Allitt and Tutton (Child support)

Allitt and Tutton (Child support) [2022] AATA 5129 (15 November 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/BC023216
APPLICANT:  Mr Allitt
OTHER PARTIES:  Child Support Registrar
Ms Tutton

TRIBUNAL:Member H Moreland (Presiding Member)
Senior Member J Longo

DECISION DATE: 15 November 2022
DECISION:

The decision under review is set aside and the Tribunal makes a departure determination that Ms Tutton’s income for the purpose of child support is set at $181,500 for the period from 13 May 2021 to 30 June 2023.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – decision to depart - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

The issue to be determined in this application is whether there is a reason to change the administrative assessment of child support and whether it is just and equitable and otherwise proper to do so.
Mr Allitt and Ms Tutton are the parents of [Child 1], [Child 2] and [Child 3]. [Child 1] is no longer an “eligible child” with regard to child support. Mr Allitt and Ms Tutton have two child support cases, one where Mr Allitt is the payer (630600111);[1] and one where Ms Tutton is the parent liable to pay child support (630600119).[2] An application for child support was registered with Services Australia – Child Support (the Agency) from 21 April 2016 and is currently subject to collection. With regard to [Child 2], Mr Allitt has 100% of the care and Ms Tutton has 0% of the care; and with regard to [Child 3], Mr Allitt has 0% of the care and Ms Tutton has 100% of the care.
[1] The Agency papers, p 484.
[2] The Agency papers, p 484.
Prior to the application, Ms Tutton was assessed to pay child support on the basis of her income being $52,638 for the period from 1 November 2021 to 21 February 2022; and Mr Allitt’s income being $90,762.[3]
[3] The Agency papers, p 248.
On 13 May 2021, Mr Allitt applied to the Agency for a departure from the administrative assessment on the basis that, in the special circumstances of the case, the administrative assessment of child support was not reflective of Ms Tutton’s income, property and financial resources (Reason 8A).[4]
[4] The Agency papers, pp 99-106 and 109-110.
On 17 October 2021, the Agency found the reason established and changed the assessment so that Ms Tutton’s income for the purpose of child support was set at $126,000 per annum for the period from 1 July 2021 to 31 October 2023.[5]
[5] The Agency papers, p 16.
On 4 November 2021, Mr Allitt objected to the original decision and on 26 November 2021, Ms Tutton also objected to the original decision. On 19 January 2022, an objections officer decided to set aside the original decision and set Ms Tutton’s income for the purpose of child support as being $135,333 for the period from 1 June 2021 to 31 December 2023.
On 2 February 2022, Mr Allitt lodged an application to the Administrative Appeals Tribunal (the Tribunal) for review of the objections officer’s decision. Directions for this matter were made for the parties to provide additional information following a telephone directions hearing held on 14 July 2022. Mr Allitt and Ms Tutton both participated in the telephone directions hearing, with Ms [A], an Australian legal practitioner, representing Ms Tutton. The application was heard on 7 September 2022, with Mr Allitt, Ms Tutton and Ms [A] all participating via teleconference. The Tribunal considered the documents and information provided to the parties prior to the hearing, as well as the oral evidence of Mr Allitt and Ms Tutton; and additional evidence obtained by the Tribunal.[6] All of this information was exchanged between the parties. The matter was deferred to obtain further information from third parties and the Tribunal reconvened and made its decision on 15 November 2022.
[6] Administrative Appeals Tribunal Act 1975 subsection 37(1) and section 38AA Statement and Documents provided by the Agency numbered 1 to 605; Mr Allitt’s documents numbered A1 to A402; Ms Tutton’s documents numbered B1 to B213; and additional documents requested by the Tribunal (C1-C5; and D1‑D78).

CONSIDERATION

The legislative framework

The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three‑step process to be satisfied:
1)That there is a ground for a departure;
2)That it is just and equitable to depart from the administrative assessment; and
3)That it is otherwise proper to depart from the administrative assessment.
Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.
The Tribunal also referred to the Australian Government Guides to Social Policy Law – Child Support Guide (the Guide) in making this decision. The Guide sets out the approach taken by the Agency in its consideration of social security matters. It expresses policy and the Tribunal is not bound by such policy; however, in Drake and Minister for Immigration and Ethnic Affairs (Drake),[7] the Full Court of the Federal Court held that a Tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the relevant legislation. The Tribunal adopts this approach in the present matter.
[7] (No 2) [1979] AATA 179.

Grounds for departure

Reasons 8A and 8B – the earning capacity, income, property and financial resources of each parent

10.Subparagraph 117(2)(c)(ia) and (ib) of the Assessment Act, commonly referred to as Reasons 8A and 8B respectively, provide that a ground for departure from an administrative assessment exists if:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia) because of the income, property and financial resources of either parent.
(ib) because of the earning capacity of either parent.

The Tribunal notes that the term “in the special circumstances of the case” is not defined in the Assessment Act but that it was established in Gyselman v Gyselman,[8] where it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
[8] (1992) FLC 92-279.

12.In considering the above, the Tribunal is mindful of the requirement of satisfying subsection 117(7A) of the Assessment Act having regard to the capacity of the parent to derive an income, but disregarding the capacity of anyone who does not have a legal duty to maintain the child. To this end, the Tribunal has considered Mr Allitt’s and Ms Tutton’s circumstances as the parents of [Child 2] and [Child 3].
13.With regard to terminology, the Tribunal also notes that generally “adjusted taxable income”, or “ATI”, is calculated according to section 43 of the Assessment Act, comprising the person’s taxable income (as defined under the taxation legislation) as well as other items such as the person’s reportable fringe benefits, target foreign income, net investment loss, specified tax free pensions or benefits and reportable superannuation contributions; and according to 2.4.4 Child support income in the Australian Government Guides to Social Policy Law – Child Support Guide, a person’s adjusted taxable income (ATI) is generally used in administrative assessments for child support.[9]
[9] noted above, the Agency made an administrative assessment, using an income of $52,638 for Ms Tutton for the period from 1 November 2021 to 21 February 2022. This figure was based on two thirds of the Male Total Average Weekly Earnings (MTAWE).[10] As stated at 2.4.2 Formula tables & values in the Guide, the Agency:
[10] The Agency papers, p 493.
The default income that may be used when there is no ATO assessment for a parent for the previous 2 years, or when there is no ATO assessment for a parent is also based on MTAWE, being 2/3 of MTAWE for the relevant year.[11]
[11] discretion provided for under section 117 of the Assessment Act provides that the Tribunal can depart from the administrative assessment and this means that the Tribunal can determine that an income amount other than a parent’s ATI, or 2/3 MTAWE, is to be used for the purpose of calculating the parent’s child support obligation. For clarity, the Tribunal will refer to this figure as the parent’s “income for child support purposes”. Another income amount to be referred to in these reasons is “taxable income” and that is the amount specified in Australian Taxation Office income tax returns.
16.As outlined above, the objections officer decided to depart from the administrative assessment that used $52,638 for Ms Tutton’s income and $90,762 for Mr Allitt’s income for the period from 1 November 2021 to 21 February 2022.
17.As shown in the Agency’s papers, Mr Allitt told the Agency that he believed that Ms Tutton’s income was higher than $52,638 and that Ms Tutton, who is self-employed, had been obscuring the full extent of her income by operating her business under the name “[Company 1] Corporation” which, he said, was registered in the name of their eldest son, [Child 1], who is over 18 years of age. The Tribunal has established that the registered name of the entity in question is [Company 1] Operations Pty Ltd ([Company 1] Operations).
18.On 14 July 2022, following the telephone directions hearing, directions were issued to Ms Tutton to provide, amongst other information, income tax returns for the 2019/20, 2020/21 and 2021/2022 financial periods, to assist in ascertaining Ms Tutton’s income. The Tribunal notes that rather than providing these income tax returns, Ms Tutton provided income tax amendment notices for 2019/20 and 2020/21 and a tax return summary for 2021/22. The Tribunal raised this non-compliance with the Tribunal’s directions with Ms Tutton at the hearing. Ms Tutton told the Tribunal that she had downloaded the documents from myGov and was unaware that the documents she had provided were not the documents she had been directed to provide.

