Child support can be a minefield for even the most seasoned of practitioners and whilst we are not often required to provide representation before the Administrative Review Tribunal (ART), clients will often seek assistance in respect of the process and likely outcomes.
One of the difficulties faced by a ‘receiving parent’ is obtaining an appropriate assessment of child support where the ‘paying parent’ is self-employed. Being self-employed the paying parent can often arrange their finances such that the income on which he/she is assessed is much lower than the real income being received, whether it be in the form of actual income or other benefits.
The matter of Stanley (applicant father) and Child Support Registrar, with Miss Ogden as the third party (mother) came before Tribunal Member Letch on the father’s application of review of an Objection Decision which disallowed his objection to a Change of Assessment Decision, which significantly increased his child support obligation. At the time of the ART hearing Mr Stanley was in arrears of child support in the amount of $8,803.59.
Mr Stanley and Ms Ogden are the parents of a child born in 2011. The child lives predominantly with the mother, with the father assessed to pay child support. Mr Stanley operates a company which in the 2023/2024 achieved a net profit of $163,729, after payment of wages being $60,672 to Mr Stanley and the balance of $116,917 to his current partner. Mr Stanley’s taxable income for that same period, after deductions, was $59,996. Curiously, Mr Stanley provided a pay slip evidencing an annual income of $75,000 for the current period.
Ms Ogden applied for a change of assessment pursuant to reason 8A7 contained within s117 of the Child Support (Assessment) Act, 1989. The determination of that application, made on 2 December 2024, was that for the period 1 September 2024 to 31 December 2026 Mr Stanley’s adjusted taxable income, for child support assessment purposes, was set at $190,000. This figure was arrived at by the following calculation:
- Declared salary pursuant to his pay slip, being $75,000.
- Plus 35% of the business profits, being $57,305.
- Plus 20% of the amounts claimed by the business as depreciation and motor vehicle expenses being $57,361.
- Rounding up of $333.
Accordingly, Reason 8A was established and this had the result of changing Mr Stanley’s annual obligation for child support from $3,827 to $27,648. Mr Stanley filed an Objection to that decision which effectively requires another Officer within Services Australia: Child Support to review that Change of Assessment decision. The Objection was disallowed and the assessment remained unchanged. The matter then came before the ART as Mr Stanley then sought a Review of that Objection Decision.
Both parties participated in the hearing by telephone albeit passively on Ms Ogden’s part as she was content with the current assessment, although she did seek that the assessment cover a longer period of time, presumably so that she did not have to continue making Change of Assessment applications as Mr Stanley’s obligation would be re-assessed each year when he submitted his Income Tax Return.
The Tribunal Member determined the matter along the same lines as both the Change of Assessment and Objections Officers to the effect that the figure of $190,000 was a fair (and conservative) representation of Mr Stanley’s financial capacity8. Further, the Tribunal Member set the determination period to be until a terminating event which, in this case, was likely to be in 2029 when the child reached the age of 18 years.