Consideration of Child Support Income - Earning Capacity versus Actual Income?
Posted: 30th April 2015
Posted in: News
Posted by: Dean Evans, Partner
The Full Court of the Family Court in the case of Yip & Wreford and Anor  dismissed a father’s appeal where his child support income was increased by the Child Support Agency (CSA) to $217,000.
The Court considered the SSAT’s approach to the father who resigned his long-term employment to form a profitable company with his new partner.
The Court considered the distinction between “earning capacity” under section 117(4)(da) and “capacity to derive income” under section 117(7A)(a) of the Child Support Assessment Act (CSAA).
The facts of the matter were:
- The father resigned from his long term employment as a manager of a large company in June 2011. He lodged an income estimate with the CSA of nil. It was previously $115,000 per annum.
- The father and his new partner commenced a company with a turnover of more than $500,000 in the year ending 30 June 2012.
- The mother applied to the CSA.
- The father’s child support income was increased by a case officer from nil to $115,000.
- The father requested a review. Income was then set at $217,000 per annum by the SSAT.
- The father then applied to the Federal Circuit Court for review. This application was dismissed. The father appealed to the Full Court of the Family Court.
How was the figure of $217,000 reached?
In setting the father’s annual income at $217,000, the SSAT considered the income and expenses of the company, adjusted the business expenses claimed, added back the director’s fee paid to the father and his new partner, then divided the result by the ratio that it assessed what the father and his new partner each contributed to the company being 75% in the father’s favour. This percentage of income was then attributed as to the father.
This case is available for you to read at the link set out below.
Yip & Wreford and Anor  FamCAFC 21