The Tribunal notes that it had evidentiary limitations in determining Ms Tutton’s income for the purpose of this review, not only because it did not have full income tax returns for Ms Tutton but because of the nature of the documents before it. The Tribunal acknowledges that it is not a legal requirement that sole traders maintain financial statements such as balance sheets and profit and loss statements, nor that sole traders operate separate bank accounts for business transactions, but observes that Ms Tutton’s business and personal finances are mingled together, to the extent that they are difficult to separate personal and work‑related expenses.

[Company 2]

20.According to Ms Tutton’s Statement of Financial Circumstances, dated 18 August 2022, and as clarified by Ms Tutton at the hearing, Ms Tutton submits that her total gross weekly income is $900.[12] Ms Tutton told the Tribunal that her income is derived from her business, which she operates as a sole trader, trading as “[Company 2]”. Ms Tutton told the Tribunal that prior to establishing this business, she participated in the New Enterprise Incentive Scheme (NEIS), through which she had obtained a [qualification]. Ms Tutton said [Company 2] had commenced operating in May 2020.
21.[Company 2], Ms Tutton said, provides respite care from her home, and also support work in the homes of clients, or support work taking clients to activities. Ms Tutton explained that “respite” is overnight care provided in the home; and “support work” is other work, such as care in the home of a care receiver or taking clients to activities. Ms Tutton estimated that around 70% of [Company 2]’s business is respite care, with the remainder being support work. The clients, Ms Tutton said, acquire the services of [Company 2], primarily funded by the National Disability Insurance Scheme (NDIS) contracts via local government authorities and other service providers but [Company 2] is not a registered NDIS provider.
[12] Second party papers, p B1.

The objections officer determined that Ms Tutton’s income for the purpose of child support was $135,333.[13] This was calculated by totalling the gross income of [Company 2] of around $320,000 for the nine-month period from 26 June 2020 to 25 March 2021 based on information derived from invoices issued by [Company 2] and bank statements.[14] The objections officer deducted an allowance for GST, and then extrapolated the resulting figure of $290,000 over a nine-month period to find that Ms Tutton’s gross income over a 12-month period was around $386,667. The objections officer then used the ATO Small Business Benchmarks for child care services (the most appropriate index it could identify) to deduct the average amount of deductions (65%) of that annualised figure ($251,336). Deducting that figure from the annualised figure led to the objections officer’s income figure of $135,333 for Ms Tutton. The Tribunal notes there are minor differences in these numbers, in the range of less than $5, probably due to rounding.
[13] The Agency papers, pp 459-460.
[14] The Agency papers, pp 458-459.
In the absence of a higher standard of evidence, such as worksheets included in an income tax return, or financial statements, the Tribunal accepts the calculations of the gross income for [Company 2] on the basis of adding the values of the invoices and the transfers to Ms Tutton’s bank account to determine the gross income that Ms Tutton receives from [Company 2].
The Tribunal asked Ms Tutton about her use of a ([BANK 1]) account ending in [number] more generally, to ascertain whether she used this account for business, or personal expenses, or both. The Tribunal acknowledges Ms Tutton’s submission that it is not a requirement that a sole trader use a separate account for business purposes. Ms Tutton told the Tribunal that she did use this personal account for business purposes but that she didn’t have that many personal expenses.
The Tribunal asked Ms Tutton about a number of transfers to her [BANK 1] account ending in [number]. She acknowledged that these were payments in relation to [Company 2]:
·2 July 2020, $31,036.28 ([Organisation 1]);[15]
[15] Second party papers, p B102.
·3 July 2020, $30,937.56 ([Organisation 1]);[16]
[16] Second party papers, p B102.
·20 August 2020, $27,194.46 ([Council]);[17]
[17] Second party papers, p B111.
·21 August 2020, $28,892.05 ([Organisation 1]);[18]
[18] Second party papers, p B111.
·1 September 2020, $17,067.18 ([provider]);[19]
[19] Second party papers, p B112.
·4 September 2020, $13,914.70 ([Organisation 1]);[20]
·27 October 2020, $63,831.01 ([Council]);[21]
·18 November 2020, $7,343.74 ([Council]);[22]
·2 December 2020, $6,645.84 ([Organisation 1]);[23]
·3 December 2020, $13,385.43 ([Council]);[24]
·17 December 2020, $5,079.36 ([an]Account);[25]
·7 January 2021, $26,298.88 ([Council]);[26]
·14 January 2021, $13,626.43 ([Council]);[27]
·21 January 2021, $12,881.20 ([Council]);[28] and
·25 March 2021, $11,809.84 ([deleted]).[29]
[20] Second party papers, p B113.
[21] Second party papers, p B123.
[22] Second party papers, p B127.
[23] Second party papers, p B130.
[24] Second party papers, p B130.
[25] Second party papers, p B133.
[26] Second party papers, p B136.
[27] Second party papers, p B137.
[28] Second party papers, p B138.
[29] Second party papers, p B152.
The Tribunal then asked Ms Tutton about expenses from the [BANK 1] account ending in [number]. Ms Tutton said that the only personal expenses of hers that came from that account were her health insurance payments. Ms Tutton told the Tribunal that the Telstra expenses on that account were for her mobile phone which was a business phone. She said that she only has one phone. This was the same phone that Ms Tutton was talking to the Tribunal on. The Tribunal asked Ms Tutton if she only used the phone for business and she said “yeah, that’s it”. The Tribunal asked Ms Tutton if she used the phone for personal calls and she said “I don’t have time for personal calls … my phone bill is written off in my tax as my business phone”. The Tribunal asked Ms Tutton if she calls her children on the phone and she said “Yeah, they are employed by me so yeah, I do call my children”. The Tribunal asked Ms Tutton if she only called her children for work-related purposes and she said “Yep”. She said that other than that, they call her when they need her.
The Tribunal asked Ms Tutton whether she still maintained that all expenses in the [BANK 1] account ending in [number] were business expenses and she said they were. The Tribunal then asked again and Ms Tutton said that maybe 5% of the expenses were for her health insurance and the chiropractor and the rest were business expenses. Ms Tutton told the Tribunal that the food expenses related to her business were substantial and they were paid from that account. Ms Tutton then told the Tribunal that all the expenses had been [reconciled]. The Tribunal notes that Ms Tutton has not provided any [reports].
The Tribunal asked Ms Tutton which bank account she used for personal expenses and Ms Tutton said that she uses cash for personal expenses. Ms Tutton told the Tribunal that the cash comes from the [number] account as drawings and she keeps it in a safe at her home.
The Tribunal asked Ms Tutton about a series of transactions that had occurred in [State 1]. Ms Tutton told the Tribunal that she had travelled to [State 1] to collect her vehicle from [Child 1]. Ms Tutton said that a payment of $22 to “[a business]” on 10 June 2022 was a business expense because it was for her as a business owner on her birthday.[30] She said that a dinner [on] 11 June 2022 was a business expense because it was a dinner attended by some clients in [State 1].[31] When asked by the Tribunal which “clients” she was referring to, Ms Tutton said it was a person who owns an accommodation business and she had been researching taking respite clients from New South Wales to [State 1]. Ms Tutton said that the accommodation payment of $1,305 on 11 June 2022 [for] three nights was also a business expense.[32] Ms Tutton told the Tribunal that transfers of $100 each to [Child 2] and [Child 3] on 12 June 2022 were a business expense because they were travelling with her and they work for her.[33] Ms Tutton said that they had been working on financial planning for [Child 2].
[30] Second party documents, p B82.
[31] Second party documents, p B82.
[32] Second party documents, p B82.
[33] Second party documents, p B82.
The Tribunal concludes that while Ms Tutton might hold these views, it does not accept that all of the expenses that are not health insurance or chiropractic expenses are business expenses. This is because Ms Tutton had said that payments to her sons for working in her business were marked as such, but there were many payments to her children from this account that were not marked as being for support work, including the $15,000 transaction to [Child 2] for her car to be returned to her. Similarly, the Tribunal does not accept that, simply because a person is travelling and may engage in a business meeting while travelling, every payment while travelling is a business expense. There are multiple examples of personal expenses, such as Ms Tutton’s health insurance and chiropractic expenses, which are personal expenses. In addition, the purchase of food, payment of utilities, purchase of appliances, such as an air conditioner, and motor vehicle expenses would have a personal use. Some expenses from the account ending in [number] were clearly not business expenses, such as [details deleted];[34] a transfer to [Child 1] denoted as “gift”;[35] a rate payment to [a] Council;[36] and numerous payments for fast food.
[34] Second party documents, p B139.
[35] Second party documents, p B103.
[36] Second party documents, p B161.

