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CSA - The incantations

Unscrupulos methods employed to raise a liable parent's income when redundancy payements are received (or other payments).

I have, on numerous occasions, implied that the CSA have used spells to artificially raise a liable parent's income. Well, it has come to light that they do have incantations when it comes to "Financial Resources", such as redundancy Payments.

Financial resources are covered in reason 8 departures from administrative assessment (commonly referred to as Change of Assessment).

Incantation 1 - Creatious Legislationinious.
 This spell takes the format of writing a letter that contains the following (or of something of similar nature):
Lisa Lambert - SCO Delegate of the Child Support Registrar said
The Act requires the department to use the gross income when calculating the financial support that is to be provided by the parents. This being the case, net income must be “grossed up” using the relevant taxation scales


Of course to many this would appear as authoritative proof of the need to apply "grossing up". However, a search in the Child Support Assessment Act 1989 (the act applicable to making assessments) will show that there is no instance of the word gross nor of any word that contains gross within it. The word net only appears twice but none of those occurrences refer to net-income.

If any person who has had a reason 8 change of assessment that includes the above, or words of a similar nature, then there is a very good chance that you have cause for complaint. I believe that the above statement is contrary to the constitution and is without doubt a "Rule of Law" issue, in that it is not within the remit of a government agency to generate legislation not to lie that legislation exists when it does not.

Incantation 2 - Convenientlyous Convertious Amountisouses
This incantation is used to perform word metamorphosis. It's usage suddenly transforms amounts into a new form. For example in regard to a the non-taxable gross amount received this incantation transforms that amount into a net-income amount (see the statement above). In the following:
 
Lisa Lambert SCO - Delegate of the Child Support Registrar said
When grossing up the net lump sum payment of $xxx,xxx
You can see that this spell has in fact been used twice. First it converts a gross sum (the tax-free component of a redundancy payment) into a "net lump-sum payment" and then from that into "net income".

Incantation 3 - Grossiously Grossiousupious
This incantation, unlike the previous incantations, performs the actual miracle. That is it applies the grossing up that the ATO applies to Fringe Benefits to the now conveniently transformed gross tax free component of the redundancy payment into an amount that is approximately 50% greater than it originally was. Yes, Lambert used this to convert approximately $120,000 into $180,000.

One would think that the CSA would be satisfied with those 3 spells but no as along comes:

Incantation 4 - Treatious  Exemptious Asious Nonious-Exemptious
This incantation appears to physically or mentally blind a person or persons, perhaps specifically in relation to the CSA's guide. Experiments and or research are needed to determine the true extent of this incantation. There are thoughts that this could well be the most used incantation within the CSA.

The CSA Guide - 2.6.14 Reason 8 - a parent's income, property, financial resources, or earning capacity - Lump sum payments received by a parent said
Where a parent receives a substantial amount of money (a lump sum) that would otherwise not form part of his or her income amount used for child support purposes, and therefore is not included in the assessment of child support, the lump sum may be taken into account in deciding whether the assessment should be changed. Such payments may arise as a consequence of the parent: being retrenched from their employment; …..


 CSA Guide - 2.6.14 - Lump Sum Payments

The result of applying the incantation is within the following:

Lisa Lambert SCO - Delegate of the Child Support Registrar said
“ This income is equivalent to 123 weeks of pay or a period of around 2 years and 4 months, calculated as follows: • 2013-2014 taxable income of $110,000 is divided by 52 weeks to arrive at a weekly amount of $2,115 • $260,000 is then divided by this weekly amount of $2,115 to arrive at 122.9 weeks.

The incantation is well hidden from all but those dedicated to actually looking at the matter in depth. The crucial clue to it's use is the figure of $260,000. This is the $120,000 tax-free component of the redundancy payment plus the $80,000 taxable component and plus the $60,000 derived from the application of the Grossiously Grossiousupious incantation.

The incantation (Treatious  Exemptious Asious Nonious-Exemptious) is further hidden as it's full effect doesn't happen immediately. Rather it comes into play when the tax return for the redundancy amount is issued at that time the taxable components alter the tax return to increase the taxable income, which is then passed onto the CSA. So the taxable components are then accounted for a second time.

In a very close to real life example. The CSA method (incantations applied) causes $345,430 to account for the $200,000 gross redundancy, whilst the correct method causes $201,853 to account for the $200,000 gross redundancy.

For those who may want to see more:

Example by someone said

Comparison of the Incorrect and Correct Methods.

