Wintle and Wintle (Child support)

Wintle and Wintle (Child support) [2023] AATA 3752 (21 September 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/MC025942
APPLICANT:  Mr Wintle
OTHER PARTIES:  Child Support Registrar
Ms Wintle

TRIBUNAL:Member J Nalpantidis
DECISION DATE: 21 September 2023
DECISION:

The Tribunal set aside the decision under review and substituted its decision that for the period for the period 29 July 2022 until 31 May 2025, Mr Wintle’s adjusted taxable income applicable to the child support assessment is $153,273 per year.

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

Mr Wintle and Ms Wintle are the separated parents of two children, [Child 1] aged 12 years and [Child 2] aged nine years. For the purposes of child support the children are recorded as being in Ms Wintle’s primary care and Mr Wintle’s regular care. A case has been registered with Services Australia – Child Support (the Agency) since 18 July 2022 and child support has been collectable by the Agency since that date. Mr Wintle is the payer of child support and Ms Wintle the payee.
The Tribunal noted the Agency papers referred to a pending care decision in this case. The parties confirmed they reached agreement about the care of the children, which for [Child 2] remains at 86% recorded for Ms Wintle and 14% with Mr Wintle, and for [Child 1] the care changed to 50:50 between the parents from 24 February 2023.
On 13 September 2022, Ms Wintle applied for a change of assessment, on the following basis:
· Mr Wintle’s income, property and financial resources make the child support assessment unfair (called “Reason 8A” by the Agency);
· Mr Wintle’s income or earning capacity makes the child support assessment unfair (called “Reason 8B” by the Agency).
At the time of the change of assessment relevant application, the following child support assessment was in place:
·     for the period 18 July 2022 to 28 July 2022, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $20,235 per annum. This assessment was based on Mr Wintle’s 2021/2022 adjusted taxable income (ATI) of $155,180 and Ms Wintle’s 2021/2022 ATI of $94,618.
·     for the period 27 July 2022 to 15 August 2022, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $2,827 per annum. This assessment was based on Mr Wintle’s 2022/2023 estimated income of $50,161 and Ms Wintle’s 2021/2022 ATI of $94,618.
·     for the period 16 August 2022 to 5 September 2022, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $4,879 per annum. This assessment was based on Mr Wintle’s 2022/2023 estimated income of $50,161 and Ms Wintle’s 2022/2023 estimated income of $0.
·     for the period 6 September 2022 to 8 September 2022, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $4,832 per annum. This assessment was based on Mr Wintle’s 2022/2023 estimated income of $50,161 and Ms Wintle’s updated 2022/2023 estimated income of $28,678.
·     for the period 9 September 2022 to 20 September 2022, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $4,120 per annum. This assessment was based on Mr Wintle’s 2022/2023 estimated income of $50,161 and Ms Wintle’s 2022/2023 updated estimated income of $28,678. This change was due to a change in the children’s care.
·     for the period 21 September 2022 to 30 June 2023, Mr Wintle was assessed to pay Ms Wintle an annual rate of child support of $3,370 per annum. This assessment was based on Mr Wintle’s 2022/2023 estimated income of $50,161 and Ms Wintle’s 2022/2023 updated estimated income of $41,714.
On 12 January 2023, the original decision maker decided Reason 8A was established and changed the assessment as follows:
· for the period 29 July 2022 to 31 October 2026, Mr Wintle’s ATI is set at $170,698.
The impact of this assessment was that from 29 July 2022 Mr Wintle had an amount payable of $8,427.34 and his ongoing child support payment was $451.03 per week.
On 20 January 2023, Mr Wintle objected to this decision. Ms Wintle responded to Mr Wintle’s objection on 3 February 2023.
On 18 March 2023, an objections officer of the Agency allowed the objection in part, and found special circumstances exist in the case and Mr Wintle’s income, property and financial resources make the child support assessment unfair, and that it would be just and equitable and otherwise proper to make a change. The objections officer set aside the decision of the original decision maker dated 12 January 2023, and replaced it with the following:
· for the period 29 July 2022 to 31 May 2025, Mr Wintle’s ATI is set at $102,180.
The impact of the decision was that the current annual rate of child support payable by Mr Wintle was changed to $12,412 (based on the care recorded as at the date of the objection). The decision reduced Mr Wintle’s child support balance by approximately $6,053, and his monthly child support reduced from $1,878.17 to $1,034.33 per month.
On 13 April 2023, Mr Wintle applied to the Administrative Appeals Tribunal (the Tribunal) for an independent review of the objections officer’s decision.
A directions hearing was conducted by the Tribunal on 11 August 2023, on which date the parties spoke to the Tribunal by MS Teams audio.
The Tribunal hearing was conducted on 21 September 2023 and the parties again spoke to the Tribunal by MS Teams audio and gave evidence on affirmation.
At the hearing the Tribunal had before it documents provided by the Agency (1 to 594 and 595 to 674), documents provided by Mr Wintle (A1 to A190) and documents provided by Ms Wintle (B1 to B107). All documents had been exchanged between the parties prior to the hearing and they confirmed receipt of the documents with the Tribunal.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in the place of the Registrar, must be satisfied that:
(i)   there is a ground to depart from the administrative assessment of child support;
(ii)     it is just and equitable to depart; and
(iii)   it is otherwise proper to depart.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Issue 1 – Is there a ground established to depart from the administrative assessment of child support?