The Tribunal asked Ms Tutton how she thought the payments to her children should be treated. Ms Tutton said that where there were payments to her children and they were working and the payments were for food, wherever they were, then that was a business expense because they might be paying for their own food and for a client. Ms Tutton said it was all [clearer]. Again, the Tribunal notes that Ms Tutton did not provide any reports [to] support her submissions.
Ms Tutton said that since her business commenced, she has subcontracted work to a number of casual staff (up to 13 at one time), including her three sons. The Tribunal asked Ms Tutton about the descriptors used in transactions to subcontractors. Ms Tutton said that she regularly used the term “support work” as a descriptor, even when a subcontractor had been assisting with respite work. The Tribunal notes that many payments to subcontractors had no meaningful descriptor. At least one of the payments to [a named person] was described as gardening work/landscaping. The Tribunal asked Ms Tutton about any work that any of the subcontractors had done for her that was not in relation to [Company 2]. Ms Tutton clarified that [the named person] had worked as a support worker and as a gardener at her property. Ms Tutton told the Tribunal that payments to her sons were personal payments, unless they were denoted as being for support work. Ms Tutton told the Tribunal that payments to subcontractors included their transport expenses. Ms Tutton told the Tribunal that she used [a] software for invoicing but not for payroll. She said that her payroll was based on subcontractors text messaging their hours to her, and then she would pay them based on multiplying their hours by their hourly rate.
The Tribunal asked Ms Tutton how payments to a separate account associated with her real estate investments could be considered [Company 2] expenses. Ms Tutton said that they could be considered part of the 5% that were not business expenses. The Tribunal notes that Ms Tutton had previously said that the 5% comprises Ms Tutton’s health insurance and chiropractic costs. Ms Tutton then said that these were just her “drawings”.

34.The Tribunal concludes that Ms Tutton’s oral evidence in relation to the expenditure from the [BANK 1] account ending in [number] was inconsistent and has not been accepted. The Tribunal finds that in some instances, such as when she claimed she only uses her one phone for the purpose of business, this was not possible based on her evidence that she used her phone to communicate with her children.
35.It is a well-established principle in the Family Court that the taxable income of a person who is involved in their own business may not be an accurate reflection of their earning capacity, income, benefits and financial resources for child support purposes (DJM and JLM;[37] Scott and Scott;[38] Carey and Carey).[39] The Tribunal reiterates that the Court has observed on numerous occasions that the Tribunal is not required to undertake a “forensic audit” or major investigation of the financial circumstances of a party (Podmore & Pillai (SSAT Appeal);[40] and Frost and Frost (SSAT Appeal)).[41] Rather, the Tribunal must be satisfied on the balance of probabilities as to the income, property and financial resources available to the parties for child support purposes, such that a fair decision can be made in respect of the child support liability (Shearer & Benson (SSAT Appeal)).[42]
36.In addition, the Tribunal also notes that in Humphries & Berry (SSAT Appeal),[43] Slack FM dealt with the issue of the disclosure of financial information in matters before the Tribunal. His Honour made it clear that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the Tribunal and noted the obligation “to make a full and complete disclosure of their financial affairs relevant to the matter before the hearing and a duty to assist the Tribunal to come to its determination in the application”. His Honour further observed that while it is open to the Tribunal to exercise its powers to obtain information to clarify inconsistent, confusing and incomplete financial information, this does not diminish the parties’ obligations and duties to the Tribunal and that the Tribunal should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made.
37.Similarly, in K & M (No.2):[44]
The law is clear: there is a duty in proceedings of this type on every party to provide full disclosure of their financial position. If full disclosure is not provided the Court is at liberty to make appropriate inferences and findings from the non-disclosure, and not to be unduly cautious in doing so when making findings or drawing inferences against the non-disclosing party.
38.Considering the evidence before it, and the case law relating to the taxable income of a person who is involved in their own business and the parties requirements for full and frank disclosure, the Tribunal is satisfied that the income Ms Tutton has derived from [Company 2] is significantly higher than the 2/3 MTAWE figure of $52,638 which had been used in the administrative assessment.
39.This means the Tribunal finds that special circumstances exist, such that the administrative assessment resulted in an unjust and inequitable outcome. Therefore, the Tribunal finds that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) (Reason 8A) of the Assessment Act.
[37] [1988] FamCA 97.
[38] (1994) FLC 92-457.
[39] (1994) FLC 92-489.
[40] [2011] FMCAfam 952.
[41] [2011] FMCAfam 1311.
[42] [2011] FMCAfam 623.
[43] [2008] FMCAfam 409.
[44] [2007] FMCAfam 920.

