• For the period 1 July 2023 to 28 April 2024 Mr Spencer's ATI is set at $358,438.

CHILD SUPPORT - departure determination - income, property and financial resources - special circumstances - special needs of the child - company and trust structures - ground for departure - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

1. The issue to be considered in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.
2. Ms Shepherd and Mr Spencer are the parents of [Child 1] who is now 17 years old, and [Child 2] who has ceased to be a child of the administrative assessment of child support. At the time of the change of assessment decision both [Child 2] and [Child 1] were children of the assessment. They were both recorded as being in Ms Shepherd's 77% care and Mr Spencer's 23% care. The child support case was registered with Services Australia (Child Support) from 24 November 2017 and registered for collection from the start of the assessment.
3. On 6 October 2021 Ms Shepherd applied for a change of assessment on the basis of Reason 8A - that in the special circumstances of the case, the administrative assessment of child support would result in an unjust and inequitable determination of the level of the financial support to be provided to Ms Shepherd because of the income, property and financial resources of Mr Spencer.
4. The child support assessment in place prior to Ms Shepherd's change of assessment application was as follows:
   • For the period 20 November 2021 to 30 June 2022 Mr Spencer is assessed to pay Ms Shepherd the annual rate of child support of $11,814. This is based on Mr Spencer's 2019/2020 ATI of $103,128 and Ms Shepherd's 2019/2020 ATI of $83,626.
5. On 31 December 2021 a delegate of the Registrar established Reason 8A and changed the assessment as follows:
   • For the period 1 November 2021 until [Child 1] ceases to be an eligible child of the assessment Mr Spencer's adjusted taxable income is set to $165,000.
6. On 6 June 2024 Ms Shepherd lodged an objection to the decision stating that Mr Spencer's income was greater during the 2021/2022 and 2022/2023 financial years. Her objection was out of time and Child Support refused to extend the time to allow the objection.
7. Ms Shepherd applied to the Administrative Appeals Tribunal (AAT) for a review of the decision to refuse the extension of time to lodge an objection. The AAT determined that an extension of time could be granted.
8. On 11 December 2024 an objections officer made a decision to partially allow Ms Shepherd's objection in establishing Reason 8A and varied the decision of the delegate as follows:
   • For the period 1 November 2021 to 28 April 2024 Mr Spencer's ATI is set to $165,000.
9. On 17 December 2024 Ms Shepherd sought further review with the Administrative Review Tribunal (the Tribunal). There has been a further change of assessment decision made on 26 August 2024 when the following decision was made:
   • For the period 29 April 2024 until a terminating event occurs for [Child 1] the annual rate of child support payable by Ms Shepherd shall be set at $5,000.

• The decision setting Mr Spencer's income at $165,000 shall cease to apply from the 29 April 2024.

1. This means that any decision of the Tribunal in relation to this change of assessment decision can only apply to 28 April 2024.
2. Directions were issued to both parties on 19 June 2025 and post-hearing directions were issued on 5 August 2025 to Mr Spencer. On 2 October 2025 Ms Shepherd and Mr Spencer both gave evidence under affirmation during a telephone hearing. The Tribunal considered the documents and information provided by Child Support and both parties prior to the hearing, the information provided by Mr Spencer after the hearing as well as the oral evidence of both parties.[1] Relevant aspects of the material and evidence will be referred to in the Tribunal's Reasons for Decision.

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act.
2. Section 98C of the Assessment Act establishes a three-step process to be satisfied: that there is a ground for departure; that it is just and equitable to depart; and that it is otherwise proper to make a departure determination. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Is there a reason to depart from the administrative assessment of child support?

1. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Paragraph 117(2)(c) of the Assessment Act - commonly referred to as "Reason 8A" - states as follows: "that, in the special circumstances of the case, application in relation to the child ... relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child ... (ia) because of the income, property and financial resources of either parent".
2. The term "special circumstances" is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
3. As a starting point the administrative assessment of child support from 20 November 2021 was based on Mr Spencer's 2019/2020 ATI of $103,128.
4. Mr Spencer confirmed he is a joint director and one of two shareholders for [Business 1] ('the company'). The company commenced trading on 28 June 2003. On 11 August 2017 Mr Spencer was one of four company directors. Company records show that [Business 2] held 552 ordinary shares out of a total of 3000 ordinary shares issued.[2] On 23 September 2020 two of the directors sold their remaining shares in a share buyback scheme which meant that only three shareholders remained which included Mr Spencer as the director of [Business 2], ordinary shares reduced from 3000 to 1544. As a result of the share buyback [Business 2] increased their shareholding from 20.7% to 40.2%. Mr Spencer explained that the [Business 2] number of shares issued remained the same, but the entities shareholding increased because the number of shareholders decreased.
5. On 21 September 2021 there was a further share buyback where the ordinary shares reduced from 1544 to 1073. [Business 2] increased its shareholding from 40.2% to 57.9% with the other shareholder holding 42.1%. Mr Spencer said the increase of the shareholdings in [Business 2] and the other shareholder was funded by the company share buyback. Mr Spencer also said there is a vendor loan of $550,000.
6. The Tribunal is satisfied that Mr Spencer is a director of the company and owns 57.9% shares in the company. Ms Shepherd wanted to know how Mr Spencer funded the share buybacks given in her view, his ATI income seems to be quite low.
7. Mr Spencer is employed by the company and is also one of two directors. Mr Spencer confirmed that he works full time for the company as a project manager and director, his background profession is as [an occupation 1]. He receives a salary from the company as the director and project manager, he can also receive dividends. The company provides large scale [service 1]. Mr Spencer explained that this is a highly specialist field and there are limited companies who undertake this work. Mr Spencer said the company employs 12 full-time employees in the office and 30 employees across the company, they also employ subcontractors for specialised jobs when required.
8. In the 2021/2022 financial year Mr Spencer's taxable income from the company was $158,836 which includes supplemental income of $38,943. His ATI was assessed as $136,830. Mr Spencer paid $19,263 in personal superannuation contributions.[3] Adding back superannuation contributions, the Tribunal is satisfied that Mr Spencer's ATI is more accurately reflected in an ATI of $156,066.
9. In the 2022/2023 financial year Mr Spencer's taxable income was $218,626. Gross income from employment was $142,159, supplemental income was $76,467 with a taxable income of $210,138 and personal superannuation contributions of $5,474.[4] Adding back superannuation contributions means that Mr Spencer's income for the 2022/2023 financial year is more accurately reflected as an ATI of $215,612.
10. The Tribunal is satisfied that Mr Spencer's income from employment in the 2021/2022 and 2022/2023 financial years was significantly higher than the income used in the formula assessment of child support from 20 November 2021. Accordingly, a ground for departure in accordance with subparagraph 117(2)(c)(ia) of the Assessment Act, commonly known as Reason 8A, is established.

Would a departure from the administrative assessment be just and equitable?

1. Having found that special circumstances exist such that the administrative assessment has resulted in an unjust and inequitable result, so a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Assessment Act, the next step for the Tribunal is to consider whether it is just and equitable to depart from the administrative assessment.
2. In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to whom they have a duty.

1. In relation to the proper needs of the child, the Assessment Act provides that 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 Assessment Act).
2. The child support assessment for [Child 2] ceased on 18 November 2023. Both children attend private schools and [Child 2] finished school at the end of the school year in 2023. [Child 1] is currently in year 11. The school fees are shared equally by Ms Shepherd and Mr Spencer. Ms Shepherd said that [Child 1] is managing alright at school. She has [a medical condition] but there are no special needs for [Child 1] in relation to this condition. Ms Shepherd said [Child 1] plays soccer in a community team. Both parents said there were no additional costs for [Child 1] which were outside the usual costs associated with having a teenager. Both parents said that there were no additional costs which should be included for the purposes of the administrative assessment of child support.
3. Both parents confirmed that [Child 2] (when he was a child of the assessment) was working after school and on weekends in a casual job and agreed his income would not be enough to support him. Both parents confirmed that neither [Child 2] nor [Child 1] have any income or assets of their own.