Section 117 of the Assessment Act provides that the Tribunal may make a departure order if it is satisfied a ground exists under subsection 117(2) of the Assessment Act and it would be just and equitable as regards the child, the carer entitled to child support and the liable parent, and is otherwise proper to make an order. The Tribunal considered the ground relating to the income, property and financial resources of Mr Wintle. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, Mr Wintle’s income, property and financial resources make the child support assessment unfair.

Evidence before the Tribunal

Mr Wintle’s evidence

In response to Ms Wintle’s change of assessment application, Mr Wintle submitted:
·     his business was restructured as a company in 2022 and he is the only director – the reason for the restructure was for liability protection on advice of financial professionals to ensure asset protection;
·     he is now employed by [Company name] (the Company) and is paid an annual salary of $50,024;
·     the Company also employs a casual [job task] assistant and a bookkeeping/administrative assistant;
·     he submits the Company and personal expenses are separate;
·     he included banks statements and payslips – which show a fortnight pay of $1,924 gross.
In his 20 January 2023 objection to the original decision, which set an ATI of $170,698 for Mr Wintle, he objected to the original change of assessment decision on the following grounds:
·     he receives a wage of $50,024 gross per annum from the Company he operates;
·     the assessment should be based on his wages, not Company expenses;
·     his income covers his personal expenses.
Mr Wintle gave evidence his income is an annual wage of $50,024 as reflected in his payslips. He told the Tribunal this has been the case since the parties separated. Mr Wintle gave evidence that his work has reduced significantly since the separation and as all his work is contracted there are no guarantees in relation to his income. He told the Tribunal he pays a lot in wages to keep the business going.
Mr Wintle confirmed he works in a [job task] business which he previously operated as a sole trader ([Sole trader name]) and since the separation in 2022 the business has been restructured as a company, ‘[Company name]’ (the Company); he is the only director of the Company. Mr Wintle told the Tribunal he was advised by financial professionals the restructure should have occurred years ago as it did not make financial sense for him to operate as a sole trader. Mr Wintle provided evidence the restructure was for liability protection and to ensure protection of assets.
The Tribunal noted the financial statements for year ended 30 June 2023 for the Company listed sales of $447,707 with salary costs of $190,774; profit from ordinary activities before income tax of $80,265. In 2022, when Mr Wintle was a sole trader there were sales of $394,249 and an income of $155,180 was attributed to Mr Wintle.
Mr Wintle provided Business Activity Statements from 2021 which are summarised as follows:

