Zaarour and Piranavan (Child support)

Zaarour and Piranavan (Child support) [2024] AATA 3245 (27 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2024/MC027352
APPLICANT:  Ms Zaarour
OTHER PARTIES:  Child Support Registrar
Mr Piranavan

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 27 June 2024
DECISION:

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

for the period from 22 August 2023 to 28 April 2027 or a terminating event occurs for [Child 2] the adjusted taxable income of Mr Piranavan is varied to $53,000;
for the period from 22 August 2023 to 30 June 2024 the adjusted taxable income of Ms Zaarour is varied to $126,000; and
for the period from 1 July 2024 to 6 September 2024 the adjusted taxable income of Ms Zaarour is varied to $124,888.

Notation – this means the objection decision of 3 February 2023 ceases to have effect from 21 August 2023.

CATCHWORDS
CHILD SUPPORT – departure from the administrative assessment – adjusted taxable income – applications by both parents – mother’s income, property and financial resources – father’s income, property and financial resources or earning capacity, and special needs of child – mother’s senior, part-time work on fixed-term contract, and own company not currently generating an income, or expected to – father’s self-employment, investment properties and inheritance – age, injury, reduced hours and limited job tasks – cash payments declared and personal use of business resources and finances – children’s needs not out of the ordinary – decision under review set aside and substituted

REASONS FOR DECISION

BACKGROUND

This review is about whether or not there should be a departure from the administrative assessment of child support.
Ms Zaarour and Mr Piranavan are the parents of [Child 1] (born December 2006) and [Child 2] (born April 2009). There has been a child support assessment in place since 17 February 2020.
The following administrative assessments of child support are under consideration:
·     for the period from 1 July 2022 to 13 April 2023 Mr Piranavan was assessed to pay an annual rate of $7,200 in accordance with a change of assessment decision made on 3 February 2023 (the Tribunal notes that [Child 1] and [Child 2] were in the 100 per cent care of Ms Zaarour);
·     for the period from 14 April 2023 to 30 June 2023 Ms Zaarour was assessed to pay an annual rate of $7,940 after an offset amount payable by Mr Piranavan in accordance with a change of assessment decision made on 3 February 2023 (the Tribunal notes that [Child 1] was in the 100 per cent care of Mr Piranavan and [Child 2] was in the 100 per cent care of Ms Zaarour);
·     for the period from 1 July 2023 to 28 July 2023 Ms Zaarour was assessed to pay an annual rate of $5,062 after an offset amount payable by Mr Piranavan in accordance with a change of assessment decision made on 3 February 2023 (the Tribunal notes that [Child 1] was in the 100 per cent care of Mr Piranavan and [Child 2] was in the 100 per cent care of Ms Zaarour); and
·     for the period from 29 July 2023 to 30 November 2024 Mr Piranavan is assessed to pay an annual rate of $7,200 in accordance with a change of assessment decision made on 3 February 2023 (the Tribunal notes that [Child 1] and [Child 2] were in the 100 per cent care of Ms Zaarour).
The Tribunal notes that under the change of assessment decision made on 3 February 2023 the annual rate of child support was set at $7,200 from 1 July 2022 to 26 December 2024 and then $5,200 from 27 December 2024 until 28 April 2027 or a terminating event occurs for [Child 2].