The income, property and financial resources of Ms Shepherd

1. Ms Shepherd confirmed that she works full time as [an occupation 1] at a special school, employed by [Employer 1]. She obtained a permanent position in 2022 and prior to this, worked on a casual and temporary basis.
2. Evidence before the Tribunal shows Ms Shepherd is paid fortnightly and her base salary is $125,763.[5] Ms Shepherd's individual tax return (ITR) for the 2021/2022 financial year shows a taxable income of $107,942 with deductions totalling $1,629.17 with an ATI of $106,316.[6] Ms Shepherd's ITR for the 2022/2023 financial year shows a taxable income of $115,092 with deductions totalling $3,754.57 with an ATI of $112,731.[7]
3. Ms Shepherd owns her own house and has an outstanding loan on the property.[8] She has an industry superannuation fund which on 30 June 2023 had a balance of $148,472.[9] Ms Shepherd has not made any additional contributions to superannuation above her employer guarantee contributions.

The income, property and financial resources of Mr Spencer

1. In addition to Mr Spencer's income from employment the Tribunal notes that significant funds have been distributed into the [Family Trust 1] from the [Family Trust 2] which are dividends paid by the company.
2. It has been well established by the Court that the financial resources of a parent resulting from a company or trust structure may mean that their ATI may not be a true reflection of their financial position. While the Tribunal acknowledges that managing income through these structures is legitimate for taxation purposes, it may not accurately reflect the parent's financial position for child support purposes.
3. In Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39, the Court said that the Tribunal was "entitled" to find that the facts of the case established something special or out of the ordinary. The Tribunal had found that (at [26]):

as a result of the benefits that Ms Costa's company structure provides to Mr Costa, and the fact that the value of these resources are not properly reflected by his taxable income, there are special circumstances in this case that make the administrative assessment unjust and inequitable. The ground for departure in sub-paragraph 117(2)(c)(ia) does exist in this case[.]

1. Mr Spencer confirmed that he receives distributions from the company. These are paid to [Family Trust 2] and distributed through to the [Family Trust 1]. It would seem that one of these entities is the corporate Trustee for [Business 2].
2. On 30 June 2022 the Tribunal notes that income from the [Family Trust 2] of $27,212 was distributed to the [Family Trust 1].[10] The assets of the [Family Trust 1] include the shares in the company of $417,919 and a loan from Mr Spencer of $417,589. This seems to be for the purchase of some of the shares in the company for the share buyback and contradicts Mr Spencer's statement that all of the funds for the share buyback were paid by the company. The cash and cash equivalents in the [Family Trust 1] at this time was $50.
3. On 30 June 2022 the beneficiary accounts of the [Family Trust 1] show an opening balance of $16,437, and an increase of $27,212 with total drawings of $43,649. The Tribunal is satisfied that the $43,649 is a financial resource available to Mr Spencer and should be added to his ATI for the 2021/2022 financial year. The Tribunal is satisfied that Mr Spencer's income for the 2021/2022 is more accurately reflected as $199,715 ($156,066 plus $43,649).[11]
4. On 30 June 2023 the [Family Trust 2] received $57,336 in dividends.[12] After costs $56,747 was distributed to the [Family Trust 1].[13] On 30 June 2023 the [Family Trust 1] shows dividends received of $58,000.[14] Following expenses the distribution of income was $57,336.[15]
5. Current assets held in the [Family Trust 1] increased by $85,840 from the previous financial year with the total assets of the [Family Trust 1] increasing from $417,969 from 30 June 2022 to $503,809 on 30 June 2023.[16] It looks like the loan to the [Family Trust 1] of $417,919 was repaid to Mr Spencer by 30 June 2023 as it ceased to exist on the balance sheet. The balance sheet also shows current assets included other receivables of $85,840 which is an increase from $50 of cash and cash equivalents held in the [Family Trust 1] on 30 June 2022.[17]
6. The Tribunal is satisfied that Mr Spencer had access to financial resources in addition to his ATI in the 2022/2023 financial year. As stated, the Tribunal is satisfied that Mr Spencer's ATI for the 2022/2023 financial year was $215,612.[18] He received distributions from the [Family Trust 1] of $57,336 with further receivables being $85,490. The Tribunal is satisfied that Mr Spencer's access to financial resources is more accurately reflected in an ATI of $358,438.

1. The Financial Statements on 30 June 2022 show trading income for the company of $7,276,382,[19] with a gross profit of $1,405,576[20] and a net loss after expenses of $1,301,981.
2. Ms Shepherd raised the issue of management fees and thought a portion of those management fees would be paid to Mr Spencer. Mr Spencer said the management fees are charged to the subsidiary companies and is not income he directly receives.
3. The Tribunal is satisfied that if Mr Spencer received additional income from the company, it would be recorded on his ITR or in the trust's financial statements. The Tribunal is satisfied Mr Spencer receives dividends from the company, and this is clearly shown in the Notes to the Financial Statements which show a loan to the [Family Trust 1] of $27,840. The Tribunal is satisfied that this is a dividend payment from the company distributed to the trusts and is shown on the balance sheet for the [Family Trust 1] as distribution of income (dividend). The Tribunal is satisfied that this is a payment from the company to the trust and in effect to Mr Spencer.[21]
4. The Financial Statements on 30 June 2023 show trading income of $12,706,227 with gross profit of $3,737,520,[22] with net profit after expenses of $825,589,[23] and dividends paid of $100,000.[24]
5. In the Notes to the Financial Statements the Tribunal notes there is a related party loan to the [Family Trust 1] of $84,840. As this is an asset of the [Family Trust 1] the Tribunal is satisfied that this is not a loan but rather a payment to Mr Spencer to the Trust from the company.[25] Mr Spencer also received dividends for the 2022/2023 financial year.[26]

1. [Business 3] is a subsidiary company to [Business 1] (which has been previously referred to throughout these Reasons as the company). The 2021/2022 tax return shows the company did not generate an income for that year.[27]
2. [Business 4] is also a subsidiary company to [Business 1]. The company tax return for the 2021/2022 financial year shows gross income of $1,709,864 with deductions totalling $1,613,546 and a profit of $96,318. With previous tax losses from 2021/2022 carried forward of $160,053 the company did not make a profit.
3. For the 2022/2023 financial year [Business 4] shows gross income of $2,385,338 with expenses totalling $2,355,062 and a profit of $30,276. With tax losses carried forward this company did not make a profit.[28]
4. [Business 5] is also a subsidiary company to [Business 1]. The company tax return for the 2022/2023 financial year shows gross income of $1,897,111 with expenses totalling $1,890,014 and a profit of $7,097.
5. The Tribunal is satisfied that the subsidiary companies made minimal profit and will not attribute this to Mr Spencer because the Tribunal intends to increase Mr Spencer's ATI for the 2022/2023 financial year.

1. The Tribunal is satisfied that Mr Spencer has access to financial resources in excess of his ATI and sets his ATI as follows:
   • For the period 1 November 2021 to 30 June 2022 Mr Spencer's ATI is set at $199,715.
   • For the period 1 July 2023 to 28 April 2024 Mr Spencer's ATI is set at $358,438.

Will there be resulting hardship from a departure from the administrative assessment?

