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Hoping to get back onto ATO assessments instead of assessment being based on estimates.

How do I go back from estimates to ATO assessments and bring into line my existing estimate which by my calculations as of now shows is slightly out.

I am hoping to switch back to ATO assessments from Estimates - In my situation it is difficult to track/estimate in advance, I normally know by the end of a quarter.

June 2009 - I submitted an estimate after a new assessment came out that was based on the previous years (0708) tax return (when I knew that the number of hours I was going to be working would be steadily less for a period)
Estimate submitted was accurate until recently (I recently calculated my income/expenses as of right now compared with my estimate and realised I have underestimated slightly more than 10%).

I am wondering how to best reconcile this without being exposed to the issues I have seen people have on this forum, and am ultimately hoping to switch back to ATO based assessments.

My 0809 Tax return is ready to submit, though not submitted yet due to an expected tax bill, but has to be soon.
From what I can see now the period for estimates on is 15 months meaning that sadly mine will cross 3 financial years just to complicate things more

Some General Info/Concerns:

I read in the guide that reconciliations still happens for the entire estimate period even if they are ended early by an ATO tax assessment coming out. I am not sure I fully understand how this can be done accurately which raises my concern. I.e. once I have rectified the under estimate that I noticed - I am also worried about how this period will be reconciled based on reading posts about how it is reconciled such as: http://flwg.com.au/forum/pg/topicview/misc/5103
(Where it is recommended that you *don't notify CSA of changes unless your income is definitely going to be less for a certain period*. And discusses the *reconciliation being based on a later tax return and anuallised for the entire estimate period which can often be inaccurate*)

So my questions:

What effect on my estimate will submission of my 0809 tax return have on the estimate if any? Or will only my 0910 submission when it happens effect this?

If the effect of my tax return submission is that I will thereafter be making payments based on my 0809 ATO submission, is my actual current income no longer taken into account? If this is the case it would seem extremely difficult reconcile this estimate period accurately?

Is it best to notify them now of the inaccuracy, after tax submission (which possibly ends the estimate period?), or as my week to week income fluctuates wait until my actual income does reconcile with my estimate at a given point in time and then submit my TAX return (if the effect will be for it to be now based on the ATO amount) so that I am reconciled on my end for the time in which the estimate was in place?

If it will not be based on my ATO submission, can I make a new estimate without having to wait another 15 months to get back to ATO based assessments?

Any advice would be greatly appreciated. I didnt really realise what I was getting myself into with the estimate side of things!
Hi confusion, I have also been doing estimates for nearly 2 years and still find the process very confusing from the timing point of view. I have not yet had a reconciliation done (that I know of) but I have recently been the subject of a COA under Reason 8 (earning capacity) so I think the CSA requested info from my employer and went through my estimates with a dose of salts at that time - and in the COA decision I was found to be doing the right thing.

So I may be able to help with your questions.

Firstly, I understand that the estimate period finishes at the end of the month when you put in your tax return (ie its not backdated), and this also ends the Child Support Period. This happened to me last year and I had to submit a new estimate for the new Child Support Period that started the following month to get back on to the estimate regime, rather than being assessed on previous years tax return income (as this was still much higher than my current income). If you don't want to keep doing estimates then I think the new Child Support period assessment would be based on your 08/09 return (maybe with a CPI increase in July, until you submit your 09/10 return?)

I may not be right here, but I also understand that the CSA can only reconcile the last estimate you make …..which I think means if you keep updating the estimate when changes happen then there is less risk that it will not be right. and therefore less risk it will need to be reconciled. You can submit a new estimate every 2 months (or sooner if your income goes up) I have been doing this as my income is very unpredictable and variable from month to month. I also always overestimate a bit.

I think it is important that your most recent estimate before the end of the financial year, or before your estimate period ends, adds up to (or slightly exceeds) what your tax assessment will say at the end of June. If you submit an estimate close to the end of the financial year you should be able to be more accurate. But I guess if its a lot different to previous estimates they will notice this and may backdate your child support payments.

If you first did an estimate in June 09, surely submitting your 08/09 will not have much effect on the Child Supoprt payments as there would have been less than a month in the estimate period for that financial year?? Unless you had big payment during that time, but then I guess you wouldn't have been estimating if you did. And I don't believe they can compare your 08/09 tax assessment to your 09/10 income, I think they will wait till you submit your 09/10 tax return to do this.

My opinion is that its better to submit a new more accurate estimate up front, before you submit your tax return which will end your estimate period, and certainly before the end of this financial year, rather than wait to be reconciled after you submit your tax return for 09/10.

Others may have differing views!

Also, you said "I read in the guide that reconciliations still happens for the entire estimate period even if they are ended early by an ATO tax assessment coming out" now I also remember reading that too, so I guess it would also be prudent to make sure that the last estimate you submit is also going to be accurate to the end of the original estimate period (or in excess of it) - not easy I know! I will have to do the same thing soon myself as I also intend going back to tax assessment based CS rather than estimates after I do my next tax return.
There is no real benefit in telling C$A every time there is a short term change in your income. They will use the info to squeeze more $$$ out of you later on. Unless your income drops significantly for whatever reason it's best for all involved to get you tax returns in on time and rely on them for calculation of child support.

Lodging your tax return will trigger another child support period for the next 12 months or so and probably trigger the review/reconciliation process for the past if there is a significant difference in the child support income determined from the tax assessment and the estimates. They will review the entire estimate period.

After having been through this process myself which resulted in successful court action against their assessment, I advise that you just lodge your tax return each year ASAP and leave the estimate process alone. If doing this make sure that you get it right the first time as if you amend your return later on and it reduces your taxable income, CSA will not change any child support assessments.

Last edit: by Fairgo

Fairgo, I agree with you that there's no point in starting on estimates for a short term reduction in income.
However, the dilemma arises when you don't know how long the reduction is going to be for eg. losing your job and trying to find another. If you don't submit an estimate you are going to be stuck paying too much, with too little income for who knows how long? As you say, it depends on how significant the drop is, and how long you think it will last.

Doing estimates is no fun, but sometimes they are appropriate. It depends on the circumstances.

I also agree with your advice about getting your tax return in asap each year. Seems to cause a lot of hassles when you don't.
Thanks very much for your help guys.
Yes I agree I should have got my tax return in much sooner in retrospect.

Fairgo - Are you saying it's better to just let them reconcile later than try to correct now it before getting slammed with the 10% fees?  I am happy for them to correct it at a later date though would hope not to be hit with the fees.
I did ring and let them know that I was having issues with estimating accurately - I am not sure if this would help if the fees are on the cards?
I.e. the other option would be for me to contact them and say I think I actually earned X during the estimate period?

Based on your comments I have submitted my tax return and await the outcome of this for the time being.
I am also going to document the income I earned up until the end of the estimate period, and my estimated expenses during this period for when/if the reconciliation occurs (possibly years down the track for what I read).  But possibly not submit this for now?
confusion - never pay any of the penalties as you can usually get C$A to remit them.

I was saying, get your tax return in and let them do their review and then do not use estimates in the future. But if your income drops significantly then of course use the estimate system. C$A say that it is better to over estimate your income. They are only saying this to increase the $$$ of collection. I think it is better to under estimate your income. It is easier for you to pay a little extra later than try to get an overpayment off them/the ex.
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