decision. The tribunal finds that it would not be just and equitable to depart from the assessment from any date prior to Mr Xander’s application on 16 August 2017.

2. The tribunal finds that it would be just and equitable to vary both parent’s adjusted taxable incomes. It proposes to vary Mr Xander’s adjusted taxable income to $97,000 and Ms Tackett’s adjusted taxable income to $45,000.

3. The tribunal finds that it would be just and equitable to depart from the assessment until 31 December 2018 after which the property matter between the parties should be resolved and any effects of Ms Tackett’s health condition on her ability to work may be clearer.

4. The tribunal finds that the proposed variations result in a child support liability (about $120 a week) which reflects a reasonable level of support for the children given the differences between their parents’ incomes, property and financial resources.

Hardship

1. The child support payable on the basis of the decision proposed should assist Ms Tackett to meet the children’s proper needs.

2. Mr Xander is currently up to date with his child support payments. The proposed decision may result in a small amount of arrears. However, in light of the findings made about his income and financial resources, the tribunal finds that the proposed decision will not result in hardship to Mr Xander or the children.

Issue Three – 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 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. The child support law recognises that each parent has a primary duty to maintain their children. Ms Tackett receives family tax benefit. The tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter and to properly reflect the parents’ income, property and financial resources.

DECISION

The tribunal sets aside the decision under review and substitutes a decision to depart from the child support assessment from 16 August 2017 to 31 December 2018 by varying:

• Mr Xander’s adjusted taxable income to $97,000; and

• Ms Tackett’s adjusted taxable income to $45,000.