2.6.7 Reason 1 - high costs in enabling a parent to spend time with, or communicate with, a child
A parent or non-parent carer can apply for a change of assessment in special circumstances if the costs of maintaining a child are significantly affected by the high costs of enabling a parent to spend time with, or communicate with, the child.
If the parent's capacity to support the child is affected by their high costs in spending time with another child or person whom they have a legal duty to maintain, this can be addressed under change of assessment Reason 9 (2.6.15).
CSA Act section 98C, section 98S, section 117
On this page
- Grounds for departure under Reason 1
- Who can apply under this reason?
- Are the costs high?
- High costs that significantly affect the costs of maintaining the child
- What costs can be included?
- How are the costs measured?
- Distinguishing the costs from necessary commitments for self-support
- Do the high costs make it 'just and equitable' to change the assessment?
- The kinds of decisions that reflect the high costs
- Duration of a change of assessment for this reason
Grounds for departure under Reason 1
There may be a reason for changing an assessment if, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of high costs involved in enabling a parent to spend time with, or communicate with, the child (section 117 (2)(b)(i)).
The phrase 'special circumstances of the case' is not defined in the CSA Act. The Family Court 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).
Who can apply under this reason?
The payer and the payee are both entitled to apply under this reason in relation to the costs incurred in enabling a parent to spend time with, or communicate with, the child.
Are the costs high?
A parent's costs are high if during a child support period (2.3) they total more than 5% of the parent's adjusted taxable income for the period (section 117(2B)).
The parent's adjusted taxable income for the period is calculated by:
- dividing the parent's adjusted taxable income (188.8.131.52) for the period (which is expressed as an annual figure) by 365, and
- multiplying by the number of days in the period.
The Registrar will use the parent's adjusted taxable income for the child support period in which the costs are, or will be, incurred. This will be the income for the last financial year that ended before the start of the child support period, unless:
- the parent has elected to have their child support based on an estimate of their current income (2.5.1) (in which case, the Registrar will calculate the threshold using the parent's estimated income), or
- the parent has made an application under section 44 of the CSA Act to have post-separation income (2.5.2) disregarded (in which case the Registrar will calculate the threshold using the adjusted taxable income determined for that parent under section 44), or
- the parent's adjusted taxable income amount has been varied by:
(in which case the Registrar will calculate the 5% threshold using the parent's adjusted taxable income (184.108.40.206) as amended by that agreement, court order or prior change of assessment decision).
The Registrar will use the following method to calculate whether the parent's costs are high in a case where their adjusted taxable income changes within the child support period (2.3.1) (e.g. because the parent lodged an estimate of their income within the child support period):
- Work out the parent's costs for the whole child support period.
- Divide the child support period up into separate sub-periods according to the dates to which the different adjusted taxable incomes apply.
- Calculate the number of days in each sub-period.
- For each 'sub-period', divide the adjusted taxable income by 365 then multiply the result by the number of days in the 'sub-period' to calculate the sub-period adjusted taxable income figure.
- Work out the sum of all the sub-period adjusted taxable income figures.
- Are the costs at step 1 more than 5% of the total amount at step 5?
- If yes, the parent's costs are high.
Other relevant matters
The following factors can also be relevant:
- Whether the arrangements for spending time with, or communicating with, the child are as ordered by a court or agreed between the parents, for example in a parenting plan.
- Whether the application is made prior to the costs being incurred. A prior pattern for spending time with, or communicating with, the child can be considered. Anticipated costs can be taken into account but there must be a reasonable expectation that the costs will be incurred.
- Whether the parent can substantiate the costs.
High costs that significantly affect the costs of maintaining the child
If satisfied that the costs are high, the Registrar must decide whether the costs of maintaining the child are significantly affected by those high costs. The extent to which the costs exceed the 5% threshold is relevant. If the costs are only slightly higher than the threshold, they might not significantly affect the costs of maintaining the child.
What costs can be included?
