Issued
07 Feb 2019
Decision
07 Feb 2019
Court
NZHC
Appeal Status
Pending

High Court clarifies the meaning of “year” for calculating “ongoing daily care” for the Child Support Act 1991

When there is change to ongoing daily care of a child across two child support years, the calculation of the percentage change to ongoing daily care is not split into two separate child support years.

Case
P v Commissioner of Inland Revenue & Ors [2018] NZHC 98
Legal terms
Year, Ongoing daily care

Summary

When there is change to ongoing daily care of a child which falls across two child support years (as defined) the calculation of the percentage change to ongoing daily care is not split into two separate child support years.

Impact

The judgment is an important one for the administration of child support and for changes in the ongoing daily care of a child. The judgment recognises the Commissioner of Inland Revenue's ("the Commissioner") practice when calculating whether there has been a change to the percentage of ongoing daily care (of not splitting it into child support years) is consistent with the scheme and purpose of the Child Support Act 1991 ("the Act").

Facts

This was a judicial review of a decision by the Commissioner regarding child support.

P provided ongoing daily care for her daughter. The father lived in Australia and paid child support. By agreement between P and the father, the child went to stay with the father in December 2017.

There was some disagreement between P and the father about the intended length of the child's stay. P considered the stay would be a short term one that fell over two child support years. She considered this was two short term stays split over two consecutive child support years. The father considered it would be for the long term. The child stayed with the father until July 2018.

The father advised Inland Revenue that the child was living with him. The Commissioner took the view there was a change of circumstances in the ongoing daily care of the child. The father's child support liability was adjusted to nil. P was advised she would no longer receive child support payments.

P objected on the basis the stay was a "three month per year" change using a child support year. On that basis her ongoing daily care of the child did not drop below 35% in any given child support year. The Commissioner disallowed the objection on the basis the Commissioner must give effect to any change in circumstances from the day before the date the liable parent (the father) ceases to be liable under s 25 of the Act. In this case the date P ceased to provide 35% of the ongoing daily care. The Commissioner did not consider she was constrained to using "child support year" but made the calculation commencing on the day before the day the care fell below 35% of the ongoing daily care.

Decision

Justice Palmer accepted the Commissioner's position. His Honour expressly stated:

  • [2] I do not accept the child support year is the only possible basis for calculating the period over which ongoing daily care is assessed. Usually, the relevant period can be expected to be the term of the arrangement, or the period of the regular pattern, of care being assessed by the Commissioner. The Commissioner will need to assess whether short term changes to an arrangement or regular pattern change the overall relative proportions of care on the basis of the circumstances of each case. The key requirement on parents is to be clear in agreeing on their childcare arrangements and to communicate that to Inland Revenue.

His Honour noted there was neither an explicit statement specifying the period over which the costs of caring for a child are to be calculated (at [17]) nor a definition of "ongoing daily care" (at [19]).

His Honour considered the general scheme and purpose of the Act and, in particular, the purpose of amendments to the Act in 2013 to recognise changes in patterns of parenting since 1991. His Honour continued:

  • [34]The legal issue in this case centres on the meaning of "ongoing daily care" and how a percentage of ongoing daily care is calculated. In particular, s 25(3)(b) provides liability ceases when the receiving carer ceases to provide "at least 35% of ongoing daily care". But 35 per cent of ongoing daily care over what period? The Act does not say. Neither does the legislative history. I have found no case law that is directly on point. The cases about who was a "principal provider of ongoing care" or "shared care" under the previous legislative regime do not assist.
  •  
  • [35]I do not accept P's submission that the child support year is the only possible basis for calculating the period over which ongoing daily care is assessed. That is inconsistent with the purpose of the 2013 amendments in taking into account a wider range of circumstances. Sections 79 and 80 support that by enabling the Commissioner to make an assessment on the basis of less than a year. The relative capacity of parents to provide financial support and their relative levels of care, recognised in s 4(d), must not be determined artificially or mechanistically according only to the Act's definition of a child support year. Rather, it must equitably reflect the circumstances of those involved.

Justice Palmer recognised the Commissioner's approach was pragmatic and consistent with the Act provided the Commissioner genuinely examines the circumstances of each case and does not apply her policy mechanically (at [38]).

Child Support Act 1991