Period

Total sales

Total salary, wages

July to September 2021

$99,488

$35,093

January to March 2022

$106,456

$32,007

April to June 2022

$102,637

$30,250

July 2022

$32,287

$28,132

August 2022

$39,225

$16,636

September 2022

$50,303

$18,434

October 2022

$35,206

$10,562

November 2022

$0

$0

December 2022

$32,934

$10,303

January 2023

$40,025

$9660

February 2023

$38,241

$10,645

March 2023

$38,019

$19,530

April 2023

$47,578

$10,808

May 2023

$35,486

$14,019

June 2023

$59,719

$12,775

The Tribunal referred Mr Wintle to the BAS statements which indicate that broadly sales for the Company have not decreased and salaries and wages have not increased. Mr Wintle confirmed he had control of the business but the financial statements are prepared by his accountant. Mr Wintle gave evidence that he rarely does ‘private’ work and company income may vary, decreasing in the cooler months. He gave evidence that the Company has reduced his client list and essentially now has two large, [Facility] sites as clients, one pays $140,000 per year and the other between $50,000 to $60,000. The Tribunal noted the BAS statements show annual income of approximately $450,000 which suggest significant income was achieved from other sources. Mr Wintle acknowledged this may be the case, but he was not the bookkeeper and was unable to be more specific in relation to sales or expenses; the expenses were paid out of his business bank account.
Mr Wintle told the Tribunal he does not receive cash payments for services, and this is rare for the Company. If there was a cash payment, it would be deposited into the Company bank account; for example, a couple of customers pay $70 in cash which is deposited into the business account.
Mr Wintle gave evidence that only business expense are paid from the Company bank account, although he acknowledged its possible some mistakes may be made from time to time, and these mistakes would be corrected.
Mr Wintle confirmed that he has a number of motor vehicles for work and a number of others for personal use. He confirmed his [Vehicle 1], [Make] motorbike and [Vehicle 2] were all for personal use and not work related. His work-related motor vehicles included a [Vehicle 3] and [Vehicle 4], a [Vehicle 5] and a [Vehicle 6]. He told the Tribunal these motor vehicles are used by the Company as workers need to travel to a number of worksites across Melbourne. Mr Wintle told the Tribunal that the depreciation expense on the Company financial statements are for work vehicles and not for his private vehicles.
In relation to his annual wage, the Tribunal referred Mr Wintle to the financial statements of the company and his previous sole trader financial reports, which show turnover in 2022 was $394,000 when he was a sole trader, and this increased to $447,707 in 2023 under the company structure, whereas annual wages paid to him decreased from $155,180 in 2022 when he was a sole trader to $50,024 in 2023 when he was an employee of the Company, a difference of some $105,000. Mr Wintle was unable to explain the significant difference in his income in light of the change in structure of his business.
He told the Tribunal he has been in poor health since February 2023 and has been unable to manage physical work since that time. He told the Tribunal he has done basic paperwork and the company has used sub-contractors to undertake the physical work which he had undertaken previously. Generally the company uses two contractors and this may increase to four contractors depending on the workload. He told the Tribunal the costs of sub-contractors and wages have therefore increased for the company. Depending on the hours worked wages may be from $1,500 to $2,000 per week.
The Tribunal notes that in 2022, the financial records of Mr Wintle’s sole trader business show he paid a salary of $94,000 to Ms Wintle in relation to bookkeeping. He gave evidence Ms Wintle worked out what to pay herself. Mr Wintle gave evidence the Company pays his current partner wages of $1,384 per fortnight for bookkeeping; essentially she does the invoices and receipts. He confirmed his partner also has a full-time job and she works approximately 36 hours per fortnight for the Company. He is unsure of the pay arrangements for his partner and she may be paid $27 per hour. The Tribunal noted this would work out to a salary of $972 per fortnight, which is significantly less than the $1,384 paid to Mr Wintle’s partner.
In relation to submissions made by Ms Wintle, Mr Wintle told the Tribunal Ms Wintle made herself redundant and completed the paperwork for this herself. He was not aware of what she paid herself and she took out a lump sum from the business when she left. He submitted that the re-structure of his business into a company should have been done years ago, as it is more financially beneficial to operate as a company rather than a sole trader. His partner’s father lives in Queensland and when he stays in Melbourne, he lives in a caravan at the back of Mr Wintle’s property. He was advised by lawyers not to contribute to the mortgage repayments, before a property settlement is reached, in relation to the property where Ms Wintle lives. He has $20,000 in funds available to make a contribution when advised by his lawyers.
Mr Wintle has provided medical certificates in relation to his health; he suffers from a [disease] which affects his [function]. He has an appointment coming up with a specialist and is awaiting advice about treatment. He is currently unable to do physical work and is restricted to paperwork. He takes medications (Panadeine Forte) which affects his ability to drive. He continues to pay himself a full wage because he needs to show a consistent income to support his expenses and for re-financing purposes. He is not claiming income protection or accessing his superannuation at this stage, he simply pays himself a wage as listed on his payslips (of $1,924 per fortnight gross).
Mr Wintle told the Tribunal that on separation they each received a lump sum of $75,000 and he has spent his funds on living expenses and various household items and legal fees. Mr Wintle submitted that Ms Wintle purchased various items, including furniture for her house before they separated so as she was set up. Mr Wintle told the Tribunal he paid for various school expenses for [Child 1], and he does not believe there is a need for Ms Wintle to seek a contribution for medical fees, because [Child 1] could attend public medical services at no cost.
Mr Wintle gave evidence the older child is now in his 50% care and therefore he contributes to her expenses, including school expenses. He also pays for activities such as [Activity] at a cost of $300 for fees, $300 for grading and $10 per lesson. Mr Wintle contends this is good for the child’s mental health. He submitted a paediatrician is available through the public health system and Ms Wintle does not have to attend a private service. He also disagreed with the child being treated with medication. Mr Wintle gave evidence he meets the costs of birthday presents and clothing for the children. He told the Tribunal he had incurred additional expenses for the children to set them up in their home; for example purchase of shoes, hairbrushes, bedding, clothes and so forth.
In response to the Tribunal’s question about how he meets the significant difference between his income ($962 per week) and expenses ($3,240 per week) Mr Wintle responded that he has used his savings. He told the Tribunal his partner contributes to the household expenses, but was unable to provide details of about what his partner contributes. He estimated that his partner may contribute 10% across all expenses, other than his personal medical expenses, house utility bills, telephone and motor vehicle costs.
Mr Wintle told the Tribunal the parties are in dispute in relation to the property settlement and this is being dealt with currently through their lawyers.
He submitted that due to his medical condition he is not currently working and referred the Tribunal to various medical certificates. He gave evidence that he is awaiting a further specialist consultation in relation to recommended treatment. Mr Wintle estimated his medical costs may be $160 per week ($8,000 over the year). He pays $300 per specialist visits and $30 per month for medications. He is unable to do physical work at present because he is easily exhausted and is restricted to paperwork. He nevertheless is paid his normal wage by the business.
In relation to hardship, Mr Wintle told the Tribunal the Agency assesses a different amount of child support and he pays what is assessed by direct deduction from his pay; he will continue to do so. Mr Wintle told the Tribunal that initially he was not contributing to the mortgage repayments on advice from his lawyer, but more recently the advice changed and he is now contributing 50%.