Both examples assume a static taxable income of $100,000 and use a $200,000 gross redundancy payment ($120,000 tax-free plus $80,000 taxable). The CSA method causes $345,430 to account for the $200,000 gross redundancy, whilst the correct method causes $201,853 to account for the $200,000 gross redundancy.

The Incorrect Method (as used by the CSA).

After redundancy, $110,508 (2115 * 52.25(weeks per year)) is added (the Change of Assessment Adjustment) to the ATI ($100,000) for each full year (this addition lasts for 2.36 years (125 weeks)). The amount used for the calculation of child support is $210,508 in the first year.
When the tax return includes the redundancy payment, the ATI, as issued from the ATO, is $180,000. The Change of Assessment adjusts the ATI by adding $110.508 resulting in $290,508 being used to calculate child support (i.e. the taxable components are applied twice).
In the third year, the adjustment is $44,414 ((110,508 / 52.25) * 21(weeks remaining)). Thus $144,414 is used to calculate child support.
In total, over three years, the child support income used is $645430 of which $345430 is to account for the $200,000 gross redundancy amount.

The Correct Method.

Instead of dividing $260,000 by 2115 to determine an effective period of 125 weeks, $120,000 (tax-free component) is divided by 2115 which determines an effective period of 57 weeks.
After redundancy, $110.508 is added to the ATI and $210,508 is used for calculation of child support (the first years of both examples are the same).
The following year, the taxable income is $180,000 but only 5 weeks of redundancy payment are added as an adjustment ($10,575) so the amount of $190,575 is used to calculate Child Support.
In total, over three years, the child support income is $501,853 of which $201,853 is to account for the $200,000 gross redundancy payment.
(Note! this is a simplified view. In reality, periods using the full annual rate for shortened periods when applicable apply. However, the end result is the same.)

Secondary Implications

An adjustment to the ATI is an Income Amount Order. The legislation prohibits a parent from estimating their income if an income amount order is in place. A parent who has lost their job could suffer severe hardship and especially so if child support is based upon a grossly inflated amount.
The CSA manipulate amounts to prolong the secondary implications. In a case that closely reflects the scenarios above an officer originally used the most relevant taxable income as the basis for determining the duration (number of weeks). The customer objected to some decisions so the objections officer used a rejected estimated income (lower) to prolong the duration to over 3 years from just over 2 years.


If you believe that you may have been affected  by the above or similar then I'd be more than willing to try helping you to get something done. I've actually sent the issue to some ministers with the hope of establishing an inquiry to investigate all reason 8 departures from administrative assessment for these methods being used.

I've mentioned a great likelihood of the methods having been used from the inception or thereabouts of the CSA as the methods very much relate to taxation issues and the CSA was originally in the ATO.

If you support an inquiry then I doubt that it would hurt to let the DHS minister know that you support an inquiry. The email address is minister@humanservices.gov.au





 
HI Dev_Mike T

Can I clarify with this post, are you saying that in order for the CSA to include a Redundancy payment, then there must have been a Reason 8 Change of Assessment applied.

I received a redundancy payment which I noticed the CSA of. At the time, I has a "Personalised Case Officer" who told me that as I had provided evidence of the circumstances of the redundancy, it would not be added to my "normal" income" for that period.

Then I received a new assessment where the payment had in fact been included.

I would appreciate if in fact this is correct of the CSA and I am now being forced into having to make my way through a Departure application as the CSA have now "threatened to force the sale of my home to satisfy arrears.

Whilst I do acknowledge that I would have some arrears it should not be any where the amount they claim it is. This is on the basis that I have evidence of at least 3 assessment periods where my income was not accurately reflected to what I was (had) earnt and it was over $ 140 000 plus extra in each period.  If the redundancy payment cannot be included then that would be another income amount I would be seeking to have excluded.

regards.

THD
TryHardDad said
Can I clarify with this post, are you saying that in order for the CSA to include a Redundancy payment, then there must have been a Reason 8 Change of Assessment applied.

No that is not the case. Redundancy payments appear in tax returns. However, part of the redundancy payment can be tax-free or have little tax applied and thus a redundancy payment can be used in reason 8 (rightfully or wrongfully). I believe the latter especially considering that there is now proof of how the CSA wave their wand to increase the amounts way beyond what they should be. It all depends upon the components that make up a redundancy payment.