Would departure from the administrative assessment be just and equitable?

40.Having found that special circumstances exist, such that the administrative assessment resulted in an unjust and inequitable result, so a ground for departure is established in relation to subparagraph 117(2)(c)(ia) (Reason 8A) of the Assessment Act, the next step for the Tribunal is to consider whether it is just and equitable to depart from the administrative assessment.

In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to which they have a duty.

The needs of the children

42.In determining the proper needs of a child, it is necessary to have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Assessment Act). The Tribunal has considered the evidence of the parties relating to the needs of [Child 2] and [Child 3].
43.It is noteworthy that [Child 1] was born on [date], so he turned 18 years of age on [date], but, at the date of the hearing, a terminating event had not yet occurred as [Child 2] was still a secondary school student.
44.Mr Allitt told the Tribunal that neither [Child 2] nor [Child 3] had any special needs.
45.Ms Tutton, however, said that [Child 2] might be an independent child but that he needs extra support and attention. Ms Tutton said, for example, that [Child 2] lost his driver’s licence in May 2022. Ms Tutton said that both [Child 2] and [Child 3] have PTSD and have been through significant trauma.
46.The Tribunal acknowledges Ms Tutton’s evidence that [Child 2] and [Child 3] experience mental health challenges but concludes that such needs do not affect the ability to maintain the children, so they have not been taken into account.
47.Ms [A] submitted, on behalf of Ms Tutton, that [Child 2] does not live with Mr Allitt full‑time. Ms Tutton said that [Child 2] spends significant periods of time staying with other people. Mr Allitt told the Tribunal that [Child 2] will stay overnight, away from home, on weekends, particularly when [Child 2] has been drinking alcohol. Mr Allitt told the Tribunal that [Child 2] generally stays overnight at home on five nights each week. The Tribunal concludes that this does not appear to be unusual for a young person of [Child 2]’s age.

Mr Allitt’s income, property and financial resources

In relation to Mr Allitt’s income, according to his Statement of Financial Circumstances, dated 4 February 2022, Mr Allitt’s income is $88,000 per annum, from working as an “[occupation]” with [Employer]; and he receives $45 per week ($2,340 per annum) in a military pension. Mr Allitt told the Tribunal that he works in the area of mental health on a permanent part-time basis at [a workplace] for [for] 64 hours per fortnight on a contract basis, with the ability to pick up extra shifts should he choose to but that he works 64 hours, at a minimum, per fortnight. The Tribunal notes that Mr Allitt also has the benefit of a salary packaging arrangement with his employer according to Mr Allitt’s payslips and his oral evidence but that, as noted by Mr Allitt during the hearing, this has been “added back” to Mr Allitt’s income for the purpose of child support, through the calculation of his ATI.

49.Mr Allitt’s Statement of Financial Circumstances also shows that the value of his home is $275,000 (which he owns with his wife). The Tribunal concludes that the value cited by Mr Allitt is for half the value of the property. Mr Allitt told the Tribunal that he and his wife have purchased this property through a rent-to-own scheme. Mr Allitt told the Tribunal at the hearing that he had, six weeks prior to the hearing, purchased an investment property with his wife for $530,000, with a mortgage of around $500,000, which they rent out for $750 per week. Mr Allitt told the Tribunal that the rental payments cover the cost of the mortgage on the investment property but that rates and other costs will need to be otherwise met, so the property will be negatively geared for around $25 total per week. Mr Allitt told the Tribunal that he and his wife had refinanced the mortgage on their home since completing the Statement of Financial Circumstances and as a result, they have two loans attached to their residential property, one for $508,000 and one for $108,000 (an interest only loan). These loans, Mr Allitt said, were used to renovate the home he lives in and to provide for some funds to purchase the investment property.
50.Mr Allitt’s Statement of Financial Circumstances also shows that Mr Allitt had, at the time of completing it, $1,000 in the bank; and two motor vehicles valued at $3,000 each. Mr Allitt also said that he had, in the past, bought and sold [vehicles] as a hobby but that as a result of a back injury, he no longer undertakes this hobby. Mr Allitt, according to the Statement of Financial Circumstances, had $123,000 in superannuation. With regard to Mr Allitt’s liabilities, according to the Statement of Financial Circumstances, Mr Allitt also had a personal loan with [a] Bank of $50,000.[45] The Tribunal noticed nothing out of the ordinary in relation to Mr Allitt’s expenses.[46]
[45] Applicant documents, pp A1-A7.
[46] Applicant documents, p A8.
51.The Tribunal is satisfied that Mr Allitt’s ATI should continue to be used for the purpose of the child support assessment in relation to [Child 2] and [Child 3].

Ms Tutton’s income, property and financial resources

The Tribunal notes that it is a well-established principle in the Federal Circuit and Family Court of Australia (the Court) that the taxable income of a person who is involved in their own business may not be an accurate reflection of their earning capacity, income, benefits and financial resources for child support purposes (DJM and JLM;[47] Scott and Scott;[48] Carey and Carey).[49]
[47] [1988] FamCA 97.
[48] (1994) FLC 92-457.
[49] (1994) FLC 92-489.

53.The Tribunal also notes that, as above, it had before it income tax amendment notices for 2019/20 and 2020/21 and a tax return summary for 2021/22, rather than the full income tax returns that it had directed Ms Tutton to provide. As these documents did not include the worksheets that are included in an income tax return, these documents were of little use to the Tribunal in determining Ms Tutton’s income for the purpose of child support.