The costs included in the change of assessment application must relate to enabling the parent to spend time or communicate with the child, rather than to enjoy that time or communication (Hall and Rushton (1991) FLC 92-249). Telephone and internet costs can be considered as well as accommodation and transport (Gyselman and Gyselman (1992) FLC 92-279). Transport costs include parking costs, road tolls, train, ferry, taxi or bus fares, airfares, the cost of car hire, and motor vehicle expenses. However, the cost of entertainment cannot be included, as this is a cost of enjoying, rather than enabling, time with the child, or communication with the child.
From 1 July 2008, where a parent has at least regular care (2.2.1) of a child, the only costs that can be taken into account under this reason for that parent are costs related to travel to enable the parent to spend time with, or communicate with, the child (section 117(2C)).
Legal costs incurred by either parent to establish, modify, or enforce arrangements can be significant. However, the courts have held that these expenses cannot appropriately be included as a cost of enabling them to spend time with, or communicate with, the child for the purposes of departing from a child support assessment (MAV & NTV  FMCAfam 261 (31 May 2005)). The Registrar must consider each case on its merits, but will take into account relevant decisions of courts and tribunals. Consequently, a change of assessment application based on legal costs incurred by a parent in establishing contact with a child is unlikely to succeed.
Costs of travel
The costs of travel can include actual transport costs (airfares, petrol, etc.) as well as the cost of any accommodation that is incidental to the travel, but not the costs of accommodation that is for the purpose of having contact with the children.
Example: The paying parent lives in Sydney and the child lives in Brisbane. The parent drives to see the child and spends the night in Port Macquarie on the way. After they collect the child, they pay for accommodation at a caravan park in Brisbane. If the paying parent has at least regular care of the child they can claim the cost of staying at Port Macquarie and the cost of fuel in driving to Brisbane, but NOT the cost of staying with the child in the caravan park.
How are the costs measured?
Some factors that affect the way costs are identified and measured are:
- Motor vehicle costs - when calculating motor vehicle expenses the Registrar will generally accept that the actual cost (rather than the tax rate, AAA, NRMA, RACQ or other motor association rate) is allowable (Houlihan and Houlihan (1991) FLC 92-248). The tax rate is designed for car travel up to 5000 km to take account of the additional costs of acquiring and maintaining a commercial vehicle and is not an appropriate measure for the costs. In considering a parent's actual costs, the proportion of use of the vehicle for the purposes of spending time or communicating with the child should be considered.
- Discounted fares and frequent flyer points - a parent is expected to arrange cost effective travel for themselves or the children wherever possible, and this will be taken into account when calculating the costs.
- A parent or child's travel costs that are met via an allowance from an employer or salary sacrifice arrangement (rather than the parent paying for those costs directly) are considered to be the parent's costs if the allowance/fringe benefit is included in the parent's adjusted taxable income.
- Dual purpose costs - if the costs are incurred for dual purposes or mixed-occasion visits, such as a wedding, funeral or business trip, only a portion of the costs can be considered.
- Costs of food - the cost of food for children is not included (Gyselman and Gyselman (1992) FLC 92-279) although the cost of food for the parent on a trip to spend time with the child may be included in extraordinary circumstances.
- Telephone and internet costs - the relevant portion of these costs can form part of the costs to communicate with the child.
- Accommodation costs - accommodation costs must be reasonable and necessary to enable the parent to spend time with the child without being demeaning. Family-type accommodation is regarded as appropriate rather than a luxury hotel.
- Documentary confirmation of costs - the costs should be verified by appropriate documentary evidence such as hotel/motel receipts, credit card statements, petrol receipts and itemised telephone bills. Costs must be reasonable and in proportion to the income of the parent.
Distinguishing the costs from necessary commitments for self-support
In some applications for a change to an assessment, the costs claimed may relate to accommodating the children at the payer's home. However, the costs must relate to the child rather than to the parent.
Example: The difference between renting a one-bedroom unit and a 3-bedroom unit to provide accommodation during substantial periods spent with the child.
Any costs relating to a parent's self-support must be separated from their overall costs. The Registrar will consider the proportion of the accommodation that relates to the children and the frequency of the time spent together.
Do the high costs make it 'just and equitable' to change the assessment?
