Mullen and Shelby (Child support)

Mullen and Shelby (Child support) [2023] AATA 1642 (22 February 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/MC024663
APPLICANT:  Mr Mullen
OTHER PARTIES:  Child Support Registrar
Ms Shelby

TRIBUNAL:Member M Martellotta
DECISION DATE: 22 February 2023
DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the liable parent ceased to be a resident of Australia – the liable parent remained a resident – decision under review affirmed

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

A child support assessment has been registered by Services Australia (Child Support) since 7 January 2010.
On 31 August 2021 Child Support undertook a review of the particulars of the assessment and decided that Mr Mullen continued to be a resident of Australia for child support purposes. Mr Mullen objected to that decision. His objection was disallowed.[1]
[1] According to the Child Support file, Mr Mullen objected to the original decision on 2 November 2021 and he was granted an extension of time to object. The objection decision is dated 24 June 2022.
On 22 February 2023 the tribunal held a hearing. Mr Mullen and his legal representative [Mr A] appeared by video. Ms Shelby participated by telephone.
In addition to the submissions and oral evidence provided at hearing, other evidence considered by the tribunal included the Child Support documents prepared and distributed to the tribunal and the parties by Child Support, submissions and evidence provided on behalf of Mr Mullen (A1–A55) and a written submission provided by Ms Shelby (B1–B2). The tribunal also issued a direction to Child Support requesting information pertaining to a departure prohibition order. The response to the direction is noted.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the RC Act) and the Child Support (Assessment) Act 1989 (the Assessment Act). Also relevant to this review is the Income Tax Assessment Act 1936 (the ITA Act) and the Domicile Act 1982.
Child support legislation is interpreted by the Agency with the aid of the Child Support Guide (the Guide). The tribunal is not bound by law to apply the policy as set out in the Guide, but provided the policy is consistent with the legislation, it is required to have regard to it and in the ordinary course follow it.[2]
[2] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.
The issue which arise in this case is whether Mr Mullen is a resident of Australia for child support purposes.