According to Ms Tutton’s Statement of Financial Circumstances, dated 18 August 2022, and as stated by her at the hearing, Ms Tutton’s gross weekly income is $900.[50] The Tribunal considered whether this is a realistic reflection of Ms Tutton’s income.
[50] Second party documents, pp B1-B7.
As noted above, Mr Allitt submitted that Ms Tutton had operated her business through an entity called [Company 1] Operations. Ms Tutton told the Tribunal that since 2019, the only business she has solely held is [Company 2] but that she had assisted [Child 1] in setting up [Company 1] Operations as a way to ensure that [Child 1] could generate his own income. To that end, Ms Tutton said, [Child 1]’s partner came to work with her and a couple of the clients from [Company 2] had been put through [Child 1]’s business account to get him established. Ms Tutton told the Tribunal that she and [Child 1] had planned to set up a respite home in [State 1] but that [Child 1] had “gotten into trouble” which ended that, then [Child 1] lost his job and became homeless and used the funds from the [Company 2] clients that had been put through his account. Ms Tutton told the Tribunal that [Child 1]’s partner had been paid for her work but Ms Tutton had foregone her share of that income to support [Child 1] for about a year.
Ms Tutton said that [Child 1]’s business ([Company 1] Operations) had ended in March 2021, when [Child 1] was arrested. Ms Tutton told the Tribunal that she has not operated her business through [Company 1] Operations, nor via [Child 1]; and that [Company 1] Operations is separate to [Company 2]. Ms Tutton told the Tribunal that she does not have access to [Company 1] Operations business account, nor has she ever been a signatory to that account. Ms Tutton told the Tribunal that there had been a card associated with that account for whoever was caring for the client to purchase items for that client. Ms Tutton told the Tribunal that [Company 1] Operations had ceased respite and care support work in March 2021. The Tribunal asked Ms Tutton which clients [Company 1] Operations had. Ms Tutton told the Tribunal that there were two clients that had been allocated to [Company 1] Operations to get [Child 1] started.

57.Immediately prior to the hearing, Mr Allitt provided bank statements for [Company 1] Operations. He told the Tribunal that they had been given to him by [Child 1]. There was not sufficient time for them to be exchanged with Ms Tutton but given the relevance and importance of the information contained in the bank statements, the Tribunal asked Ms Tutton about their contents.

The Tribunal asked Ms Tutton about transfers to the [Company 1] Operations account made in August 2021 for “[Name 1]”.[51] Ms Tutton said that there were late payments because these were disputed invoices. She declined to tell the Tribunal who the clients were due to privacy.
[51] The Agency papers, p 238.

59.The Tribunal asked Ms Tutton why [Company 1] Operations, if it stopped operating in March 2021, continued to make payments for “support work” from the [Company 1] Operations bank account as late as August 2021 (to [Child 2] and [Child 3]). Ms Tutton said “You’d have to ask [Child 1] that”.
60.The Tribunal also asked Ms Tutton about a transaction that was made in relation to one of Ms Tutton’s investment properties from this account (for [Council] rates) for $1,403.07 on 12 August 2021.[52] Ms Tutton told the Tribunal that this transaction to [Council] “would go down as part of her drawings” and when the Tribunal clarified that this was from the [Company 1] Operations account Ms Tutton said “It should have gone into my account and then gone out”. Ms Tutton said there should have been a payment to her and that she may have been late with the payment.
[52] Second party papers, p B240.
61.The Tribunal asked Ms Tutton how the payment was made and she said that [Child 1] would have made the payment for her, via BPAY. The Tribunal asked if Ms Tutton had paid the money back to [Child 1] if he had made the payment on her behalf from his own bank account. Ms Tutton said that it would have been paid out of the money that [Child 1] owed her “… out of the money that he owed me for the clients that I, was my work, yeah, sorry”.
62.Ms Tutton then said that there would have been invoices from her to [Child 1] to pay for the “[Name 1] clients”. She said that these were [Company 1] Operations’ clients that she and [Child 1]’s partner worked with for [Company 1] Operations, looking after the clients that she had allocated to [Company 1] Operations for [Child 1]. Ms Tutton told the Tribunal that she would have invoiced [Company 1] Operations for $1,400 and instead of paying her directly, [Child 1] would have paid her [rates] for her. Ms Tutton later said that she had never invoiced [Company 1] Operations for the work she had done because she had to forgo those funds because [Child 1] had needed the money for himself because of his personal problems. She said [Child 1] used those funds for living expenses.
63.Ms Tutton then said that the invoices still needed to be sorted out with [Company 1] Operations and that now that she had the benefit of having copies of the [Company 1] Operations bank accounts from the hearing papers for the current matter, she would be able to go through and work out what invoicing needed to be carried out. The Tribunal asked Ms Tutton why, if as she had previously said, she worked out her hours of work and that is how she had determined how much [Company 1] Operations was to pay her, she needed [Company 1] Operations bank statements in order to invoice them.
64.Ms Tutton responded that she needed the bank statements to be sure that she was invoicing correctly as she couldn’t just “invoice off memory”. Ms Tutton then said that [Child 1]’s former partner had taken a computer that contained all [Company 1] Operations business documents on it and Ms Tutton had been unable to get those records back. The Tribunal again asked Ms Tutton to clarify why she needed the bank statements to invoice [Company 1] Operations for the support work that she did and Ms Tutton stated “I don’t really understand why”.
65.The Tribunal asked Ms Tutton about payments made to her [number] account from the [Company 1] Operations account. She said that these were for her support work and included in her income tax return. When the Tribunal noted that it did not have Ms Tutton’s full income tax return, Ms Tutton said that she did not know the full income tax return was required and that she would supply it to the Tribunal. This document was never received.
66.The Tribunal also asked Ms Tutton why [Company 1] Operations would have purchased televisions at a cost of $5,000 for [Company 2] on 30 April 2021, after [Company 1] Operations stopped operating, according to Ms Tutton. Ms Tutton said this would be for the apartment set up for [Company 1] Operations’ clients. The Tribunal noted that this was, according to Ms Tutton, one month after [Company 1] Operations ceased operating. Ms Tutton said that this would have just been to replace the television.
67.The Tribunal also asked Ms Tutton about her [motor] vehicle, in particular a $10,000 deposit paid for the vehicle on 1 June 2021 from the [Company 1] Operations account. Ms Tutton confirmed that this was her vehicle. When Ms Tutton was asked why [Company 1] Operations would be paying for the deposit for her vehicle, Ms Tutton said she thought it was because [Child 1] had owed her $10,000. The Tribunal asked Ms Tutton how the balance of the payment was paid. Ms Tutton said the balance of $120,000 was paid from the [Company 1] Operations account. First, Ms Tutton said that the funds were paid form the [Company 1] Operations account because an invoice had been incorrectly paid to that account. Ms Tutton then told the Tribunal that she had deposited the funds into the [Company 1] Operations account after withdrawing the cash from her [BANK 1] account ending in [number] and waiting until the vehicle was ready and then depositing the cash when the car was ready in June 2021. Ms Tutton told the Tribunal that the reason the [Company 1] Operations account was used was that the vehicle had been purchased in [State 1] where [Child 1] was and there was some urgency at the time because the vehicle had to be paid for before the end of the financial year so she could obtain the benefit of the full asset write-off in the 2020/21 financial year.