On 30 June 2023 Mr Piranavan applied to Services Australia – Child Support (Child Support) for a change to the assessment on the basis of a parent’s income, property and financial resources (the ground more commonly known as Reason 8A).
On 18 August 2023 Ms Zaarour made a cross-application on the basis of the special needs of the child (Reason 2) and a parent’s income, property and financial resources or earning capacity (Reasons 8A and 8B).
On 16 October 2023 Child Support made the decision to change the assessment so that for the period from 6 November 2023 to 5 November 2024 the annual rate payable by Mr Piranavan is increased by $2,048 (the original decision).
On 27 October 2023 Ms Zaarour objected to this decision and on 29 October 2023 Mr Piranavan objected to this decision.
On 11 January 2024 Child Support allowed the objections in part and made the decision to change the assessment (the objection decision) so that:
·     the objection decision made on 3 February 2023 ceases to have effect on 31 August 2023;
·     for the period from 1 September 2023 to 31 August 2025 the adjusted taxable income of Mr Piranavan is set at $53,000; and
·     for the period from 1 July 2023 to 31 August 2025 the adjusted taxable income of Ms Zaarour is set at $159,000.
On 13 January 2024 Ms Zaarour applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 14 May 2024. Ms Zaarour and Mr Piranavan attended by Microsoft Teams audio. Prior to the directions hearing 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 (651 pages).
Ms Zaarour and Mr Piranavan were directed to provide further information and both complied to the satisfaction of the Tribunal.
A hearing was held on 27 June 2024. Ms Zaarour and Mr Piranavan gave evidence on affirmation by Microsoft Teams audio. Prior to the hearing the Tribunal received documents folioed A1 to A62 from Ms Zaarour and B1 to B37 from Mr Piranavan and these were distributed to the parties. Additional documents were also received from Child Support (pages 652–658).
At the directions hearing and at the commencement of the hearing the Tribunal sought clarification from Ms Zaarour and Mr Piranavan as to the reasons for their concerns.
Ms Zaarour said Child Support had underestimated the income available to Mr Piranavan and not properly considered his earning capacity. Ms Zaarour said Child Support had also inflated her income. Ms Zaarour said she was seeking a departure from the administrative assessment on this basis. Ms Zaarour added that although the children did have special needs she no longer wanted the Tribunal to review this matter. Mr Piranavan said although he did not agree entirely with the manner in which Child Support had determined the income available to him he had accepted the outcome and did not contest the decision.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
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).
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 or not a ground is established to depart from the administrative assessment of child support; and if so,
·     whether or not it is just and equitable to make a particular departure determination; and if so,
·     whether or not it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
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 administrative formula result in the ordinary run of cases.
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”.
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 prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

