The court found that the child's mother was the individual liable for the childcare fees
The Federal Court dismissed an appeal challenging a tribunal's decision on childcare cost liability, affirming that the father was not legally responsible for the payment under the New Tax Act.
In He v Secretary, Department of Education, Skills and Employment [2024] FCA 819, the parties separated in May 2016. Their child was enrolled in Avenues Early Learning Centre. Post-separation interim parenting orders made the father solely responsible for all costs associated with the child's daycare. Later proposed consent orders adjusted this to a 65%-35% split between the father and the child's mother. However, a registrar of the Family Court rejected these proposed orders due to jurisdictional issues under the Child Support Scheme.
The father applied for the Child Care Benefit (CCB) from Centrelink. He sought an internal review and later appealed to the tribunal, which upheld the initial decision, stating that he had not "incurred a liability to pay" for the childcare sessions as defined under the New Tax Act.
The tribunal distinguished between being liable and being responsible for payment, stating that liability involves a legal obligation enforceable by the care provider. The tribunal concluded that the child's mother, as the account holder with Avenues, was the one liable for the fees. Thus, the tribunal affirmed Centrelink's decision.
The father appealed to the Federal Circuit and Family Court of Australia (FCFCOA), which dismissed the appeal. The primary judge found that the child's mother was the person who incurred the legal liability for payment, not the father. The judge noted that the mother's indemnity rights against the father did not alter the fact that she was the liable party.
The judge explained that interpreting "incurred a liability to pay" to include someone without a direct contractual relationship with the service provider would place an undue burden on service providers, contradicting legislative intent.
The father contended that the FCFCOA erred in its interpretation of s. 44(1)(c) of the New Tax Act, arguing that he bore the financial burden due to court orders. However, the Federal Court upheld the primary judge's ruling, stating that "liable to pay" refers to the individual with a direct legal obligation to the service provider. The court found that the orders from the Federal Circuit Court, which directed the father to cover childcare costs, did not create direct liability with Avenues and were unenforceable due to jurisdictional limits under the Family Law Act.
The Federal Court dismissed the father's appeal, concluding that the child's mother was the individual liable for the childcare fees. The court affirmed the tribunal's interpretation of liability and emphasized the importance of a direct legal obligation for payment eligibility under the New Tax Act. The father was ordered to pay the respondent's costs.