Editors --- "Family tax benefit and shared care" [2005] SocSecRpr 1; (2005) 7 Social Security Reporter, Article 1

• Family tax benefit and shared care

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Family tax benefit and shared care

The Federal Court decision in Wade v Secretary to the DFaCS (decided 20December 2004 and reported in this issue) is the first matter in which the issue of shared care and entitlement to family tax benefit has been judicially considered. The Court acknowledged that the family tax benefit legislation provides no guidance as to how a person’s percentage of family tax benefit for a child in a shared care situation is to be determined. However, the decision in Wade itself provides only limited guidance on this issue.

The Court considered the objects of the legislation, namely to provide a benefit to the person having the care of a child, and determined that to be consistent with this object the percentage of care to be assigned to each person should reflect the actual care provided by them. However, the assessment of actual care could be based on the number of days in care or hours in care, depending on the circumstances of the case. This approach affirmed the Guidelines used by the Family Assistance Office, in determining the issue of apportionment of family tax benefit.

Greater guidance on the issue of apportionment is given in the decision of the AAT in Nowicz and Secretary to the DFaCS [2001] AATA 628 in which the Tribunal held it was necessary to look at a pattern of care over time, but that minor variations did not affect the percentage of family tax benefit payable overtime. It was considered to be necessary to take a common-sense approach and to look at all available documentation in order to establish such a pattern of care. This included Court orders and the evidence of both parties as to past care and the intended care for the future. The Tribunal also considered that once a pattern of care was established it was only appropriate for a variation in the rate of family tax benefit to occur where there was a significant departure from the already established pattern of care. The Tribunal considered that the relevant legislation was not concerned with patterns of expenditure on children and was based purely on time in care.

Despite the approach in Nowicz two AAT decisions have considered and taken account of financial factors in determining the appropriate apportionment of family tax benefit. In Daly and Secretary to the DFaCS [2004] AATA 1309 the Tribunal noted that temporal care, that is the number of days Daly’s children were in his care, was 20percent for the relevant period, but this did not reflect the mother’s greater financial outlay in that period. Instead the Tribunal weighed both financial and temporal factors to determine that entitlement to family tax benefit for Daly was only 15 percent. The Tribunal said:

As a matter of policy FTB is intended to assist with such essential costs of caring for children. It is appropriate, therefore, to consider the proportionality of FTB payments on the basis of temporal as well as financial factors.

Similarly, in Feeney and Secretary to the DFaCS, (decided 25 August 2005 and reported in this issue), the AAT considered the financial expenditure of both parents but came to the conclusion that there was no compelling evidence that such expenditure was disproportionate to the amount of time the children spent in the care of each parent. Feeney also provides useful guidance in those circumstances where, on the evidence, the actual pattern of care cannot be reliably ascertained. In those circumstances the AAT determined that it was appropriate to apportion family tax benefit based on the Court order, with the proviso that in Feeney, the Tribunal was satisfied that the pattern of care was reasonably consistent with the relevant Family Court order. A similar approach was taken in Hoffman and Secretary to the DFaCS [2005] AATA 352, where there was conflicting evidence about the reliability of diary material purporting to show the care provided.

[A.T.]