In circumstances where more than one ground for departure is put forward, the Tribunal need only be satisfied that one ground is established before going on to determine whether or not a particular determination is just and equitable and otherwise proper.

Issue 1 – Is there a ground for departure?

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).
Ms Zaarour told the Tribunal she was employed four days a week as [an occupation 1] as her caring responsibilities made it very difficult for her to work full-time. Ms Zaarour said she commenced in her current position on 4 September 2023 and her annual salary was $129,730. Ms Zaarour pointed out that as her role was a contract position she was not entitled to a bonus or any allowances. Ms Zaarour said she had no other source of income.
In response to directions Ms Zaarour provided the Tribunal with a copy of her current contract of employment. The contract states she is to be employed as a senior [occupation 1] commencing on 4 September 2023 in a part-time capacity. Her salary is $129,730 and her employment is to end on 6 September 2024. Ms Zaarour is entitled to annual leave of four weeks and personal leave on a pro-rata basis. Ms Zaarour also provided the Tribunal with a number of recent payslips which show a gross pay in line with her contract.
Ms Zaarour said prior to her current role she was employed at another [employer], [Employer], up until 22 August 2023. Ms Zaarour explained this was also a contract position.
In response to directions Ms Zaarour provided the Tribunal with an employment separation certificate showing her employment ceased on 22 August 2023. Ms Zaarour confirmed this employment separation certificate was from [Employer]. Ms Zaarour also provided the Tribunal with an Australian Taxation Office (ATO) income statement for the 2023–24 financial year showing total gross payments of $23,828.67 (as reported on 21 August 2023). Ms Zaarour confirmed the income statement was for her period of employment at [Employer].
Ms Zaarour told the Tribunal she had recently established her own company, [Company name], incorporated on 30 October 2023 primarily to work with other [specified people for a specified purpose]. Ms Zaarour said the company was not currently generating an income and she did not expect it would in the near future given its intended purpose.
In response to directions Ms Zaarour provided the Tribunal with a draft profit and loss statement for [Company name] for 2023–24. It shows the business has made losses each month since it was established.
The Tribunal notes in evidence from Child Support a copy of Ms Zaarour’s individual tax return for 2022–23. It shows total income of $164,108 comprised of total gross payments from two employers of $132,491, an eligible termination payment of $31,345 and gross interest of $272. After allowing for deductions of $36,360, including litigation costs of $31,286, work-related expenses totalling $3,827, donations of $232 and the costs of managing her tax affairs of $1,015, Ms Zaarour had an adjusted taxable income of $127,748.
Ms Zaarour also provided the Tribunal with a Statement of Financial Circumstances received on 24 January 2024.
Ms Zaarour lists total weekly household expenditure of approximately $2,471 including mortgage payments of $750, food of $350 and house repairs of $500. Ms Zaarour said the house repairs were ongoing due to a leaking balcony which could not be easily fixed. Her total personal expenditure is approximately $2,996, including income tax of $1,596, child support of $150 and minimum weekly credit card payments of $1,250. Ms Zaarour declares total assets valued at $1,828,000 including the family home valued at $1,800,000 and a motor vehicle valued at $28,000. She has total liabilities of $652,000 being the mortgage on her home of $535,000, a loan from her sister of $40,000, a HELP debt of $72,000 and credit card debt of $5,000. Ms Zaarour said the loan from her sister was used for legal fees and she was not currently repaying this. Ms Zaarour has superannuation of $280,000.
The Tribunal finds that Ms Zaarour will have an adjusted taxable income of approximately $126,000 in 2023–24. The Tribunal has calculated this amount by taking her income from [Employer] in 2023–24 of $23,828.67 and adding an amount of $106,982.81 for the salary she will earn with her employer in the current financial year (the contract amount of $129,730 divided by 365 days in a year times 301 days in the period from 4 September 2023 to 30 June 2024). The Tribunal has also allowed for reasonable deductions commensurate with those outlined in her 2022–23 tax return. From 1 July 2024 the Tribunal is satisfied Ms Zaarour would be fairly assessed as if she had an adjusted taxable income of approximately $124,888 (the salary under her contract less reasonable deductions).
The Tribunal also considered the income, property and financial resources of Mr Piranavan.
Ms Zaarour informed the Tribunal the income declared by Mr Piranavan was implausible. Ms Zaarour submitted that as Mr Piranavan ran his own business he was likely to be working for cash. Ms Zaarour said Mr Piranavan also had a lifestyle which did not match his supposed income. Ms Zaarour pointed out that Mr Piranavan had a portfolio of investment properties, one of which was not rented, so he clearly had the capacity to pay a reasonable amount of child support given these additional financial resources. Ms Zaarour added that Mr Piranavan had received a significant inheritance and was also paying for maintenance on a family beach house which he would inherit at some point in the future. Ms Zaarour said she was of the view that Mr Piranavan was not disclosing his full income.