68.The Tribunal finds that Ms Tutton’s evidence regarding the purchase of the [vehicle] was inconsistent and did not fully explain the transfer of funds to [Company 1] Operations. In the first instance, Ms Tutton stated that the deposit was paid by [Company 1] Operations because she was owed these funds. Ms Tutton further stated that the balance was paid by [Company 1] Operations because an invoice was incorrectly paid to the [Company 1] Operations account but then later stated that she had deposited the funds into the [Company 1] Operations account. The Tribunal also notes Ms Tutton failed to comply with the directions to provide documentation that would assist the Tribunal.
69.Payment by [Company 1] Operations is inconsistent with the ownership of the vehicle.
70.After the hearing, to assist the Tribunal in considering whether Ms Tutton had been operating her business through [Company 1] Operations, as well as Ms Tutton’s financial situation more broadly, the Tribunal asked the Agency to obtain registration details with regards to [Company 1] Operations, among other business names from the Australian Securities and Investment Commission (ASIC), as well as invoices and contracts from some clients of [Company 1] Operations. The names of these clients were derived from the bank statements for [Company 1] Operations that were included in the Agency’s papers.

The Tribunal observes that [Company 1] Operations was registered on 20 October 2020 and its registered address is [deleted] (a commercial address), with its principal place of business being “[address], [State 1] (a residential address). [Company 1] Operations is an Australian proprietary company, limited by shares, and [Child 1] is its director and secretary.[53] Mr Allitt and Ms Tutton both told the Tribunal that [Child 1] lives in [State 1].
[53] C documents, pp C3-C4.
The Tribunal referred to information obtained from [a website] by the Agency on behalf of the Tribunal (a copy of all contracts/agreements and invoices between [Organisation 1].com and: Ms Tutton; and/or [Company 2]; and/or [Company 1] Operations). According to [Organisation 1].com, they do not make contracts with their providers and they only had [Company 2] on their records, but not Ms Tutton or [Company 1] Operations. The invoices received from [Company 2] by [Organisation 1].com included the following:
·$30,937.56 (invoice 3), dated 28 May 2020;
·$31,026.28 (invoice 5), dated 30 June 2020;
·$28,892.05 (invoice 1), dated 29 July 2020;
·$13,914.70 (invoice 5A), dated 21 August 2020;
·$1,140.30 (invoice 6), dated 16 November 2020; and
·$6,645.84 (invoice 15), dated 15 November 2020.[54]
[54] D documents, pp D4-D13.
The Tribunal notes that the payment instructions on the invoices were that payments were to be made to Ms Tutton’s ([BANK 1]) account ending in [number] and the contact information on each invoice was “Tutton” and the phone number on each invoice was the same phone number that the Tribunal used to contact Ms Tutton for the hearing. Further, some of these invoices included an email address: [deleted][55]
[55] D documents, pp D4-D13.
The Tribunal referred to information obtained from [Council] by the Agency on behalf of the Tribunal (a copy of all contracts/agreements and invoices between [Council] and: Ms Tutton; and/or [Company 2]; and/or [Company 1] Operations). The invoices received from [Company 2] by [Council], which were made out to [a] Community Services, included the following:
·$27,194.46 (invoice 3), dated 18 August 2020;
·$27,014.29 (invoice 8), dated 30 September 2020;
·$29,764.13 (invoice 9), dated 26 October 2020; and
·$8,052.59 (invoice 10), dated 25 October 2020.[56]
[56] D documents, pp D16-D78.
The Tribunal notes that the payment instructions on the invoices were that payments were to be made to Ms Tutton’s [BANK 1] account ending in [number] and the [Company 2] ABN was on each of these invoices. Some of these invoices included Ms Tutton’s name and some did not but the contact phone number was the same phone number that the Tribunal used to contact Ms Tutton for the hearing.
Other invoices made out to [a] Community Services included the following:
·$7,343.74 (invoice 11), dated 11 November 2020;
·$13,385.43 (invoice 18), dated 24 November 2020;
·$26,298.88 (invoice 22), dated 5 January 2021;
·$13,626.43 (invoice 25), dated 12 January 2021; and
·$12,882.20 (invoice 26), dated 19 January 2021.[57]
[57] D documents, pp D16-D78.
The Tribunal notes that the payment instructions on the invoices were that payments were to be made to Ms Tutton’s [BANK 1] account ending in [number] and the [Company 2] ABN was on each of these invoices; and the contact name was Ms Tutton and the contact phone number was the same phone number that the Tribunal used to contact Ms Tutton for the hearing. Further, some of these emails included the email address [deleted]
Another set of invoices made out to [a] Community Services included the following:
·$34,808.44 (invoice 9), dated 18 December 2020;
·$52,611.88 (invoice 22), dated 8 March 2021;
·$33,084.18 (invoice 28), dated 1 December 2020;
·$8,795.19 (invoice 29), dated 1 December 2020;
·$11,479.95 (invoice 30), dated 1 January 2021;
·$11,980.53 (invoice 31), dated 1 February 2021;
·$27,116.66 (invoice 33), dated 1 April 2021;
·$5,973.35 (invoice 39), dated 29 July 2021;
·$22,038.84 (invoice 40), dated 29 July 2021; and
·$23,614.79 (invoice 43), dated 14 July 2021.[58]
[58] D documents, pp D16-D78.
The Tribunal notes that these invoices were from [Company 1] Pty Ltd (using its ABN) and there were payment instructions on all but one of these invoices and those payment instructions were that payments were to be made to the [Company 1] Operations account ending in [number]. There was no contact name on these invoices and while there was reference to an email account: [deleted], the contact phone number was the same phone number that the Tribunal used to contact Ms Tutton for the hearing.
Another set of invoices made out to [a] Community Services included the following:
·$7,556.86 (invoice 44A), dated 30 July 2021;
·$7,556.86 (invoice 45A), dated 30 July 2021;
·$7,556.86 (invoice 49A), dated 30 August 2021;
·$7,556.86 (invoice 50A), dated 30 August 2021;
·$7,556.86 (invoice 51A), dated 30 August 2021;
·$7,556.86 (invoice 52A), dated 30 August 2021;
·$8,614.30 (invoice 53A), dated 5 September 2021;
·$8,614.30 (invoice 54A) dated 30 September 2021; and
·$8,614.30 (invoice 55A) dated 30 September 2021.[59]
[59] D documents, pp D16-D
The Tribunal notes that the payment instructions on the invoices were that payments were to be made to Ms Tutton’s [BANK 1] account ending in [number] and the [Company 2] ABN was on each of these invoices but no contact name was included in the invoices but the contact phone number was the same phone number that the Tribunal used to contact Ms Tutton for the hearing.
Another set of invoices made out to [a] Community Services included the following:
·$12,099.02 (invoice 73), dated 31 March 2022;
·$9,769.86 (invoice 74), dated 31 March 2022;
·$9,769.86 (invoice 75), dated 31 March 2022;
·$9,769.86 (invoice 76), dated 19 June 2022;
·$11,163.06 (invoice 77), dated 19 June 2022;
·$9,769.86 (invoice 78), dated 19 June 2022;
·$9,769.86 (invoice 79), dated 19 June 2022;
·$9,769.86 (invoice 80), dated 19 June 2022;
·$9,769.86 (invoice 81), dated 19 June 2022;
·$9,769.86 (invoice 82), dated 19 June 2022;
·$9,769.86 (invoice 83), dated 19 June 2022;
·$9,769.86 (invoice 84), dated 19 June 2022; and
·$9,769.86 (invoice 85), dated 19 June 2022.[60]
[60] D documents, pp D16-D
The Tribunal notes that the payment instructions on these invoices were that payments were to be made to a [BANK 1] account ending in [number], which the Tribunal was unable to identify from the evidence before it; and that no contact name was included in the invoices but the contact phone number was the same phone number that the Tribunal used to contact Ms Tutton for the hearing.
The Tribunal sent Ms Tutton a copy of the additional information received after the hearing and provided her with the opportunity to comment on it. Ms Tutton provided the following written submissions:
As explained at the hearing. I worked for [Company 1] and did the invoicing for [Company 1], clients. Therefore I was the contact person on the invoices.
The [Company 1] clients were in nsw where the staff were being trained. covid prevented [Company 1] from starting in qld as originally planned.
As per documents received there are no invoices to my plan manager for [Company 1]. The my plan manager clients were [Company 2] clients.
Several staff members were subcontracted to care for [Company 1] clients that were in nsw. The invoices were paid into a commonwealth bank account soley controlled by the owner and director [Child 1] Allitt. The staff at [Company 2] had a credit card for a period of time to pay for client costs.
My phone was questioned at the tribunal, just for the record I have unlimited call plan, I was questioned about calling my sons on my work phone.[61]
[61] Second party papers, p B213.