Ms Wintle’s evidence

In her change of assessment application, Ms Wintle submitted she and Mr Wintle purchased a business in 2010 which Mr Wintle operated as a sole trader. She stated:
·the business was successful and she worked in the business from 2015 to 2022;
·in the financial year 2021/2022 Mr Wintle received $155,180 as a sole trader;
·the business is now registered as a company and he pays himself an annual wage of $50,161;
·Ms Wintle submits Mr Wintle pays all his bills and expenses through the business;
·in her change of assessment application Ms Wintle included the income and financial statements for Mr Wintle’s business for 30 June 2020, 30 June 2021 and 30 June 2022:
§ 30 June 2020 shows a profit (as a sole trader) of $177,186, and in 2019 it was $217,425. The expenditure includes:
   depreciation of $9,866.65
   vehicle expenses of $13,748.74
   registration and insurance of $3,608.88
   office supplies of $1,757.75
   wages of $145,178.96
§ 30 June 2021 shows a profit (as a sole trader) of $154,922.89. The expenditure includes:
   motor vehicle depreciation of $13,845.65
   vehicle expenses of $3,562.92 (fuel and oil separately)
   registration and insurance of $1,792.51
   office supplies of $5,599.36
   wages of $138,041.49
§ 30 June 2022 shows a profit (as a sole trader) of $155,175.07. The expenditure includes:
   motor vehicle depreciation of $10,705.64
   vehicle expenses of $2,733.70
   registration and insurance of $2,056.30
   office supplies of $3,099.45
   wages of $126,568.89.
In response to Mr Wintle’s submissions to the Agency, Ms Wintle stated:
·Mr Wintle pays utility bills, fuel, phone and internet from the business account;
·he chooses to pay himself a low wage of $1,626 per fortnight;
·his partner, [Ms A], is employed as a bookkeeper/administrative assistant and receives $1,384 per fortnight in wages and [Ms A] also works another job for wages;
·he has a [Vehicle 4], [Vehicle 3] and a Chevrolet utility (recently purchased for $137,000), he owns a [Vehicle 2] which is valued over $27,000 and also owns three work trailers, a dirt bike and a caravan.
Ms Wintle responded to Mr Wintle’s objection as follows:
·Mr Wintle is now mortgage free and she is now required to pay a mortgage on the property where she resides; Mr Wintle’s property is mortgage free and the properties are subject to financial settlement between the parents;
·Mr Wintle pays for personal expenses through the Company including motor vehicle expenses.
Ms Wintle told the Tribunal that their business accountant told her to increase her wage (to $94,000) so as to pay less tax; that money went into their joint bank account and was not for her sole use. She said this figure included a termination payment, not part of her annual salary, and this has disadvantaged her in terms of the child support assessment.
Following the separation she was made redundant and did not have a job to go to; she was only paid half her annual leave and termination payment.
Ms Wintle submitted Mr Wintle chose to pay himself a low wage but he can choose to pay himself whatever he likes because he has control of the Company. Effectively, he is the chief executive officer and can choose the wage he pays himself; he can also choose the wage paid to his partner. She submitted there is a significant difference between Mr Wintle’s 2022 wage of (approximately) $155,000 and his 2023 wage (following the Company restructure) of (approximately) $50,000, and this decreases the child support Mr Wintle has to pay, which is to meet essential expenses for the children. Ms Wintle submitted the cost of living has increased significantly and she is left to pay the mortgage on her home without contribution by Mr Wintle (they are still working through the property settlement). The current child support assessment of $343 per moth does not cover the expenses she has to meet. Ms Wintle submitted $343 should be paid each week, rather than per month. She told the Tribunal she used the $75,000 from the separation and also sold a motor vehicle for extra funds, which she used to meet her expenses. She lives in the [Street 1] property which is valued at $650,000 and has a mortgage of some $265,000, while Mr Wintle lives in the [Street 2] property which is a mortgage free property valued at $725,000.
The Tribunal referred Ms Wintle to her Statement of Financial Circumstances which estimated her weekly income as $997 per week (inclusive of child support in the amount of $47 per week). Upon being questioned by the Tribunal whether all her expenses have been listed, Ms Wintle acknowledged that she may not have included all her expenses, such as pet expenses, mortgage repayments and legal fees. Her total weekly expenses were listed at $1,373 inclusive of mortgage repayments of $397 per week; Ms Wintle told the Tribunal more recently Mr Wintle has contributed half the mortgage repayments. She apportioned $862 of those expense to herself and $511 to the children.
In written submissions Ms Wintle stated:
·We are currently working through legal matters and have not yet finalised our divorce or separated our assets.
·After separation, Mr Wintle made me redundant, employed his new partner to do my job, then changed business structure from sole trader to company.
·I only received half of my annual leave termination pay.
·Mr Wintle is 100% owner and CEO of [Company name].
·Mr Wintle chose to pay himself a wage of $50,024 per annum.