Mr Piranavan said he was self-employed and ran his own [tasks 1 and 2] business as a sole trader. Mr Piranavan said the business was called [Business name] and although his focus was on [task 1] he also did small [task 3], [task 4] and general [task 2]. Mr Piranavan said he was a registered [occupation 2] but after working for himself for more than 35 years he no longer did heavy [occupation 2] work due to his health and age.
Mr Piranavan said there was always ongoing work but he was now careful to pick the type of jobs he undertook and only did around 20–30 hours a week. Mr Piranavan explained that he had a back operation in mid-2021 due to degenerative discs and then had a car accident a short time later. Mr Piranavan added that he was fortunate he could also rely on income from his two unencumbered investment properties in [Towns 1 and 2] to help meet his expenses. Mr Piranavan said these investment properties were taken into account during financial settlement between the parents.
Mr Piranavan told the Tribunal he invoiced for most of his work and for the bigger jobs he usually quoted on a project by project basis. Mr Piranavan said he also charged an hourly rate for [task 2] work and smaller jobs. He added that he rarely did cash work and if he received cash it would always be declared. Mr Piranavan said all the income from his business went into a [Bank] business bank account. Mr Piranavan added he was definitely doing more work now than he was in the couple of years after his operation.
In response to directions Mr Piranavan provided the Tribunal with a draft profit and loss statement for [Business name] for the 11 months to 31 May 2024. It shows sales of $68,700 less cost of goods sold of $23,745 leaving a gross income of $44,955. After accounting for business expenses totalling $8,825 [Business name] is forecast to make a net profit of $36,130 to 31 May 2024. On an annualised basis this is equal to a net profit of approximately $39,500.
Mr Piranavan said the expenses claimed were all for legitimate business purposes. In relation to motor vehicle expenses Mr Piranavan said he claimed 80 per cent of the total amount against the business as these costs were business related while the remaining 20 per cent was for private use. He thought this was the same for his telephone expenses.
Mr Piranavan also provided the Tribunal with a copy of his individual tax return for 2022–23. It shows total income of $22,184 including total supplement income of $22,184 and gross interest of $2. After allowing for deductions of $600 Mr Piranavan had a taxable income of $21,586 in 2022–23. The Tribunal notes the amount for total supplement income in the tax return is comprised of net income from [Business name] of $19,917 plus net rent from his two properties of $2,267. The tax return shows that [Business name] generated total income of $40,417 and after allowing for total expenses of $20,500 the business recorded the net income amount of $19,917 in 2022–23. The schedule for work-related motor vehicle expenses for the van confirms that 80 per cent of the total is claimed for business use. The tax return also shows gross rent for the two investment properties of $30,557, capital works deductions of $7,791 and other rental deductions of $20,499 leaving net rent at $2,267.
Mr Piranavan told the Tribunal the property in [Town 1] had been rented since 2010 and the property in [Town 2] since 2017. Mr Piranavan said [Town 2] was a duplex with one being rented while the second had never been rented. Mr Piranavan said he had lived in the second duplex for four years after separation and it was now used to store tools, ladders and equipment. He said there were ongoing maintenance costs related to both properties.
The Tribunal notes in evidence from Child Support a copy of the individual tax return for Mr Piranavan for 2021–22. It shows total income of $11,265 including total supplement income of $8,709 and gross payments of $2,556. After allowing for deductions of $490 Mr Piranavan had a taxable income of $10,775 in 2021–22. The amount for total supplement income in the tax return is comprised of net income from [Business name] of $27 plus net rent from his two properties of $8,682. The tax return shows that [Business name] generated total income of $11,116 and after allowing for total expenses of $11,089 the business recorded net income of $27 in 2021–22. The tax return also shows gross rent for the two investment properties of $40,680, interest deductions of $9,300, capital works deductions of $7,791 and other rental deductions of $14,907 leaving net rent at $8,709.
Mr Piranavan informed the Tribunal that he did receive an inheritance in 2022 and this was taken into account during financial settlement. Mr Piranavan said he and his sister were helping his [Age]-year-old father to meet minor costs for a beach house including council rates. Mr Piranavan stressed the beach house belonged to his father and not him.
In response to directions Mr Piranavan provided the Tribunal with a letter from Collards Solicitors dated 28 June 2022. It confirms Mr Piranavan received a sum of $134,687.73 into his nominated account as a beneficiary of an estate. The Tribunal also notes in evidence an extract from the Reasons for Judgement of the Honourable Justice Hartnett dated 30 March 2022 which, in relation to property settlement, refers to an “anticipated inheritance”. The Tribunal is satisfied the inheritance received by Mr Piranavan is not relevant to the consideration of his income, property and financial resources in the circumstances of this case.

