Tribunal: Member Paul Noonan
On 5 January 2018, the Administrative Appeals Tribunal set aside a decision made by an objections officer of the Department of Human Services and substituted a decision to vary the adjusted taxable incomes of both parents.
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 a departure from the administrative assessment in special circumstances.
Ms Billing and Mr Tillick are the parents of two children. Ms Billing lodged a change of assessment (departure) application with the Department on two grounds. Firstly, the formula assessment was only taking into account Mr Tillick’s claimed taxable income, which wasn’t an accurate reflection of his overall access to financial resources, 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.
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) ‘special circumstance’ has been established; what would be a just and equitable assessment of child support; and whether the proposed assessment would otherwise be proper.
Even though the application for departure was made under two grounds, the Tribunal found it was only necessary that one be established. It found that when one is established, the remaining ground may be taken into account when considering the just and equitable factors.
The Tribunal considered if, in special circumstances, a ground existed pursuant to subparagraph 117(2)(c)(ia) such that the administrative assessment would result in an unjust and inequitable determination of the level of financial support payable because of the financial resources of Mr Tillick. The Tribunal stated that it was a well-established principle in the Family Court that the taxable income of a person who is self-employed may not be an accurate reflection of their earning capacity and financial resources for child support purposes. The Tribunal undertook an analysis of Mr Tillick’s financial resources, accounts and taxation returns to see if they increased his overall access to financial resources and as such should be added to his taxable income. The Tribunal subsequently increased his taxable income to $101,241. The Tribunal also analysed Ms Billing’s income, access to financial resources and earning capacity and concluded that her overall access to financial resources was reflected by her most recent adjusted taxable income, which was $82,402. These income changes led to an increase in the child support payable by Mr Tillick from $3,818 to $11,193 per annum. The Tribunal was satisfied that this increase showed the original application of the formula assessment resulted in an unjust and inequitable determination.
The Tribunal then considered whether the departure would be just and equitable. This involved a consideration of Mr Tillick’s ability to meet necessary costs for self-support after taking out education expenditure, business and child support expenses. The Tribunal found he had sufficient overall access to financial resources to meet these costs. This is the point at which the Tribunal considered the impact of the education costs of the children, which had recently doubled. Overall, the Tribunal considered each parent should meet the costs of raising the children according to their respective financial capacity as determined by the Tribunal. The Tribunal did not consider Mr Tillick had the financial capacity to make a further contribution to the education costs over and above the updated amount of child support payable based on the Tribunal’s findings as to income.
The Tribunal found no issue with regards to the departure being otherwise proper.
The Tribunal therefore decided there should be a departure from the assessment and set aside the decision under review and substituted it for one that varies Mr Tillick’s adjusted taxable income to $101,242 and Ms Billing’s adjusted taxable income to $82,402 for the period 17 November 2016 to 30 June 2017.
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.