Reason 8 Software
Reason 8 Exe
Reason 8 Demo
Reason 8 Login
Reason 8 Download Mac
Reason 8

Context

2.6.14 Reason 8 - a parent's income, property, financial resources, or earning capacity Context. Parents and non-parent carers can apply for a change of assessment in special circumstances if the child support assessment is unfair because of the income, property and financial resources or earning capacity of one or both parents of the child for whom child support is payable. Music making software for creating and mixing your music. 4.1 (165 votes) 11.3.9 Propellerhead Software AB. Review Comments (3) Questions & Answers (1).

Parents and non-parent carers can apply for a change of assessment in special circumstances if the child support assessment is unfair because of the income, property and financial resources or earning capacity of one or both parents of the child for whom child support is payable.

Act references

CSA Act section 3(2), section 66, section 98C, section 98E, section 98S, section 117(2)(c), section 117(4) to section 117(9), section 117(7B)(a)(i), section 117(7B)(a)(ii), section 117(7B)(b)(i), section 117(7B)(b)(ii)

On this page

Grounds for departure under Reason 8

There may be a reason for changing the assessment if, in the special circumstances of the case, the assessment of child support results in an unjust and inequitable level of financial support to be provided by the payer for the child because of either parent's:

income, property and financial resources (CSA Act section 98C(2) and section 117(2)(c)(ia)), or
earning capacity (CSA Act section 98C(2) and section 117(2)(c)(ib).

The circumstances in which the Registrar (or a court) can take into account a parent's earning capacity have been limited from 1 July 2006.

Either parent can apply for a change of assessment using this reason. The Registrar can also initiate a change of assessment using this reason.

'Special circumstances'

The phrase 'special circumstances of the case' is not defined in the CSA Act. The Family Court has held that 'it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary' (Gyselman and Gyselman (1992) FLC 92-279).

A child support assessment is generally calculated using the parents' most recent taxable income. Where, in the special circumstances of the case, a parent's current income is not adequately reflected in the child support assessment (whether it is more or less than the income used), an application may be considered under this reason.

A parent is able to make an estimate of income to be used in their child support assessment if their estimated income is 85% or less than their adjusted taxable income for the last relevant year of income. A parent's ability to make an estimate of income will therefore be considered before the Registrar will consider a change to the assessment under this reason. If an estimate of income is unable to be accepted because the estimate is not 85% or less than the parent's adjusted taxable income, the Registrar will generally not be satisfied that the reduction in income alone constitutes a special circumstance.

The Registrar can be satisfied that there are special circumstances if 1 parent has substantial property or financial resources that have not been properly taken into account in the child support assessment (Ross and McDermott (1998) FLC 98-003).

Although a parent's most recent taxable income is used in the child support formula, the Registrar can look beyond the parent's taxable income when considering an application for a change of assessment. Income, earning capacity, property and financial resources which do not necessarily form part of a parent's taxable income can be added to or excluded from a child support assessment (Carey and Carey (1994) FLC 92-489).

Additional income, property or financial resources

Each application will be determined according to the individual circumstances of the case.

However, there is a range of circumstances that may form the basis of an application under this reason. It may be that a parent:

has substantial property but a small child support income amount
has legitimately arranged their financial affairs to minimise tax
receives income which is not assessable or is exempt from tax, or
received a lump sum payment that is not included in the child support income amount.

From 1 July 2009, a broader range of income is used in determining the adjusted taxable income for a parent in the formula assessment (see 2.4.4.10).

This includes:

reportable fringe benefits
target foreign income
total net investment losses
specified tax-free pensions or benefits, and
reportable superannuation contributions.

This means it will not usually be necessary to apply under this reason to have these factors considered. That is, they may already be taken into account in the parent's adjusted taxable income used in the child support formula.

Where a parent receives income and they have paid no, or negligible, tax on that income, the Registrar may calculate the equivalent gross value of that income. This grossed-up income will be taken into account in deciding whether there is a reason to change the assessment.

When making a decision under this reason, the Registrar will consider whether a parent has capacity to earn or derive additional income including a consideration of assets that do not produce, but are capable of producing, income. However, the Registrar must disregard the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child (CSA Act section 117(7A)).

In some cases, a parent's financial circumstances or the issues associated with the case may be too complex to be determined by the Registrar. In these cases the Registrar may refuse to change the assessment (CSA Act section 98E) and the parents may object to the refusal decision. If a party is aggrieved by the objection decision they may apply to the AAT for a first review of the objection decision (CSA Act section 98JA(2)).

Unfair or unjust & inequitable assessment based on income

Once the Registrar has determined that the parent's income, earning capacity, property and financial resources are not reflected in the child support assessment, a decision must be made as to whether this produces an unfair result. This includes consideration of the parent's total financial circumstances and whether the income used in the assessment correctly reflects their capacity to support their children. It also includes comparison of any change in the parent's income against any change in the parent's commitments and expenditure from the time of the application (Ross and McDermott (1998) FLC 98-003).

If the Registrar finds that there is a discrepancy between the child support assessment and the income, property and financial resources of the parent, the extent of the discrepancy will also be considered before deciding whether or not the assessment produces an unfair result. In this sense, 'unjust and inequitable level of child support', is narrower than the 'just and equitable' elements under CSA Act section 98C.

Example: The Registrar may determine that a parent has an income that is marginally greater than the child support income amount but, overall, it does not render the assessment unjust and inequitable. Similarly, it may be established that a parent has property which does not produce an income but, overall, the value of the property does not render the assessment unjust and inequitable.

Asset rich but income poor

In some cases a parent might have substantial property and assets but a low income used in the child support assessment. The Registrar may consider the parent's property and assets, as well as any income, in deciding the appropriate rate of child support to be paid (Abela and Abela (1995) FLC 92-568 and Bendeich and Bendeich (1993) FLC 92-355).

The Registrar will take into account that child support is intended to meet the day-to-day needs of the child when considering a parent's capacity to contribute to supporting a child.

It is not sufficient for a parent to say that they are unable to pay child support because their assets produce little or no income or will only produce income at some point in the future. The Registrar will consider whether the parent has the capacity to restructure their financial affairs to produce an income stream from which to contribute to child suppo