·The business has a shareholder loan. Mr Wintle is 100% shareholder.
·Mr Wintle lives with his partner [Ms A] and her father [Mr B] at our [Street 2] property which is owned by Mr Wintle and myself.
·[Ms A] and [Mr B] both work for Mr Wintle. [Ms A] is an employee. I am unsure if [Mr B] is.
·Mr Wintle receives cash in hand payments for many jobs which he does not declare. There is some evidence of this in his personal accounts.
·Mr Wintle and I have a mortgage on the [Street 1] property where I live with our children. I was paying full mortgage repayments by myself for 6 months because Mr Wintle refused to contribute. I have paid $16,000 from February to July. After speaking to his lawyer, Mr Wintle has now agreed to pay half of the mortgage repayments until we reach financial settlement. Mr Wintle is living in our [Street 2] property which is unencumbered. He has [Ms A] and [Mr B] contributing to living expenses and he claims many bills and expenses through the business.
·Mr Wintle owns many vehicles and equipment, most of which he classes as company assets. Redbook valuation can be provided for most vehicles.
    [Vehicle 2] $25,400
    [Vehicle 3] $15,150
    [Vehicle 4] $19,000
    [Vehicle 5] $37,150
    [Vehicle 6] $124,150
    [Vehicle 7]            $7,000
    [Make] Tractor                 $18,500
    Custom Trailer approx.      $10,000
    Custom Trailer approx.      $3,000
    Various [Equipment] and [job task] equipment approx. $20,000
    Motorbikes, caravan and recreational equipment approx. $20,000
·Mr Wintle has not provided evidence of a serious ongoing medical condition. His doctors' certificates only cover a few days to week at a time. He has employed staff to perform his regular physical duties, however, he is still paying himself and his partner a full-time wage to carry out the administration role that used to be my job prior my redundancy.
·I am not receiving any government assistance (apart from the Child Care Subsidy) because our combined assets are too high and so were my earnings for the 2021- 2022 financial year when I was working for Mr Wintles business. I may be entitled to some government assistance after completing my 2022-2023 tax return, or I may need to reapply once our assets have been separated. I now work in a low-income job and my essential living expenses are far higher than my current earnings.
·We divided the money in our joint account 50/50. We each received $75,000 which was deposited into separate personal accounts. Due to the rising cost of living and expensive legal fees and mortgage repayments, the funds in my account have almost depleted and I may need to sell the [Street 1] property if matters don't settle soon. The amount that Mr Wintle pays in child support covers nowhere near 50% of the children’s living expenses. I have attached proof of ongoing school fees and receipts from [Child 1]'s paediatrician appointments.
·In the past month, Mr Wintle and [Ms A] have booked three inter-state holidays. They spend excessive amounts of money on alcohol, cigarettes, takeaway food, restaurants, fashion, vehicles, pets, home renovations and landscaping. If Mr Wintle can afford to spend all this money on non-essential items, then he can afford to pay child support.
Ms Wintle gave evidence that one child is struggling with mental health issues and attends a paediatrician six-monthly at a cost of $150 per visit. The child was taking an anti-depressant/anti-anxiety medication at a cost of $10 per month but this has now stopped. Ms Wintle gave evidence the other child is also suffering from mental health issues but she cannot afford the cost of attending a psychologist.
Ms Wintle told the Tribunal that she has to pay school fees for one child who is about to start secondary school, in the amount of $420 and she also has to purchase a laptop for one child at a cost of $450 to $610, as well as school uniforms with the cost as yet to be determined. Primary school fees for the children were $600 inclusive of fees, books, stationery and excursions. The cost of uniforms last year was $250 for one child; generally the younger child inherits the older child’s clothes. Ms Wintle gave evidence that Mr Wintle does not contribute to the children’s school expenses.
Ms Wintle gave evidence that generally the cost of living has increased significantly and she tries to confine spending to essential items. It is difficult to afford non-essentially items such as presents for the children’s birthdays; she has also not been able to afford private dental treatment for the children and is using the free service.
Ms Wintle gave evidence that her income in the 2022 was inflated due to termination and holiday pay being included following her termination from Mr Wintle’s company. Her current PAYG income is $1,950 gross per fortnight.
Ms Wintle told the Tribunal that she has used her savings (she had an amount of $75,000 following the separation) to meet the shortfall between her income and expenses and this has been significantly depleted. She is concerned that eventually she may have to sell her home. She contends that Mr Wintle has the ability to pay for two recent holidays and this is not consistent with someone struggling financially. She cannot afford such an expense.
Ms Wintle told the Tribunal she uses after school care for the younger child and receives a child care subsidy for this service.