Mr Piranavan also provided the Tribunal with a Statement of Financial Circumstances received on 20 February 2024. Mr Piranavan lists total weekly household expenditure of $1,362 including mortgage payments of $700 and total motor vehicle expenses of $312. His total personal expenditure is approximately $138 per week (child support of $7,200 per annum). Mr Piranavan declares total assets valued at $2,117,500 including the family home and his two investment properties as well as his work van. He lists total liabilities of $386,000 being primarily the mortgage on his family home. Mr Piranavan has no superannuation.
Mr Piranavan operates his own [tasks 1 and 2] business as a sole trader. He has explained that, following a back operation, he is now working 20–30 hours a week and this is unlikely to increase given his injury. The Tribunal notes that Mr Piranavan has previously provided evidence to Child Support confirming he suffered an injury affecting his capacity to work. The Tribunal is satisfied this is the case. Mr Piranavan has also pointed out that he is able to rely on income from two unencumbered investment properties.
Mr Piranavan has provided the Tribunal with a draft profit and loss statement for his business for the 11 months to 31 May 2024 and the Tribunal finds that [Business name] will make a net profit of approximately $39,500 in 2023–24. The Tribunal is not satisfied, however, this is a true reflection of the income and financial resources available to Mr Piranavan for the purposes of child support. There are also certain advantages in being self-employed which are not generally available to salary and wage earners. Such advantages may include being able to write off personal expenses against the business, reducing personal tax liability as a result of the way the business is structured and being able to claim business expenses which offer a parent some personal gain.
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.
Mr Piranavan has told the Tribunal that income from his business was deposited into his [Bank] account. An examination of bank statements in evidence from Child Support shows regular business-related deposits from what appear to be his clients. The majority of expenses in the bank statements are also business related, however, there are some personal expenses such as supermarkets, eateries, cafes and liquor outlets. While the Tribunal is not suggesting there is anything wrong with such a practice it does indicate Mr Piranavan is meeting some of his personal costs through his business. This is not uncommon in small businesses but the Tribunal is of the view such personal benefits are a financial resource that should be regarded as income for the purposes of child support.
Mr Piranavan also has investment properties which generate rental income. A review of his 2022–23 tax return shows a net rental income of $2,267 and a review of his 2021–22 tax return shows a net rental income of $8,682. Both tax returns show capital works deductions of $7,791 as well as other rental deductions. The capital works deductions listed in the tax return are in accordance with a BMT schedule which is essentially an ongoing forecast of deductions ensuring the cash return from an investment property is maximised. Again, while legitimate for tax purposes, utilising such a schedule may mean the cash flow effect is not matched by actual capital expenditure in the same year.
Ms Zaarour submits that Mr Piranavan has a stronger asset position and this should be taken into account when considering his income, property and financial resources. When looking at the net asset position of both parents the Tribunal considers them to be not dissimilar particularly when taking into account that Mr Piranavan has no superannuation. Ms Zaarour has also argued that Mr Piranavan may be taking cash payments, however, without further evidence the Tribunal cannot take this into consideration.
The Tribunal notes the objections officer determined that Mr Piranavan had income and financial resources available to him of approximately $53,000 per annum. This was based upon earnings from his business, with Mr Piranavan working an average of 25 hours per week, plus net rental income from the investment properties.
Taking into account the approximate net profit of [Business name] in 2023–24 of $39,500, plus his net rental income and personal benefits received through his business, the Tribunal is satisfied Mr Piranavan would be more fairly assessed as if he had an adjusted taxable income of at least $53,000. In reaching this decision the Tribunal is conscious that Mr Piranavan is able to meet his mortgage repayments of approximately $36,400 per annum as well as his general living expenses as set out in his Statement of Financial Circumstances.
Mr Piranavan made his application for a change of assessment on 30 June 2023 and Ms Zaarour made her cross-application on 18 August 2023.
The administrative assessment in place from 1 July 2023 was based on the objection decision made on 3 February 2023. Ms Zaarour was assessed to pay an annual rate of $12,262 (under the formula assessment) which was then offset by the $7,200 payable by Mr Piranavan in accordance with the objection decision. This left Ms Zaarour to pay an annual rate of $5,062. From 29 July 2023 Mr Piranavan is then assessed to pay an annual rate of $7,200 in accordance with the objection decision. At the time this objection decision was made Ms Zaarour was being assessed based upon an estimated income of $59,958.
The Tribunal has found, however, that Ms Zaarour will have an adjusted taxable income of approximately $126,000 in 2023–24 and Mr Piranavan would be more fairly assessed as if he had an adjusted taxable income of $53,000. When these amounts are applied in the child support formula the annual rate of child support payable would be approximately $9,974.
The Tribunal is satisfied that special circumstances exist and the application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Ms Zaarour. On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