85.While Ms Tutton told the Tribunal that she worked for [Company 1] Operations, in order to establish [Child 1] in his own business, the Tribunal observes there is no evidence that Ms Tutton was paid a salary by [Company 1] Operations, or that there has been any change in any of the business activities at Ms Tutton’s home, or the mobile care activities previously operated by her but now operated by [Company 1] Operations. Further, the contact number for all the business activity has consistently been Ms Tutton’s phone number that she uses for business and personal activities.
86.The Tribunal concludes, based on the evidence before it, that Ms Tutton has operated her business activities through both her trading name [Company 2] and [Company 1] Operations. Considering the evidence before it, the Tribunal is not persuaded that Ms Tutton has not remained in control of [Company 1] Operations, particularly as Ms Tutton and the services provided by [Company 1] Operations are all in southern New South Wales and [Child 1] lives in [State 1].
87.This means the Tribunal is not satisfied that Ms Tutton transferred any of her business operations to [Child 1], and consequently, the income derived from [Company 1] Operations is to be attributed to Ms Tutton.
88.As outlined in paragraphs 22-23, the Tribunal accepts the method used by the objections officer to determine that Ms Tutton’s income for the purpose of child support is $135,333.[62] The Tribunal, however, finds that these calculations do not take into consideration income received from Ms Tutton from [Company 1] Operations, and it has a different view on the application of the ATO Small Business Benchmarks.
[62] The Agency papers, pp 459-460.
89.In addition to the invoices and deposits used in the objections officer’s decision, totalling $323,187.07 (which the objections officer rounded down to $320,000), the Tribunal finds that the following payments to the [Company 1] Operations bank account, totalling $234,160.56, need to be added, as they were received during the same time period (26 June 2020 to 25 March 2021):
·$28,933.83 ([Organisation 1]), dated 20 November 2020;
·$7,633.82 ([Organisation 1]), dated 10 December 2020;
·$34,808.44 ([Council]), dated 23 December 2020;
·$22,208.85 ([Name 1] ), dated 31 January 2021;
·$22,673.82 ([Name 1] ), dated 31 January 2021;
·$22,673.82 ([Name 1] ), dated 31 January 2021;
·$22,673.82 ([Name 1] ), dated 31 January 2021;
·$19,942.28 ([Name 1] ), dated 10 February 2021; and
·$52,611.88 ([Council]), dated; 11 March 2021.[63]
[63] Applicant papers, p A371-A402.

90.The Tribunal chooses to round this total figure down to $230,000, finding that Ms Tutton’s gross income over the nine-month period was in the order of $550,000, or $733,000.
91.With regard to ascertaining the most appropriate figure to deduct for expenses, the Tribunal acknowledges that the objections officer found that 65% is the average in the child care sector and this was the closest industry type that the objections officer could identify in the ATO Small Business Benchmarks, and the ATO Small Business Benchmarks (the Benchmarks) include a different set of figures for child care businesses with an annual turnover of more than $600,000.