Findings

The Tribunal has found that Mr Wintle operated a [job task] business for many years as a sole trader, and he restructured the business in 2022 to operate under a company structure, [Company name]. The Tribunal has found that Mr Wintle is the sole director and shareholder of the Company which allows him control over financial decisions, including what wage he pays to himself, and working under a Company structure also affords Mr Wintle deductions, otherwise considered private expenses not available to PAYG earners, including items such as depreciation, telephone expenses, rental costs, connection fees, home office costs and motor vehicle expenses.
As a sole trader Mr Wintle’s annual income from the business according to his tax return of 2021/2022 was $155,180, and fortnightly wage under the Company structure was annualised at $50,024. The change in Mr Wintle’s remuneration post separation has a clear negative impact on the child support assessment, reducing his potential liability significantly.
Mr Wintle submitted his annualised income, being $50,024 per annum as reflected in his payslips, should be applied in the child support assessment. As shown in Mr Wintle’s income tax return for the financial year 2022, (as a sole trader) the business had annual income of $394,249, and Mr Wintle’s income for that year was $155,180. Total salary and wage expenses in 2022 for the business were listed as $126,569, with a substantial amount paid to Ms Wintle (some $94,000) who was part of the business at that time. It was Ms Wintle’s evidence that she provided administrative assistance and bookkeeping for the business. The Tribunal accepts that when operating as a sole trader Mr Wintle received financial benefit from the business in excess of $155,000 per annum. Following the restructure of the business in the financial year 2023, the Company annual income increased to $447,707, with an operating profit before tax of $80,265. Salary expenses for the Company were listed at $190,774, with an annual salary expense for Mr Wintle of $50,024.
There is no dispute that Mr Wintle’s partner is employed by the Company as a bookkeeper/administrative assistant and paid a wage of $1,384 per fortnight (annualised at $35,984) and that she also had other full-time employment. Mr Wintle listed his partner’s overall income as $2,403 per week which is annualised at $124,956. The Tribunal accepts as does the objections officer that income paid to Mr Wintle’s partner would otherwise be paid to Mr Wintle and is income available to Mr Wintle. The objections officer accepted a nominal amount of $250 per week for bookkeeping/administrative assistance as a reasonable expense for the business, which totals $13,000 per annum which is significantly less than the amount claimed of $35,984. The difference should be attributed to Mr Wintle.
The Tribunal has accepted that Mr Wintle made a number of purchases which he claimed against his business accounts, including a purchase of $1,767.95 from The Good Guys for a coffee machine and purchases on 3 January 2023 of $991 and $1,550 from JB Hi Fi for new mobile phone and iPad, totalling $4,656. Mr Wintle did not provide an explanation to satisfy the Tribunal that these are expenses solely linked to the business. The Tribunal does not accept that these particular items were solely for business use, and considers there may be other purchases made through the business account that are not solely for business use. As Mr Wintle derived a personal benefit from them rather than them being work-related expenses, the Tribunal finds it is reasonable that they should be added back to Mr Wintle’s income, noting the before tax amount would be greater.
The Tribunal found that the Company paid [Financial services provider] $2,165.56 per month for motor vehicles finance costs. There were other motor vehicle costs claimed by the Company. The Tribunal has found that Mr Wintle has a number of motor vehicles, including vehicles he claims are for work-related purposes and others for private use. Mr Wintle gave evidence the [Vehicle 1], [Make] motorbike and [Vehicle 2] were all for personal use and not work related; his work-related motor vehicles included a [Vehicle 3] and [Vehicle 4], a [Vehicle 5] and a [Vehicle 6]. Mr Wintle was did not provide a satisfactory evidence in relation to how he met his personal motor vehicle costs and how those costs were distinguished from work related costs. On balance the Tribunal finds that the motor vehicle expenses, paid by the Company, provided some personal benefit to Mr Wintle as he did not meet any motor vehicle expenses from his personal income. The objections officer factored expenses of $15,000 per year, which the Tribunal considers reasonable to apply for personal motor vehicle expenses covered by the Company, noting the before tax amount would be greater. The objections officer also noted Mr Wintle received $2,779 over a six-month period into his personal account from the business, which supplements his income; an amount of $5,500 per annum was added to Mr Wintle’s income. The gross amount which should be applied is greater than the amount attributed by the objections officer.
It was Mr Wintle’s evidence that while he may have used the business account to make personal purchases from time to time, he reimbursed the business account from his personal account to cover any non-work related purchases from the business account. Mr Wintle did not provide satisfactory corroborating evidence in support of his oral evidence.
By adding the (after tax) amounts listed above, to the annual wage of $50,024 claimed by Mr Wintle, the objections officer determined the annual income that should be applied to Mr Wintle’s child support assessment applied is $102,180, which will increase the assessment from $3,370 to $12,412 per annum.
It was Mr Wintle’s evidence that he rarely receives any cash payments for his work and all his income is reflected in his bank statements. Mr Wintle gave evidence that his business income primary comes from two major clients, and on closer examination it appears that the two clients referred to by Mr Wintle represented less than (approximately) 50% of the business income ($447,000) reflected in the Company financial statements for the financial year 2023. Ms Wintle contends that Mr Wintle’s income is greater than that reflected in his bank statements and income tax records.
Mr Wintle provided a Statement of Financial Circumstances listing his income as $962 per week (annualised to ($50,024), with expenses of $3,240 per week (annualised to $168,480), and expenses related to the children were listed at $555 per week (annualised to $28,860). Noting the expenses are paid from after tax income, clearly Mr Wintle’s listed expenses are significantly more than claimed income of $50,024. Even accounting for Mr Wintle’s partner contributing to some of the household expenses, the Tribunal concludes that to meet his stated expenses, Mr Wintle requires an income that is significantly more than $50,024 per annum. The Tribunal accepts Mr Wintle’s expenditure demonstrates a capacity to pay that is in excess of the ATI of $50,024. The Tribunal is therefore satisfied that this creates a special circumstance in this case.
Mr Wintle’s listed his resources, including his half share of two properties which has yet to be settled ($662,500), bank funds of $55,030, (two) motor vehicles valued at $18,960, household contents of $10,000, and superannuation of $86,273. Included in his liabilities was a joint home loan of $263,239. Mr Wintle gave evidence that he had three motor vehicles for his private use and four vehicles for work purposes. Ms Wintle provided valuations of Mr Wintle’s motor vehicles which significantly exceeded the $18,960 value attributed by Mr Wintle. Despite the Company balance sheet showing net assets of $198,072, which also reflected the total equity of the Company, Mr Wintle did not place a value on the business which he fully owns. As an operating concern with significant revenues and profitability, the business clearly has a value which the Tribunal accepts is at least $198,072 as at 30 June 2023. The Tribunal does not accept the property and financial resources listed by Mr Wintle adequately reflects his level of income, property and financial resources.
The Tribunal accepts that in cases of parents who are self-employed, either as a sole trader or under a company structure, it is necessary for a change of assessment consideration to determine if there is a personal benefit available to the parent from their employment that is not available to a salary and wage employee.
Where a person’s income is not adequately reflected in the assessment, it may be warranted to change a parent’s income to account for those resources if this would make a significant difference to the child support liability. The Tribunal accepts that applying an income of $50,024 per annum for Mr Wintle to the child support assessment is unfair.