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

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 discussed below,[1] which are as set out in subsection 117(4) of the Act:
[1] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares(SSAT Appeal) [2008] FMCAfam 886.
(4)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii)any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
(A)the liable parent; or
(B)any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

The nature of the duty of a parent to maintain a child

Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments.
In this case the parents have a duty to support [Child 1] and [Child 2]. The Tribunal was not made aware that either parent has a legal responsibility to any other child or person.

The proper needs of the child

In relation to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).
In her cross-application Ms Zaarour raised the special needs of the children. Ms Zaarour told the Tribunal that both children had issues arising from family conflict and required treatment. Ms Zaarour said, to date, she had been unable to afford the costs associated with such treatment on her own and did not wish the Tribunal to review their special needs.
For the Tribunal to consider this matter a child must have needs that are categorised as special or out of the ordinary when compared to those attributable to most other children. It is generally accepted that the costs associated with the special needs significantly affect the costs of maintaining the child. As Ms Zaarour has explained she has yet to incur such costs the Tribunal will not consider this matter further.
The Tribunal was not made aware that the parents expected [Child 1] and [Child 2] to be cared for, educated or trained in a particular way. The Tribunal is satisfied it is appropriate to calculate the costs of the children’s needs by reference to the Costs of the Children Table (provided for in Schedule 1 to the Act).

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

The Tribunal is satisfied that [Child 1] and [Child 2] have no income, earning capacity, property and financial resources which should be taken into account for the purpose of child support.

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

The Tribunal has already considered in detail the income, property and financial resources of both parents.
In her cross-application Ms Zaarour raised the earning capacity of Mr Piranavan. Ms Zaarour told the Tribunal that Mr Piranavan was a registered [occupation 2] and not merely a [task 1]. Ms Zaarour said Mr Piranavan was capable of performing multiple trades and had the capacity to earn a greater income than that indicated in his tax returns. Ms Zaarour added that Mr Piranavan was abusing the system to deflate his financial resources.
Mr Piranavan said he was a registered [occupation 2] and this was a requirement for undertaking more than two trades. Mr Piranavan explained that while his main focus was on [task 1] he also did many other tasks related to the job at hand such as tiling. Mr Piranavan stressed that he no longer performed [occupation 2] work but rather small [tasks 3 and 2].
In order to establish that Mr Piranavan’s earning capacity might be greater than that reflected in the child support assessment and render the assessment unfair, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied. Those three criteria are:
(a)    one or more of the following applies:
·the parent does not work despite ample opportunity to do so (subparagraph 117(7B)(a)(i));
·the parent has reduced the number of hours per week of their employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged (subparagraph 117(7B)(a)(ii));
·the parent has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
(b)    the parent’s decision not to work, to reduce the number of hours, or to change their occupation, industry or working pattern is not justified on the basis of:
·the parent’s caring responsibilities (subparagraph 117(7B)(b)(i)); or
·the parent’s state of health (subparagraph 117(7B)(b)(ii)); and
(c)    the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child (paragraph 117(7B)(c)).
Mr Piranavan is self-employed and operates as a sole trader. He has told the Tribunal he reduced his hours of work following a back operation in 2021. Mr Piranavan has also said he is now back to working 20–30 hours a week but does not wish to perform longer hours due to his injury and age. Although Mr Piranavan is working and has not changed his occupation or industry he has reduced his hours of work to below full-time. The first criterion is, therefore, met. The Tribunal is satisfied, however, that Mr Piranavan has been able to justify the decision to reduce his hours on the basis of his state of health. It is also not unreasonable for Mr Piranavan to wish to perform less physical work as he gets older. The second criterion is not met.
As all three criteria must be satisfied, it follows that if one is not satisfied, then this ground cannot be considered. The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Mr Piranavan in this case.
The Tribunal is also satisfied the earning capacity criteria are not met in relation to Ms Zaarour.