The most recent Benchmarks are for the 2019/20 financial year.[64] They provide that for a business with turnover of more than $600,000, the total expenses divided by annual turnover ranges from 79% to 88%, with an average of 84%. The Tribunal notes that the child care sector incorporates a wide variety of businesses, from family day care centres run from educators’ homes, to large child care centres located in commercial locations under business leases. Ms Tutton’s business is based from her home, as well as in the residences of care receivers, but, as noted above, there appears to be significant co-mingling of Ms Tutton’s business and personal expenses.
[64] Tribunal concludes that Ms Tutton’s business would be at the less intensive end of the range, and so finds that a starting point figure of 79% is more appropriate. The Benchmarks, however, also provide for labour, rent and motor vehicle expenses. The Tribunal concludes that Ms Tutton’s business is labour intensive but notes that as Ms Tutton owns her property outright, she pays no rent. For this reason, the Tribunal concludes that the full allowance for rent (12%) should be removed from the allowable deductions, leaving a figure of 67% as a rule of thumb to use for the purpose of determining deductions.
1. Noting that this is not a forensic accounting exercise, nor a major investigation, and that Ms Tutton has not provided detailed financial statements, the Tribunal is required to make a decision based on the evidence before it.
2. The Tribunal concludes that a more appropriate deduction for expenses from Ms Tutton’s business activities (through [Company 2] and [Company 1] Operations) is 67% ($368,500).
3. This means the Tribunal concludes that Ms Tutton’s income for the purpose of child support is to be set at $181,500.
97.The Statement of Financial Circumstances also shows that Ms Tutton has property with a total value of $778,000; superannuation of $117,900; total liabilities of $360,000; total personal expenditure of $310 per week; and total household expenditure of $600 per week.[65]
[65] Second party documents, pp B1-B7.
98.The property owned by Ms Tutton includes the home from which the business is run, which is valued at $830,000; and two units which she stated are worth “$-90,000” each. Ms Tutton’s property also includes the [vehicle] utility, valued at $110,000 (which she owns outright) and household contents of $30,000.[66] According to the Statement of Financial Circumstances, Ms Tutton has superannuation of $117,922. [67] Ms Tutton stated in the Statement of Financial Circumstances that she has two mortgages of $178,000 and [$175,000]. During the hearing, Ms Tutton said that these mortgages related to the two units that she owns that she purchased under the NRAS scheme. She said that the properties operate at a “massive loss”, but because of the way they are structured, another person is able to claim the losses while she is paying the expenses. The Tribunal concludes that Ms Tutton has presented the value of the units at their market value, taking into account the mortgage liabilities, to reach the “$-90,000” value for each unit. The Statement of Financial Circumstances also includes an overdraft of $2,000. The Tribunal noticed nothing out of the ordinary in Ms Tutton’s weekly expenses.[68]
[66] The Agency papers, p B4.
[67] The Agency papers, p B4.
[68] Second party documents, pp B1-B7.
99.In terms of Ms Tutton’s financial resources generally, the Tribunal has observed that it is a well‑established principle in family law that the taxable income of a parent who is self‑employed may not be an accurate reflection of their income and financial resources. This is because self-employed people are able to derive additional benefits from their business, and also have greater control over the structure of their finances than ‘Pay As You Go’ employees. While expenses and deductions claimed are quite legitimate for taxation purposes, this does not automatically extend to child support. It is accepted that there is a divergence between the taxation system and the child support system in this area.
1. From its review of Ms Tutton’s bank accounts, as well as from oral evidence taken from her during the hearing, there appears to be no clear demarcation between her business and personal expenses. Ms Tutton operates a business from the property she lives in, purchases goods, such as televisions, that can be used for the business or for personal use, and, for example, has entertainment and phone expenses that are difficult to separate into business and personal expenses. Further, Ms Tutton’s [BANK 1] bank account ending in [number] has been used by her for both business and personal use.
Ms [A]’s submissions
1. The Tribunal notes that Ms [A] submitted that a payment made by Ms Tutton to Mr Allitt of $15,000, on 11 June 2022,[69] was a payment for child support from Ms Tutton to Mr Allitt. Mr Allitt told the Tribunal that the funds were actually a matter between Ms Tutton, [Child 1] and [Child 2], in relation to a motor vehicle that Ms Tutton wanted [Child 1] to return to her. Mr Allitt told the Tribunal that he had facilitated the payment through his account because there was a limitation on transactions from [Child 2]’s account as it was a student account. The Tribunal concludes that this $15,000 transaction is not relevant to its consideration of whether a departure determination should be made, whether the $15,000 was a non-agency payment or a discretionary payment from Ms Tutton to [Child 1].
  [69] Applicant papers, p A281.
Would there be resulting hardship from a departure from the administrative assessment?
1. Subsection 117(4) of the Assessment Act requires the Tribunal to take into account whether any departure determination or failure to make a departure will cause any hardship to the child, the carer, the liable parent or any other person the liable parent has a duty to support.
2. Mr Allitt told the Tribunal that if there was no departure determination, he would need to pay a higher amount of child support for [Child 3] and his wife would have to assist in paying his child support and neither of those options would be fair.
3. Ms Tutton told the Tribunal that she would experience hardship if there was a departure determination because she has made significant outlays with regard to the children and simply does not have the funds to pay any additional amounts of child support.
4. In her written submissions, Ms Tutton said:
  See attached current text message from Mr Allitt, requesting If I give [Child 1] 10k for a vehicle he will accept as non agency payment. Please note [Child 1] received 15,000 in June from me to pay off his car loans that was money I was forced to give when they refused to hand over my vehicle. See attached police correspondence. The bank record show this payment I made into the joint account held by [Child 2] and his father was withdrawn into Mr Allitt’s account immediately then you can see Mr Allitt giving it to [Child 1]. Noting this was “a gift from dad to [Child 1]”. Mr Allitt is teaching [Child 1] its ok to black mail people.
  Please also see attached recent correspondence received via [Child 2] I regards to more demands for money for [Child 1]. [Child 1] currently has [Child 2] ute that I contributed 5,000 to in January, he gets his licence back in 2 weeks and will not have his vehicle returned until I pay further money to [Child 1].
  I’m not in a position to pay assist [Child 1] into a vehicle with a child support debt for 18,000 over my head. I am currently supporting both [Child 2] and [Child 3] and 15,000 is a significant amount that went too [Child 1] in June.
  [Child 2] has asked for rent assistance of 350.00 per week he is currently studying and preparing for his hsc exams. He will find casual employment after Christmas until he starts uni in feb. His moving into his brothers on the weekend. I have committed to paying 350.00 per week for his half of the rent [Child 1] currently rents a house for 700 per week on his own after his girlfriend vacated in june.
  I always have supported my children and will continue to do so as best as I can.[70]
  [70] Second party papers, p B213.
1. The Tribunal concludes that being unable to provide significant funds to a person’s children for discretionary spending does not constitute financial hardship.
Conclusion
1. The Tribunal concludes that it would be just and equitable to make a departure determination from the administrative assessment.
2. The Tribunal finds that the start date for the departure from the assessment should be 13 May 2021, the date that Mr Allitt requested a review of the administrative assessment.
3. The Tribunal notes that a terminating event will occur in relation to [Child 2], as he is completing secondary school on 9 December 2022.[71]
  [71] The Agency papers, p 531.
4. This means the Tribunal makes a departure determination that:
  ·Ms Tutton’s income for the purpose of child support is set at $181,500 for the period from 1 July 2021 to 30 June 2023.
5. The Tribunal has carefully considered all of the written and oral evidence and costs regarding the children’s proper needs. The income, resources, benefits and assets together with the commitments and liabilities of both parties were also scrutinised to determine the above departure determination.
Is it otherwise proper to make a particular departure determination?
1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. Subsection 117(5) of the Assessment Act sets out the matters that must be considered when deciding whether it would be ‘otherwise proper’ to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Assessment Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support. The Tribunal has concluded that it is otherwise proper in the circumstances to depart from the administrative assessment.
DECISION
The decision under review is set aside and the Tribunal makes a departure determination that Ms Tutton’s income for the purpose of child support is set at $181,500 for the period from 13 May 2021 to 30 June 2023.

[2022] AATA 5129

15 November 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction