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Compensation for Injury and CSA

How does CSA look at Compensation for Injuries

Hi All, I have tried the search engine to try and find an answer to my question without success.

I am asking this question on behalf of my Daughter and Grandson.

My daughter is a single mum and only receives the minimum child
Support from her sons dad.  He has always tried his hardest to minimise
His child support responsibility (nearly always cash in hand).  Currently
He is waiting for a compensation payout for an injury he supposedly received whilst working (a scam).

My daughter has nearly always been employed to ensure that her son does not
Go without and she has done it tough over the years. She has gone without to provide for her son.

The question is. 

How does CSA look at compensation payments, if at all.

If anyone has any knowledge or information it would be greatly appreciated
I believe the short answer is that this is not taxable income. Depending on how this money is invested, it may yield income.

It is something that could mentioned as part of a change of assessment.

Junior Executive of SRL-Resources

Executive Member of SRL-Resources, the Family Law People on this site (Look for the Avatars). Be mindful what you post in public areas. 

Compenstion payments and minimising income

This customer explains they believe the paying parent is minimising their income and could soon receive a compensation payout.


First the CSA is keen to hear about any parent paying or receiving who might be under reporting their income in order to minimise or maximise their child support payments and Government benefits. CSA welcomes contact from parents about these issues so they can be passed onto CSA's Enforcement Services team.


Parents and others who wish to provide anonymous information can visit the Fraud tip-off section on the CSA website or contact the Australian Government Fraud tip-off line on 131 524. The more evidence that can be provided the more likely the tip off will be investigated thoroughly and lead to an outcome.


Compensation Payments


If a parent receives a compensation payment and reports this on their tax return, the parent's taxable income will be used in their child support assessment. For parents who don't lodge tax returns, the CSA continues to identify more than 120,000 parents annually and provides this information to the ATO who then undertake lodgement enforcement.

If a parent lodges a tax return but does not report the compensation payment on the tax return, then depending on the type and reason for payment, there may be grounds to advise CSA and request that CSA undertakes a financial investigation and change the assessment accordingly (in what was previously called a Registrar Initiated Change of Assessment and what is now called the Minimisers Project). This type of activity is prioritised across all customers and not every allegation leads to an investigation.

Parents who wish to take a more active role in progressing the issue can consider a Change of Assessment process.

For more information, call the CSA's Change of Assessment team on 131 141 or view information about Change of Assessment under Reason 8- a parent's income, property, financial resources, or earning capacity, in The Guide, CSA's online guide to the administration of the new child support scheme. The Guide can be found at www.csa.gov.au.

The guide says;

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 Centrelink 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.

Change of Assessment under Reason 8- a parent's income, property, financial resources, or earning capacity, in The Guide

The Child Support Agency (CSA) has provided this general information to support a better understanding of the Child Support Scheme. To discuss an individual child support case, or for further information, please contact the CSA directly, as specific cases or circumstances will not be discussed in a public forum.
All CSA communications with the forum will be in the form of public posts- the CSA will not be responding to private posts or emails.
Additional information on the Child Support Agency, and details on their participation in this site can be found here
Thank you CSA, I will pass on the information and hope that your reply may help other people who may be in a similiar situation.

To be honest I was not expecting a reply from the horses mouth, thank you. :)
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TR 2002/D13 (Withdrawn) - Income tax: assessability of statutory personal injury compensation scheme payments (As at 18 December 2002)

above is the relevant ATO ruling on the nature of compensation that is assessable and not assessable.

Junior Executive of SRL-Resources

Executive Member of SRL-Resources, the Family Law People on this site (Look for the Avatars). Be mindful what you post in public areas. 
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