CONSIDERATION OF LEGISLATION, SUBMISSIONS AND EVIDENCE

Section 10 of the Assessment Act and section 4 of the RC Act interpret the meaning of resident of Australia as follows:
For the purposes of this Act, a person is a resident of Australia on a day if on that day the person is a resident of Australia for the purposes of the Income Tax Assessment Act 1936.[3]
[3] For the purposes of the RC Act the definition does not include a person who is resident of a reciprocating jurisdiction.
Section 6 of the ITA Act, provides:
resident or resident of Australia means:
(a) a person, other than a company, who resides in Australia and includes a person:
(i)whose domicile is in Australia, unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia;
(ii)who has actually been in Australia, continuously or intermittently, during more than one‑half of the year of income, unless the Commissioner is satisfied that the person’s usual place of abode is outside Australia and that the person does not intend to take up residence in Australia; or
(iii)who is:
(A) a member of the superannuation scheme established by deed under the Superannuation Act 1990; or
(B) an eligible employee for the purposes of the Superannuation Act 1976; or
(C) the spouse, or a child under 16, of a person covered by sub‑subparagraph (A) or (B); and
(b) a company which is incorporated in Australia, or which, not being incorporated in Australia, carries on business in Australia, and has either its central management and control in Australia, or its voting power controlled by shareholders who are residents of Australia.
The Guide at section 1.6.1 states that the Child Support Registrar will apply the same test as the Australian Taxation Office (ATO) to decide if a person is a resident of Australia for child support purposes. The ATO provides the following tests:[4]
·Resides test
·Domicile test
·183-day test (not applicable in this case)
·Commonwealth superannuation test (not applicable in this case).[5]
The ATO has issued a draft taxation ruling (TR2022/D2)[6] in relation to residency tests for individuals. This notes that there is no single fact which determines the outcome as every decision will turn on its facts. A person will be considered resident if they meet any one of these tests even if they don’t meet one of the other tests.
[4] Your tax residency | Australian Taxation Office (ato.gov.au) (accessed 1/3/23).
[5] While this was discussed at hearing, this test only applies to public sector superannuation and Commonwealth superannuation schemes. The applicant is a member of an industry superannuation scheme.
[6] Issued 6 October 2022 – this Ruling consolidates and replaces the material in Taxation Rulings IT 2650 Income tax: residency – permanent place of abode outside Australia and TR 98/17 Income tax: residency status of individuals entering Australia.
The resides test is the primary test of tax residency. The ordinary meaning of resides is used to decide who is an Australian resident for income tax purposes:
The Shorter Oxford Dictionary defines reside as:
'...to dwell permanently, or for a considerable time, to have one's settled or usual abode, to live, in or at a particular place...'[7]
[7] Residency – the resides test | Australian Taxation Office (ato.gov.au) (accessed 1/3/23).
Relevant factors taken into consideration under this test include the physical presence of the person, their intention and purpose, whether they have family, business or employment ties to Australia, where they maintain and locate their assets and their social and living arrangements.
Where a person does not satisfy the resides test a person will still be considered a resident of Australia if they satisfy one of the three statutory tests.
The domicile test[8] provides that a person is a resident of Australia, if their domicile (the place that is their permanent home) is in Australia unless the Commissioner of Taxation is satisfied that their permanent place of abode is outside of Australia.
[8] Page 9, TR2022/D2 which references the Domicile Act 1982 and relevant authorities.
Domicile is a place that is considered by law to be a person’s permanent home and is usually something more than a residence. Types of domiciles include, domicile by origin this is attributed to everyone at their birth; domicile by choice is inferred by law where there is both a change of residence and an intention to make the change permanent or indefinite; and domicile by operation of law is where it is imposed by law.
According to the ATO, a person who has always lived in Australia will retain a domicile in this country even when absent overseas unless they choose to permanently migrate to another country. A person can only have one domicile at any point in time and a person’s domicile continues until they acquire another one; it cannot be abandoned without replacement. For a person to acquire a domicile by choice a person must have a lawful physical presence in that country and an intention to make that country indefinitely their home. According to the ATO draft ruling:
Obtaining a visa to migrate to a particular country would be consistent with an intention to make your home indefinitely in that country. A working visa, even for a substantial period of time, would usually not be sufficient evidence of an intention to acquire a new domicile of choice.[9]
[9] Para 59, TR2022/D2.
Section 10 of the Domicile Act 1982 provides:
10 Intention for domicile of choice
The intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his or her home indefinitely in that country.
Permanent place of abode has been established through case law to have the following meaning:
·permanent does not have the meaning of everlasting or forever, but is used in the sense of being contrasted to temporary or transitory
·your place of abode is your residence, where you live with your family and sleep at night.
According to the ATO, the domicile test will usually apply where an Australian resident goes to work in an overseas country for an extended period of time. It notes that a person in this situation may not satisfy the resides test due to being away for a lengthy period, however, a person would normally have a domicile in Australia, unless they choose to change it, and as such the domicile test will be applied. The critical factor here is whether the person is determined to have a permanent place of abode abroad. Relevant factors here include:
·intended and actual length of stay overseas, including the continuity of that stay
·existence of an established home overseas
·existence of a residence in Australia (while overseas)
·family and financial ties.
According to the ATO draft ruling:
…if you move from country to country or place to place, you will not have a permanent place of abode overseas and will remain a resident of Australia. This is regardless of whether or not you have any dwellings in Australia, or whether Australia more generally can be described as your place of abode.[10]
[10] Para 66, TR2022/D2.
The above draft ruling is consistent with the Guide, which states at section 1.6.1:
the duration and continuity of the person's presence in the overseas country:
If a person has no fixed or habitual place of abode overseas but moves, for example, from one country to another, this may tend to suggest that the person has not established a permanent place of abode outside Australia.
[Mr A]’s submission referenced the Guide. He submitted that his client is not a resident of Australia because he has chosen to replace his domicile of origin; his client has the intention to reside indefinitely in a foreign country and this is evidenced by his client not returning to Australia since 2019.[11]
[11] A33–A55.
Mr Mullen provided the following evidence:
a)   He was born in Australia and is an Australian citizen. He is not a citizen of any other country.
b)   His elderly parents and his siblings live in Australia.
c)   His wife lives in Australia.
d)   He is a [Occupation 1] of a [specified workplace]. He has been in this industry since about 2000.
e)   In 2005 he departed Australia with his then wife (Ms Shelby) and their children. This was to take up a position is a [workplace] in [Country 1]. In 2006 he took up a role in [Country 2] for three years until December 2009.
f)    In 2009 Ms Shelby left him and returned to Australia with the children.
g)   In January 2010 he transferred to another position in [Country 3]. He stayed there until May 2011. He returned to Australia in May/June 2011 to finalise family law proceedings relating to the dissolution of his marriage to Ms Shelby. He remained in Australia for about two years. He worked in the family business.
h)   In 2013 he secured a position in [Country 4] and left Australia in November 2013. He was a [Occupation 1] of a [workplace] for two years until 2015.
i)    In 2015 he decided to return to Australia. He secured a position in Sydney. He remained in that role for three years and two months.
j)    In 2019 he returned to [Country 2] and held a residency card there. He worked there until September 2019.
k)   In October 2019 he returned to [Country 4] and worked there for three years; he left there in October 2022.
l)    He then went to [Country 5] to take up a role in that country and has been there since October 2022.
m)    He has not contributed to his superannuation funds since leaving Australia in 2019.
n)   He is subject to an active departure prohibition order due to owing arrears of child support. He is not sure when the order was made. This has nothing to do with his decision not to return to Australia. He has remained overseas because of the employment opportunities and he has never wanted to come home.
o)   His wife and family visit him overseas. He remarried in 2014. His wife is an Australian citizen. She lives in Australia. They don’t have children.
p)   His parents purchased a house in 2016 and this is where his wife lives. Initially his parents purchased this home as an investment and also to ensure that his children had an appropriate place to stay when in his care. However, that never really eventuated.
q)   His parents purchased the home because at the time he could not afford it. He can’t really remember what he contributed towards the purchase but as he was not able to take out a loan, the property was registered in his father’s name. The property is worth about $1,000,000. There is a mortgage over the property. He and his wife paid rent to his parents, and they used that money towards paying the mortgage. He denies that he entered into this arrangement to avoid being seen to hold assets in Australia. He said this arrangement came about because he had a bad credit rating.
r)    His father has recently transferred (in December 2022) the title of the property into his (Mr Mullen’s) sole name. His father is getting rid of all his assets and does not want to leave it to Mr Mullen’s children because of their age. Mr Mullen has refinanced the mortgage under his and his wife’s names. He contributes towards the mortgage payments as the mortgage is now in his name. He does not own any other assets in Australia he does not own any assets overseas.
s)   He contributes financially towards the household and his wife. His wife intends to join him in [Country 5] later this year once her daughter finishes Year 12. His wife spends up to six months with him overseas. He will sell the house in Australia when his wife comes to live with him full time.
t)    He will need to talk to his father about how to treat any proceeds of the proposed sale. They will possibly create a family trust and name his children as beneficiaries to that trust. His father has in effect gifted him the house.
u)   All of his family live in Australia which includes his parents, siblings and his children. His children have never spent any significant time with him since 2019.
v)   In [Country 5] he holds a temporary residency card. In [Country 4] he held an e-visa.
w)     In [Country 4] he leased two residential properties. He is currently residing at the [workplace] where he works but is looking for a private lease.
x)   It is not the culture of his industry to remain in a role for longer than two to three years. He doesn’t choose where to go next, this is a company decision. In terms of his current position he will at minimum remain for not less than three or four years. He expects that after that he will move to another role, either in [Country 5], [Country 6] or [Country 7] but not Australia.
y)   He opened a new bank account when he moved to [Country 5].
z)   His ultimate goal is to retire in [Country 6]. He will never return to Australia for work purposes or residency; he would not return here even for a holiday.
Mr Mullen provided the tribunal with copies of his Australian income tax returns lodged for the 2019/20, 2020/21 and 2021/22 financial years. He confirmed that he was required by the ATO to lodge these returns despite declaring nil income.[12]
[12] Notices of overdue returns issued by the ATO at page 189 of the Child Support papers
Ms Shelby told the tribunal that Mr Mullen owes significant child support arrears. He has never complied with his child support obligations and his current position disputing his residence status is further indication of his refusal to pay his child support. When they first went overseas together it was never a long-term plan it was just to make some good money to set the family up. The only reason he has not returned to Australia is because of the departure prohibition order.
Child support provided information about the Departure Prohibition Order. They advised that Mr Mullen was subject to an order from 22 December 2014 until 24 March 2015. A second order was issued on 22 October 2019 and has a current expiry date of 14 August 2023.
In this matter the tribunal makes the following findings of fact:
a)   Mr Mullen was born in Australia; he is an Australian citizen. He has not acquired citizenship of any other country.
b)   Mr Mullen’s parents, siblings and children live in Australia.
c)   Mr Mullen’s wife lives in Australia. The intention is that she will travel to [Country 5] to live with Mr Mullen at the end of 2023 when her daughter completes Year 12.
d)   Mr Mullen works as a [Occupation 1] of a [workplace].
e)   His work and travel history is as follows:
·2005 to 2006 – [Country 1]
·2006 to 2009 – [Country 2]
·Jan 2009 to May 2011 – [Country 3]
·May/June 2011 to 2013 – Australia
·November 2013 to 2015 – [Country 4]
·2015 to March 2019 – Australia
·March 2019 to September 2019 – [Country 2]
·October 2019 to October 2022 – [Country 4]
·Since October 2022 – [Country 5]
f)    In 2016 his parents purchased a house in Australia. Mr Mullen made a financial contribution to the purchase of the property. His wife lives in the property. He and his wife paid rent to his parents.
g)   In 2022 his father decided to transfer the property into Mr Mullen’s sole name. Mr Mullen and his wife are joint mortgagees. Mr Mullen is the registered legal owner of the property.
h)   Mr Mullen contributes to the mortgage; household costs and financially supports his wife who works part time.
i)    Mr Mullen expects his current role will continue for three or four years before taking up another role. This is consistent with the practice in his industry.
j)    Mr Mullen intends to retire in [Country 6].
k)   Mr Mullen is currently subject to a Departure Prohibition Order which was issued on 22 October 2019.
The tribunal is satisfied that Mr Mullen does not meet the resides test.
In this matter, the main submission made by Mr Mullen and his lawyer is that because he has expressed the intention never to return to Australia then he is not satisfying the domicile test. The authorities referred to by Mr Mullen are those referenced in the Tax Ruling IT2650.[13] Those authorities deal with persons who have relocated to a single country for employment purposes for an indefinite period. Factually those cases[14] are distinguishable from the facts of this case where Mr Mullen has not remained in one country.
[13] As noted this ruling was withdrawn with effect from 6 October 2022.
[14] T. v. Jenkins (1982) 12 ATR 745 and T. v. Applegate (1979) 9 ATR 899.
As noted, a person can acquire a domicile of choice where they demonstrate an intention to make their home indefinitely in that country.[15] In this case, Mr Mullen has not remained in a single foreign country. Since 2019 he has moved from [Country 2] to [Country 4] and is now in [Country 5]. He has also stated that his intention is to eventually retire to [Country 6]. In this regard the tribunal notes the following example in TR2022/D2:
[15] Section 10 Domicile Act 1982.
Example 9 – person out of Australia indefinitely – resident under domicile test
Stuart was born and raised in Australia. He separated from his spouse and moved out of the family home, leaving his 4 children in the care of his former spouse. He met and formed a relationship with a Chinese national and visited her in China on many occasions.
In time, he resigned from his employment in Australia and moved to Nanning, China to take up a short-term employment contract and advance his new relationship. When the first contract ended, Stuart took up further short to medium-term employment contracts in various countries in Asia and moved apartments as needed to fulfil these roles. Sometimes his partner visited him and sometimes he visited her or spent time with her in between contracts.
From time to time, Stuart returned to Australia, usually for his children’s birthdays or special events. When in Australia, he stayed with his parents or friends as he no longer has any assets in Australia.
Stuart is not considered to be a resident of Australia under the ordinary concepts test as he is not residing here and intended to leave Australia indefinitely. Stuart has not maintained a significant connection to Australia and has worked and lived outside of Australia for most of the income year.
Stuart is domiciled in Australia so he will still be a resident of Australia unless his permanent place of abode is outside Australia. Even though Stuart has abandoned his residency in Australia, he has not established his permanent place of abode outside of Australia, as evidenced by his shifting between a number of countries and apartments for employment purposes [emphasis added]. Therefore, he is an Australian resident under the domicile test.

The tribunal also notes that in this case Mr Mullen owns an asset in Australia and his wife resides in Australia. As noted by the ATO, under section 10 of the Domicile Act 1982, for a person to acquire a domicile by choice a person must have a lawful physical presence in that country and an intention to make that country indefinitely their home.
The starting point is that Australia is Mr Mullen’s domicile by origin. In the tribunal’s view, it is not sufficient for a person to simply express an intention to abandon their domicile, it has to be replaced by another domicile.
It is apparent from Mr Mullen’s evidence that he does not have an intention to make any of the countries he has worked in since 2019 indefinitely his home, to the contrary his evidence is that the nature of his industry is such that at most he will remain in a country for up to three or four years before relocating. Further, his clear evidence is that he has no intention of making [Country 5] his home indefinitely, rather at some point he intends to retire in [Country 6]. The tribunal is satisfied and finds that Mr Mullen has not established a permanent place of abode outside of Australia.
The tribunal is not satisfied that Mr Mullen has acquired a domicile by choice in another country, as such he remains domiciled in Australia.
The tribunal concludes that Mr Mullen is a resident of Australia pursuant to the domicile test. For these reasons the tribunal is satisfied that Mr Mullen is a resident of Australia for child support purposes.

DECISION

The decision under review is affirmed.

[2023] AATA 1642

22 February 2023

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Statutory Construction

Appeal