Once the high costs are established, and the fact that the costs significantly affect the cost of maintaining the child/ren is accepted, the Registrar must consider whether it would be just and equitable (2.6.17) to change the assessment. The decision must also be otherwise proper (2.6.18).
In considering if it would be just and equitable (2.6.17) to change the assessment, the Registrar will consider any court orders made regarding the management of spending time with, or communicating with, the child, especially where the court order directs that costs be shared. The Registrar will also take into account any relevant parenting plan. The Registrar will also consider other elements including:
- the child's need to be supported by, and spend time with, or communicate with, both parents
- the contribution each parent makes to the costs
- the necessary commitments of each parent relative to their respective capacity to contribute
- any hardship which would be caused to either parent
- any other relevant factor.
A parent's actual income in the relevant period as well as their adjusted taxable income (220.127.116.11) will be considered. If the parent's current income is different from their adjusted taxable income, this will also be a factor for the Registrar to weigh up in considering whether it would be just and equitable (2.6.17) to change the assessment.
If the parent's income is high and all of their necessary costs are met (including the costs to enable them to spend time with, or communicate with, the child) then the costs, however high, might not significantly affect their capacity to support the child and it may not be just and equitable to change the assessment.
The kinds of decisions that reflect the high costs
One of the principles of child support is that parents should generally meet the costs of their children according to their respective available resources. Where the costs of the children are high due to the special circumstances of the case, it is often appropriate to share those higher costs between the parents in a similar way.
When the Registrar determines that the costs of maintaining a child are significantly affected by the high costs of enabling a parent to spend time with, or communicate with, the child, it may not be appropriate to deduct (or add) all of the costs over the 5% threshold from (or to) the child support payable, because this would shift the whole of the obligation to pay the high costs from one parent to the other.
The Registrar may therefore allocate the costs (over the 5% threshold) to the parents according to their percentage of the combined child support income (2.4.4):
- If the receiving parent is meeting the additional costs, by adding the paying parent's share to the child support payable, or
- If the paying parent is meeting the additional costs, by deducting the receiving parent's share from the child support payable.
Example: A paying parent has established high contact costs of $4,000 and they are meeting these costs in full. The paying parent has an adjusted taxable income of $60,000 so the threshold amount is $3,000 (i.e. 5% of $60,000). The total high contact costs of $4,000 are reduced by the 5% threshold amount ($4,000 - $3,000 = $1,000).
The receiving parent's share of the combined child support income is 30% so their share of the high costs is $300 (i.e. 30% of $1,000). As the paying parent is meeting the additional costs, the receiving parent's $300 share of the high contact costs is deducted from the child support payable of $6,000. The paying parent therefore has a reduced child support payable amount of $5,700.
The Registrar may also increase a parent's self-support amount (18.104.22.168) (referred to as the 'exempted income amount' in the child support formula pre-July 2008) to reflect the amount that that person would have to earn to meet the costs that exceed the 5% threshold (Houlihan and Houlihan (1991) FLC 92-248). Because costs in excess of the threshold are measured over the child support period, these costs must be adjusted to an annual figure before being grossed up to obtain a pre-tax figure. This is done by dividing the costs in excess of the threshold by the number of days in the child support period (2.3.1) and multiplying that amount by 365. The Registrar will then gross up the parent's annualised costs in excess of the 5% threshold, using the appropriate marginal tax rate based on the parent's taxable income.
The above approaches allow the parent to use other administrative options such as an estimate of current income and to have changes in care taken into account if necessary. In other cases, the circumstances of the case may indicate an alternative type of decision is appropriate, especially if there are a number of reasons included in the application for a change to the assessment.
Duration of a change of assessment for this reason
Where there is a decision to change an assessment because of the high costs of enabling a parent to spend time with, or communicate with, the child, the length of time the decision will apply depends on the circumstances of the case. If there is a regular pattern with consistent expenditure, the decision may be of a longer duration than a case where it is irregular and expenditure varies greatly from period to period. Where a pattern is not established but there has been an order of a court in relation to the issue of time spent or communication with the child, a decision for a shorter duration might be made.