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Tribunal: Member Jean Cuthbert

On 7 February 2018, the Administrative Appeals Tribunal varied a decision made by an objections officer of the Department of Human Services to adjust the applicant’s adjusted taxable income for the purposes of a child support assessment.

The Child Support (Assessment) Act 1989 (the Act) allows the Child Support Registrar to make an administrative assessment of the child support payable by a liable parent. To do this a formula is used which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act allows the decision-maker to depart from the formula assessment when making a child support assessment in special circumstances. The grounds for departure are listed in subsection 117(2) of the Act.

Mrs Rutter and Mr Hellier are the parents of two children. Mrs Rutter applied to the Department for a departure from the formula assessment on two grounds. Firstly, that Mr Hellier’s income, financial resources, property and earning capacity were greater than reflected in the provisional income used for him in the assessment, so the assessment was resulting in an unjust amount payable by him. Secondly, the costs of educating the children in the manner both parents expected were significant. Mr Hellier lodged a cross-application on the grounds that Mrs Rutter’s income, property, financial resources and earning capacity were not properly reflected in the assessment.

When determining whether or not to depart from an administrative assessment, paragraph 98C(1)(b) of the Act required the Tribunal to consider: whether a subsection 117(2) ground for departure had been established; what would be a just and equitable assessment of child support; and whether the proposed assessment would otherwise be proper.

Mr Hellier’s 2017 adjusted taxable income of $17,475 consisted of parental leave pay of $10,761 and parenting payment single of $6,714. His 2015/16 adjusted taxable income of $83,700 consisted of salary payments totalling $83,844. Mr Hellier claims that he stopped working because he was the full time carer of his son and undertaking full-time studies. He claimed he recently separated from his second wife but she continued to pay his rent of $1000, which greatly exceeded his income. The Tribunal did not find Mr Hellier to be a credible witness. On the evidence available, the Tribunal found that he was not separated from his wife, but that he had organised his affairs in a way that sought to minimise his child support liability.

Subsection 117(2)(c)(ib) provides that the earning capacity of a parent may be a ground for departure. The Tribunal considered Mr Hellier’s earning capacity and noted that Mr Hellier’s adjusted taxable incomes were $154,342 for 2013/14 and $150,878 for 2014/15. In light of the earlier findings regarding credibility, the Tribunal did not accept that Mr Hellier’s decision not to work from June 2016 was justified by reason of his caring responsibilities for his child. Having regard to Mr Hellier’s evidence about his expected future earnings, the Tribunal was satisfied that he could have continued to earn at least the same amount as he earned in 2014/15.

Taking into account the objects of the Act, including that children should share in the standard of living of both their parents, the Tribunal found that the earning capacity of Mr Hellier provided a ground for departure from the formula assessment. Mr Hellier would be liable to pay far more child support if the assessment was based on his earning capacity rather than his adjusted taxable income. The Tribunal found that the assessment was unfair to Mrs Rutter and the children.

On these grounds, the Tribunal found that it would be just and equitable and otherwise proper to depart from the assessment by varying Mr Hellier’s adjusted taxable income to $150,878 from 21 June 2016 to 31 December 2019.

Names used in all child support decisions are pseudonyms so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

Read the full written decision on Austlii.