TryHardDad said
I would appreciate if in fact this is correct of the CSA and I am now being forced into having to make my way through a Departure application as the CSA have now "threatened to force the sale of my home to satisfy arrears.


The fact is that the legislation says nothing at all in regards to what can or can't be included in Reason 8 (or in fact any other reason). The legislation expects that the registrar/(CSA) will act fairly, correctly and competently, as has been known for many years, this is not the case. The only recourse is to object, which is highly unlikely to provide a fair outcome as at this level officers are more than likely deeply reliant upon the "brownie points" gained from extracting as much as they can and not rocking the boat.

After objection you have SSAT which is basically now an extension of the CSA and will be even more ruthless in waving the wand. Knowing that the only recourse is to take the matter to court where there is a great likelihood that dismissal of the case very likely borne of the institutionalised attitude/stigma in regards to payers never paying enough and/or the courts themselves considering CS not really their area.

In short the system sucks from start to end.
We have a stay order currently about to be heard in WA regarding this sort of treatment.

You mentioned that there is a dependency on the components that make up a redundancy payment.

The ATO say:
Redundancy payments
A genuine redundancy payment is a payment made to you as an employee who is dismissed because the job you were doing has been abolished.

Depending on your employment conditions, for example what your employer is required to pay under the industrial agreement or employment contract, a genuine redundancy payment may include:

Payment in lieu of notice severance payment of a number of weeks' pay for each year of service
a gratuity or
a'golden handshake'.

The following payments are not included in a genuine redundancy payment:
  1. salary, wages or allowances owing to you for work done or leave already taken for work completed
  2. lump sum payments of unused annual leave or leave loading paid on termination of employment
  3. lump sum payments of unused long service leave paid on termination of employment under a formal arrangement
  4. payments made in lieu of superannuation benefits.
Any payments that meet the conditions of a genuine redundancy are tax free up to a limit based on your years of service with your employer. The tax-free limit is a flat dollar amount plus an amount for each year of completed service in your period of employment with your employer.

Indexation changes the tax-free limit on 1 July each year.

Before a payment is tax free up to the limit, it needs to meet all of the genuine redundancy conditions.
As far as I can see, a genuine redundancy payment cannot have any additional determination by CS officers regardless of what reason they want to consider it. What do you say about that MikeT?

The reason I ask is because we have another case like this winding its way along the system and I can see that ending up in court for a determination in respect to the income set for the Payer which is a lot higher than it should be based on what we have seen.

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
 

Secretary SPCA said
As far as I can see, a genuine redundancy payment cannot have any additional determination by CS officers regardless of what reason they want to consider it. What do you say about that MikeT?


From what I have uncovered:

a) The CSP should not flout the constitution and abuse the power bestowed upon them by stating that legislation exists when it does not (ie state that the  legislation states that must gross up net income).
b) Treat redundancy payments as net income, when it is a gross amount and then gross it up as if it were a Flexible Benefit.
c) Contravene their own policies (the guide) the CSP should ignore redundancy payments as per
The CS Guide - 2.6.14 Reason 8 - a Parent's Income, Property, Financial Resources, or Earning Capacity said
"Where a parent receives a substantial amount of money (a lump sum) that would otherwise not form part of his or her income amount used for child support purposes, and therefore is not included in the assessment of child support, the lump sum may be taken into account in deciding whether the assessment should be changed."

That is redundancy payments DO form part of the income  amount used for CS purposes as they are reported to the CSP via the ATO.

Furthermore redundancy payments are, at law, considered as compensation :-

Mike in a document sent to the AG, the Ombudsman and the DHS Minister and others said

Case law defines relevant and important aspects of redundancy payments. Two important findings are established by Lindenmeyer J in Burke (1993) FLC 92-553.
The first finding is that redundancy payments are compensation and specifically not compensation for loss of wages or salary; that they are compensation for non-transferable credits such as for, sick pay, long service leave, loss of seniority, and inconvenience and hardship as a result of the losses. Lindenmeyer J in Burke held:
The commission in the TCR case[2] held that the legal basis for the payment of redundancy pay is twofold. Namely, it is justifiable as compensation for non-transferable credits such as sick leave and long service leave, loss of seniority and loss of the employer's contribution to pension and superannuation, and for the inconvenience and hardship to employees associated with that. It held that redundancy payments do not relate to the need to search for other employment, or to tide over an employee during a period of unemployment, as they are payable whether or not unemployment ensues, and commented that it, 'would be misleading to assume that success in obtaining a new job indicated that an individual made redundant had managed to recover the security built up over years of service in the redundant job'. Consequently, the standard for redundancy entitlements is linked to years of service. In summary, redundancy awards generally provide for a payment of a minimum number of weeks salary, plus a set number of weeks paid per year of service for the qualifying period, and a set maximum amount.


 ie the ATO basically quote part of the above.

A second finding, although overridden by the correct consideration of the above is that redundancy payments are joint and  thus only a portion, if considered, should be considered. :-

Mike in a document sent to the AG, the Ombudsman and the DHS Minister and others said

The second finding is that redundancy payments are joint resources. Lindenmeyer J in Burke held:
An employer's obligation under an award to provide redundancy pay is part of an employee's indirect remuneration arising from his or her employment. By analogy with a decision of this Court in Hauff and Hauff [1986] FamCA 16; (1986) FLC 91-747 regarding superannuation entitlements, the circumstances that no direct financial contribution is made by the employee's spouse to the entitlement, and that no actual deprivation is suffered or established by the non-contributor spouse, do not inhibit the conclusion that the non-employee spouse has made a contribution to the redundancy under s 79(4)© during the period of the marriage that relates to the relevant period of employment. The extent to which the non-employee spouse has so contributed to the property or resource as the case may be, that is constituted by the right to redundancy pay will be a question of fact to be determined in the ordinary way in each case.


The responses:-

Ombudsman none.

AG we are not at all concerned about the CSP's anarchistic act of terrorism so are letting the DHS deal with the matter.

DHS : Payne passes it to Morrison who passes it to CSP who whitewash everything. as per:-

Attachment
DHS MInister's response clearly indicating collaboration with the CSP acting as an anarchistic terrorist

Hi,

I am before the AAT over the treatment of a redundancy payment. The way I see it is that given the Child Support (Registration and Collection) Act does not deal directly with redundancy payments, then precedent decisions before the full court of the Family Court are the ONLY determination of redundancy payments.

However I cannot find any in the austilli database.

Can anyone offer case law under the CS Act wrt to redundancy? Either supportive or unsupportive?

Thks

A person who can't pay gets another person who can't pay to guarantee that he can pay. Like a person with two wooden legs getting another person with two wooden legs to guarantee that he has got two natural legs. It don't make either of them able to do a walking-match. Charles Dickens
PaulG it is not the Collection and Registration Act, rather it's the Assessment Act that is the relevant act.

First the taxable component of the redundancy payment will be taken into consideration without a Change of Assessment (Departure from Administrative Assessment) as an when then taxable income takes into account the redundancy payment which would then be applied under normal assessment.

e.g. if the payment were made in period July 1st 2018-June 31st 2019 then an assessment made post June 31st 2019 would then reflect the taxable component of the redundancy payment.

As such the dubious act is including any aspect of the redundancy payment forming part of a reason 8 Change of Assessment. I believe the case law cited above clearly establishes, according to taxation law/precedents,  that a redundancy payment is in fact **compensation** and should therefore be considered as compensation. The guide states :-

Child Support Guide 2.6.14 said
Compensation
Where a lump sum is received because of compensation for a personal injury there may be a reason to change the assessment because the payment compensates the parent for past loss of wages or a reduction of future earning capacity (Harris and Harris (1991) FLC 92-254).

Where the amount of compensation is set by way of private settlement it can be difficult to establish the portion of the compensation which relates to loss of wages or a decrease in future earning capacity. In these cases a decision by the department concerning the period during which the parent is precluded from applying for social security benefits can be of assistance.

The cost of the parent's future needs may be increased and a part of the compensation, if not all, may need to be preserved to meet those costs. The parent's cost of meeting their future needs will need to be ascertained to decide the extent to which the parent's capacity to contribute to the financial support of the child has been increased because of the compensation payment.

The above very clearly indicates that only compensation for loss of wages or a reduction in future earning capacity should be taken into consideration. Redundancy is not such compensation otherwise a redundancy payment would be adjusted when the redundant gained employment. As such and according to the bible that the Child Support Program insist (when it suits) redundancy payments are excluded.

I am unaware of a precedents set, the case in which I assisted went no further and as can be seen from above everyone including the Attorney General ,clearly considered the act of anarchistic terrorism by the way of the invention of legislation and the dismissal of precedents as a right and  just act to increase the Governmental coffers.  
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