The Tribunal has found Ms Wintle is a PAYG employee, earning $950 gross per week. Her 2023 income tax return shows income of $66,586. She listed expenses of $1,373 per week, with $511 attributed to the children. Ms Wintle gave evidence that she has met the shortfall between her income and expenses through savings which have been significantly depleted since 2022. Ms Wintle’s resources included a half share of two properties (including her home) valued at $665,000, bank savings of $28,644, household affects and a motor vehicle valued at $40,000, household contents $25,000, with liabilities of $264,750 (being a half share of a joint loan), and superannuation of $147,010. The Tribunal accepted that this represents Ms Wintle’s level of income, property and financial resources.

The Tribunal finds that, the application of the provisions of the Assessment Act relating to the administrative assessment of child support in this case would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Wintle to Ms Wintle for the children of the assessment, because of Mr Wintle’s income, property and financial resources. This ground for departure (under Reason 8A) is established.

Issue 2 – Is it just and equitable to depart from the administrative assessment of child support?

As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. In addition to the income, property and financial resources of Mr Appleton, discussed in detail above, and the Tribunal is required to consider:
·      the nature of the duty of a parent to maintain a child and the earning capacity, property and financial resources of the children;
·      the proper needs of the children;
·      Mr Wintle’s earning capacity;
·      the income, property and financial resources of the parents;
·      the necessary self-support commitments of the parents;
·      any direct and indirect costs incurred by Mr Wintle in providing care for the children; and
·      any hardship to the parents or the children by the making of a departure determination.

The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the child

There was no evidence before the Tribunal that the children have access to any other income, property or financial resources from which to support themselves and the Tribunal finds accordingly. The children are entirely reliant on their parents to meet all of their needs.

The proper needs of the children

Subsection 117(6) of the Assessment Act states that in having regard to the proper needs of the child, the court must have regard to the manner in which the child is being, and the manner in which the parents expected the child to be, cared for, educated or trained; and any special needs of the child.
There was evidence provided that one child attends medical treatment with costs of approximately $150 every six months met by Ms Wintle. Ms Wintle gave evidence that she meets various school expenses for the children including fees, uniforms, books and laptop computers. She gave evidence this may represent an overall cost of $1,000 (in the coming year) for one child who is staring secondary school and $300 for the child in primary school. Mr Wintle gave evidence that he meets particular costs for the children, including sporting activities. Otherwise there was no evidence presented of the children having particular needs which are required to be met by the parents.
The Tribunal finds that the costs of the children’s particular needs for medical treatment and educational costs being met by Ms Wintle are not significant and should not be taken into account in the child support assessment.

The income, property and financial resources of Mr Wintle

The Tribunal has addressed the issue of Mr Wintle’s income, property and financial resources above in some detail. The parties own joint properties with a joint mortgage on one of the properties. Other than the joint mortgage, Mr Wintle did not list any debts or liabilities, such as credit card debts, which suggest he meets all his expenses from his current income, property and financial resources. Mr Wintle’s resources included property, business, superannuation, household affects and a number of motor vehicles. Mr Wintle placed no value on his business, which the Tribunal has found has operated profitably for several years, and continues to do so as an operating concern.
The Tribunal has found that the information provided by Mr Wintle in his Statement of Financial Circumstances showed significantly higher expenditure than his reported income, and he was unable to explain this discrepancy. The Tribunal accepted that Mr Wintle had significant spending beyond his reported income and his expenditure was not reflective of his level of reported income, property and financial resources.

The income, property and financial resources of Ms Wintle

The Tribunal finds that Ms Wintle is a PAYG employee, with her annual income as reflected in her 2022/2023 income tax return being $66,856. The Tribunal has addressed the issue of Ms Wintle’s property and financial resources above.

The earning capacity of Mr Wintle

Subsection 117(7B) of the Assessment Act requires the Tribunal to consider the following matters in determining that a parent’s earning capacity is greater than is reflected in their income used in the administrative assessment:
·      Whether the parent:
oIs not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
oHas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
oHas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
·      Whether the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii)); and
·      Whether the parent has not demonstrated that it was not a major purpose of their decision (not to work despite ample opportunity to do so, or to stop working, or to reduce their hours of work or to change their occupation, industry or working pattern) to affect the administrative assessment of child support (paragraph 117(7B)(c)).
The Tribunal accepts Mr Wintle is essentially self-employed operating a [job task] business. He gave evidence that his work was impacted by a medical condition, and that he is unable to undertake the physical work he had previously undertaken; he is currently restricted to paperwork. Nevertheless, Mr Wintle gave evidence that he continues to be paid his wage, as before and this will continue. The Tribunal accepts that Mr Wintle’s medical condition has otherwise not impacted on his income earning capacity.
The Tribunal found that Mr Wintle continues to work in his usual occupation, essentially as a self-employed [job task occupation], and has done so for many years. He has a pattern of consistent pattern of working, income and expenses. In the circumstances of the case, the Tribunal has concluded that it is not appropriate for the Tribunal to make an earning capacity determination in respect of Mr Wintle’s work.

The earning capacity of Ms Wintle

The Tribunal accepted from Ms Wintle that she is employed on a full-time basis and the Tribunal finds that it is not appropriate to make an earning capacity determination in respect of Ms Wintle’s circumstances.