Any hardship that would be caused

The Tribunal has found that Ms Zaarour will have an adjusted taxable income of approximately $126,000 in 2023–24. This will fall to approximately $124,888 from 1 July 2024 in keeping with the salary under her current contract (less reasonable deductions).
Ms Zaarour lists total estimated household expenditure of $128,518 per annum although this includes ongoing house repairs of $26,000 per annum and some discretionary expenditure. Her annual personal expenditure totals $155,792. The Tribunal notes, however, this includes income tax of $83,033 which is very high given her taxable income (tax withheld from salary and wages in her 2022–23 tax return was $43,159). Minimum weekly credit card payments of $1,250, equal to $65,000 per annum, also appear high.
Ms Zaarour told the Tribunal that as a single parent she led a restricted lifestyle and found it difficult to travel. Ms Zaarour added that she was effectively housebound.
Mr Piranavan is self-employed and the Tribunal has found he would be more fairly assessed as if he had access to income, property and financial resources equal to an adjusted taxable income of $53,000 per annum. Mr Piranavan declares total average household expenditure of approximately $70,824 per annum. His only personal expenditure is for child support of $7,200 per annum. Mr Piranavan said he tried not to live beyond his means and paid his bills when he could.
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 or not it is just and equitable to backdate the determination.
As previously noted the administrative assessment in place at the time the parents made their applications was based on an objection decision made on 3 February 2023. The change of assessment process is not available as an avenue of appeal against a previous decision. In the ordinary course of events the Tribunal would only consider a subsequent change of assessment when the circumstances of the parent or child are significantly different such that the previous decision is unfair or new evidence has become available which was not considered by the original decision maker.
In this case the Tribunal is satisfied that when Ms Zaarour left her employment her position changed and a new review of her income, property and financial circumstances was warranted. Mr Piranavan continues to run his own business and his financial circumstances remain broadly the same.
As Ms Zaarour left her employment on 22 August 2023 the Tribunal finds it just and equitable to commence the departure determination from 22 August 2023 rather than an earlier date.
Having considered the interests of both parents the Tribunal proposes to make the following determination:
·     for the period from 22 August 2023 to 28 April 2027 or a terminating event occurs for [Child 2] the adjusted taxable income of Mr Piranavan is varied to $53,000;
·     for the period from 22 August 2023 to 30 June 2024 the adjusted taxable income of Ms Zaarour is varied to $126,000; and
·     for the period from 1 July 2024 to 6 September 2024 the adjusted taxable income of Ms Zaarour is varied to $124,888.

In accordance with the determination of the Tribunal the annual rate of child support payable by Mr Piranavan from 22 August 2023 will be approximately $6,964. This will increase slightly from 1 July 2024 when the lower income for Ms Zaarour is used in the assessment. The rate payable by Mr Piranavan will fall to approximately $4,858 when [Child 1] is no longer a child of the assessment (this would ordinarily occur when [Child 1] turns 18 years of age).
Mr Piranavan is self-employed and the Tribunal is of the view the income reflected in his individual tax return is unlikely to adequately reflect the true extent of his financial resources for the purposes of child support. In light of this the Tribunal has varied his income until the end of the child support case in order to provide the parents with some certainty. In contrast Ms Zaarour is employed on a contract which ends on 6 September 2024. The Tribunal has varied her income until this date and thereafter the usual administrative processes will apply in relation to her adjusted taxable income. This will enable Ms Zaarour to submit an estimate of her income, should she choose to do so, once her contract of employment ends. The Tribunal considers this a fairer outcome for Ms Zaarour.
The proposed determination of the Tribunal will remove the requirement for any offsetting associated with future changes in care.
The Tribunal is satisfied the proposed determination will not cause hardship to Mr Piranavan, Ms Zaarour or the children and is just and equitable.

Other matters

Mr Piranavan told the Tribunal that [Child 1] had recently moved in with him. The Tribunal notes in evidence that on 7 June 2024 Mr Piranavan notified Child Support of the change in care arrangements stating that he was providing 100 per cent care of [Child 1] from 5 June 2024. Once this change in care has been determined by Child Support it may lead to a change in the amount of child support payable.

Ms Zaarour raised with the Tribunal issues relating to family violence. While understandably of concern to Ms Zaarour these are not matters the Tribunal can take into consideration in this process.

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

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 the children to be primarily supported by their parents rather than by government assistance. The Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
Ms Zaarour is not in receipt of family tax benefit. The Tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community and would be otherwise proper.

DECISION

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

for the period from 22 August 2023 to 28 April 2027 or a terminating event occurs for [Child 2] the adjusted taxable income of Mr Piranavan is varied to $53,000;
for the period from 22 August 2023 to 30 June 2024 the adjusted taxable income of Ms Zaarour is varied to $126,000; and
for the period from 1 July 2024 to 6 September 2024 the adjusted taxable income of Ms Zaarour is varied to $124,888.

Notation – this means the objection decision of 3 February 2023 ceases to have effect from 21 August 2023.

[2024] AATA 3245

27 June 2024

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Family Law

Administrative Law

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Jurisdiction

Statutory Construction

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Appeal