1. In determining whether a change of assessment should occur the Tribunal needs to consider whether there will be resulting hardship for either parent or the children in the making or not making of a departure determination (paragraph 117(4)(g) of the Assessment Act).
2. Mr Spencer was assessed to pay child support based on the formula assessment of $11,814 for the period 20 November 2021 to 20 June 2022. This assessment used Mr Spencer's ATI of $103,128 for 2020/2021 financial year and Ms Shepherd's ATI for the same year of $83,626.
3. Following the change of assessment decision by the delegate which set Mr Spencer's ATI to $165,000, the change of assessment decision increased Mr Spencer's annual rate of child support from $11,814 to $21,144.[29]
4. There are two children in the formula assessment for child support until 18 November 2023, the Tribunal's decision will increase Mr Spencer's child support liability for the period 1 November 2021 to 30 June 2022 from $11,814 to $21,666 creating an arrears for Mr Spencer of $9,852. Mr Spencer has already paid this arrears as the child support amount payable is similar to liability which arises under the change of assessment decision already made by Child Support which is the subject of this review.
5. Setting Mr Spencer's ATI to $358,438 from 1 July 2023 to 28 April 2024 will result in an increase in child support payable by Mr Spencer from 1 November 2022 to approximately $25,220 for [Child 2] and [Child 1], which does not result in an increase of child support payable by Mr Spencer when compared with the increase in child support arising from the change of assessment decision by Child Support which is the subject of this review.
6. On 18 November 2023 [Child 2] ceased to be a child of the assessment. The child support assessment in place for the period 19 November 2023 to 31 January 2025 resulted in Mr Spencer's annual child support liability being $11,832, this was based on the change of assessment decision to record his ATI as $165,000 which is the subject of this review.[30]
7. Applying the Tribunal decision to set Mr Spencer's ATI to $358,438 from 1 July 2023 will result in an increase of annual child support payable by Mr Spencer for [Child 1] from $11,832 annually to approximately $17,522 annually for the period 18 November 2023 to 28 April 2024. This will create an arrears of approximately $5,720 for Mr Spencer annually but will be less than this because it applies for 23 weeks of the year and will be approximately $2,530.
8. The Tribunal is satisfied that this decision will not cause hardship to Mr Spencer and will provide Ms Shepherd with a fairer assessment of child support to her for the relevant period given the Tribunal's finding that Mr Spencer has access to financial resources in excess of his ATI used in the formula assessment for the 2022/2023 financial year.

Is it otherwise proper to make a particular departure determination?

1. 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 Assessment Act.
2. Subsection 117(5) of the Assessment Act sets out the matters that must be considered when deciding whether it would be "otherwise proper" to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the 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. Paragraph 117(5)(b) of the Assessment Act means that 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.
3. The Tribunal is satisfied that it is otherwise proper in the circumstances to depart from the administrative assessment of child support.
4. The Tribunal notes that it is open to either party to lodge further change of assessment applications should future circumstances of either party change significantly from the circumstances upon which this decision is based.

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

• For the period 1 November 2021 to 30 June 2022 Mr Spencer's ATI is set at $199,715.

• For the period 1 July 2023 to 28 April 2024 Mr Spencer's ATI is set at $358,438.

[1] Section 23 and section 25 statement and documents provided by Child Support in accordance with the Administrative Review Tribunal Act 2024 which the Tribunal refers to as the hearing papers (420 pages). Documents provided by Ms Shepherd (A1-A86) and Mr Spencer (B1-B219).

[3] B12-B14 of Mr Spencer's submissions.

[4] B21-B25 of Mr Spencer's submissions.

[5] A18-A23 of Ms Shepherd's submissions.

[6] A10-A12 and A16 of Ms Shepherd's submissions.

[7] A13-A15 and A17 of Ms Shepherd's submissions.

[8] A44-A53 of Ms Shepherd's submissions.

[9] A21-A43 of Ms Shepherd's submissions.

[10] B174 and B176 of Mr Spencer's submissions.

[11] 2021/2022 financial year ATI shown in paragraph 20 of these Reasons.

[18] See paragraph 21 of these Reasons.

[25] There exists no loan documents or requirements for Mr Spencer to repay this amount.

[26] See paragraph 36 of these Reasons.

[27] B29-B40 of Mr Spencer's submissions.

[28] B133-B140 of Mr Spencer's submissions.