The necessary commitments of Mr Wintle

In his Statement of Financial Circumstances, Mr Wintle listed expenditure significantly greater than his reported income. He was unable to provide convincing evidence to the Tribunal to explain the discrepancy.
Mr Wintle gave evidence of medical expenses including visits to specialists and medication, otherwise he did not provide claim any other necessary commitments for self-support or support for another person other than the usual expenses incurred by most people, as outlined in his Statement of Financial Circumstances.

The necessary commitments of Ms Wintle

The Tribunal was provided a Statement of Financial Circumstances by Ms Wintle, which listed her usual expenses, which did not include other necessary commitments for self-support or support for another person other than the usual expenses incurred by most people.

The direct and indirect costs incurred by the parents in providing care for the children

The Tribunal noted that the legislation requires the Tribunal to consider any direct and indirect costs incurred by the carer entitled to child support in providing care for the child.
The Tribunal found that both parents meet various costs for the children, as outlined above, otherwise there was no evidence presented of the children having particular needs which are required to be met by the parents.

Hardship

Paragraph 117(4)(g) of the Assessment Act requires the Tribunal to consider any hardship that would be caused to Mr Wintle, Ms Wintle and to the children or other person that the parties have a duty to support, by the making of, or the refusal to make, a departure determination.
Ms Wintle gave evidence that she is struggling to meet her current household expenses and a decrease in child support would place her in even more difficulty, whereas an increase in child support payments would mean that she is able to better manage her current financial commitments.
The Tribunal finds that Ms Wintle would face greater financial hardship if it were to refuse to depart from the administrative assessment of child support, given the current expenses she meets in providing care for the children. The Tribunal further finds that the children may also experience hardship if the Tribunal were to refuse to make a departure determination in this matter, given Ms Wintle would experience difficulty in continuing to meet all the current necessary costs of the children.
Mr Wintle gave evidence that he generally pays what is assessed by the Agency. Given the findings of the Tribunal above regarding Mr Wintle’s circumstances, and his ability to meet a range of expenses, including various discretionary expenses, the Tribunal accepts that Mr Wintle’s financial circumstances are not adequately reflected in the administrative assessment and he has the income and financial resources to meet expenses significantly greater than his reported income of $50,024. The Tribunal finds there is no hardship caused to Mr Wintle from the Tribunal’s decision.

What is the proposed departure determination in this case?

The Tribunal considers it reasonable to make a departure determination that reflects Mr Wintle’s income, property and financial resources.
The Tribunal considered it appropriate to depart from the administrative assessment from 29 July 2022, being the date currently being applied in the departure from the administrative assessment, to reflect a higher income for Mr Wintle. The Tribunal considered that the period set by the Agency, ending the departure determination on 31 May 2025, gives the parties certainty for a reasonable period of time going forward, while also allowing for a reassessment of the parents’ and children’s circumstances at that point in time.
The Tribunal notes Mr Wintle’s reported income is $50,024 which is a starting point in relation to the income that should be set for the purposes of the assessment. For the reasons outlined above, the Tribunal has found that Mr Wintle meets significantly more expenses than is reflected in his income. While the objections officer set an ATI for Mr Wintle of $102,180, by adding back various amounts to his income. While this may be appropriate in some cases, in this case the Tribunal cannot be satisfied that all expenditure or work-related expenses have been accounted for so as to appropriately reflect Mr Wintle’s income, property and financial resources. The Tribunal has determined a fairer method is to add back the Company 2023 financial year operating profit before tax of $80,265 and a proportion of wages paid to Mr Wintle’s partner by the Company, in the amount of $22,984 ($35,984 less $13,000 which is allowed) to Mr Wintle’s reported gross income of $50,024, and sets an ATI for Mr Wintle of $153,273. The Tribunal is satisfied this method would better reflect Mr Wintle’s expenditure.
The Tribunal therefore proposes to make the following departure determination: for the period 29 July 2022 to 31 May 2025 Mr Wintle’s ATI is varied to $153,273 per year.
The Tribunal considered that making this departure determination would not cause Mr Wintle significant financial hardship and a failure to make a departure determination would cause financial hardship to Ms Wintle.

Issue 3 – Is it otherwise proper to make a departure determination?

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. The Tribunal accepted from Ms Wintle’s Statement of Financial Circumstances that she is currently in receipt of child care subsidy. Mr Wintle did not list any Centrelink payments. The Tribunal decided that any departure determination made by the Tribunal is likely to have a positive impact on the public purse and the Tribunal therefore concluded that it is otherwise proper to make the proposed departure determination.

DECISION

[2023] AATA 3752

21 September 2023

Key Legal Topics

Areas of Law

Family Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies

Procedural Fairness

Period	Total sales	Total salary, wages
July to September 2021	$99,488	$35,093
January to March 2022	$106,456	$32,007
April to June 2022	$102,637	$30,250
July 2022	$32,287	$28,132
August 2022	$39,225	$16,636
September 2022	$50,303	$18,434
October 2022	$35,206	$10,562
November 2022	$0	$0
December 2022	$32,934	$10,303
January 2023	$40,025	$9660
February 2023	$38,241	$10,645
March 2023	$38,019	$19,530
April 2023	$47,578	$10,808
May 2023	$35,486	$14,019
June 2023	$59,719	$12,775