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Rent and paying interest in advance

Does paying rent and paying interest in advance get added and deducted off wages for CSA

Hi,
Hope someone can answer this clearly…thank you.

I pay child support,sold my home last year as i couldnt afford to keep it but have some money in the bank,currently living at my parents again.I fly up every month to see my little girl who lives in QLD,im in Sydney,hotel plus flights etc is expensive but love her and want a wonderful relationship with her so this is my priority,i also have another son in Sydney that i see every week.
I am looking to buy an investment property but am worried they will add the rent income to my wages.CAN SOMEONE EXPLAIN THE TRUTH TO ME,CSA IS CONFLICTING WHEN I CALL THEM.

Eg IF I EARN SAY $60,000 GROSS INCOME THEN SAY $20,000 FROM INTEREST WITH MONEY IN BANK IT BECOMES $80,000 GROSS PER YEAR…….THEN IF I BUY AND INVESTMENT PROPERTY AND SAY I GET $20,000 RENT P/YR THIS THEN
= $100,000 GROSS INCOME.WILL THEY THEN DEDUCT THE INTEREST PAID FOR THE LOAN …SAY ITS $30,000 IN INTEREST WILL IT THEN SHOW MY NET INCOME BEING $70,000 ? THEN CSA WILL BASE IT ON $70,000 GROSS?

THEN I WAS TOLD IF I PAY THE INTEREST 1YEAR IN ADVANCE (SAY $30,000) I CAN CLAIM THAT AS WELL FROM AN ACCOUNTING POINT OF VIEW BUT WILL THE ALSO WORK FOR THE CSA? SO SAY ITS $70,000 GROSS - LESS 1YR INTEREST IN ADVANCE (-$30,000 =$ 40,000 GROSS INCOME?

IS THIS CORRECT?

I am just trying to get ahead without being knocked off my feet again and again.It costs me  $12,000-15,000 a yr to see my little girl then on top of that is the child support.I have claimed what i can with CSA but am waiting on what little difference the flights and accommodation will make when they calculate it.

I cant afford to buy my own place just now but hope to buy an investment if CSA havent made it impossible .

Can anyone explain if this is correct?in simple terms please,i need to understand clearly.

THIS I WILL APPRECIATE VERY MUCH AND I THANK YOU IN ADVANCE.
Also would you mind telling me how you came to know this?I just want to make sure this information is correct so i am not mislead into doing something that is incorrect ,obviously i will also check to confirm.

Again thank you and God Bless you all

Dan
thefrog - C$A works from your taxable income.

They then add back to your taxable income - employer fringe benefits, funds paid into super via salary sacrifice, foreign income, net losses and rental losses to determine a child support income.

If you purchase an investment property and gear it so there are no rental losses or gains, then it will not effect your child support assessment at all.

If you make a rental gain for the year, then as per normal process it will form part of your taxable income and you will pay child support on that part when C$A works out your child support income.

If you make a rental loss then C$A will add the loss back to your taxable income to determine your child support income and you will pay child support on the loss component only.

Does this make sense?

PS: in some cases claiming the loss may not be viable as there is no requirement to do so.
Fairgo said
…PS: in some cases claiming the loss may not be viable as there is no requirement to do so.
You need to consider the taxation implications (You will pay more tax to the ATO) doing this. The fact is that there are two incomes to be worked on if you are a child support customer. One income is the Taxable income for the ATO which is fairly straight foward. That will determine what Tax you pay or get back .

The other is the child support income which adds anything and everything back and determines what Child Support you will pay. In some cases even depreciation (which is another long story and one that they are simply wrong). So you need to firstly work out what you are going to apply to derive the ATO income and thus minimise your tax to pay or tax back including capital losses and gains and then you need to calculate the Child support income. These are two completely separate calculations.  

Rent income is "Income" and it will be looked at by CSA. Interest is also considered income. You might consider a taxation advisor in relation to planning future income. You also have the ability to quarantine additional income made after you separated for up to three years. The best place to look at all of this to start to get a grasp on what might be added back is the Guide and read through a number of the forums here using the search engine to find related materials. Here is a post talking about the ability of the CSA SCO to determine an amount that he or she considers appropriate.

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
 
Sec SPCA - Yes I agree thefrog should get financial advice.

However please note there are two C$A processes:

The standard administrative assessment which works using taxable income as I described above, and

the Change of Assessment process that may result in a deviation from the standard administrative assessment.

Regarding claiming losses or not - it depends on: level of care, no. of children paying for, tax brackets and amount of loss.
Hi and thanks for the replies ! thank you both!

So,i see it is mor complicated than i thought.

So by a loss do you mean say my loan repayments on an investment property was 30,000 and i only got 20,000 in rent (not including outgoings and other claimable things,just so it is simplified for me),does this mean they will then take $10,000 of my gross income and then calculate that? this is the loss right? and by gain you mean is my rent was 30,000 and my repayments only 20,000 then its a gain of 10,000 so they would add that to my gross income .So loss they take off the 10,000 OFF my gross income but gain they ADD 10,000 to my gross income?

Also this would work the same for my interest as its income so they will add it to the gross.

Can i buy an investment now before the end of financial year and claim anything?…like stamp duty or pay interest in advance or anything to bring down the amount for both tax purposes and Child support too?
I will always pay more for my little girl child support but dont want to get stuck like this as im getting interest but then i have to pay tax on it all the while i am actually loosing out as properties have gone up this last year.

thanks again for this network of friends helping other…really nice to see!!! ;-)

dan
It's not that complicated.

Given the financial scenario you have outlined, all C$A will do after your tax return has been processed by the ATO, is add back to your taxable income (gross income minus all allowable deductions) any rental losses claimed.

If you do not claim any rental losses C$A will only use the taxable income figures to asses your child support liability.

If you want to have property investments in your name and minimise child support whilst earning full-time average salary/wage, then maintaining a no loss/profit position each year with a long term goal of cashing it in when you are no longer a child support payer would probably be the best plan.

If this is what you want, then put your cash into a long term investment that is neither negative or positive geared.

Better still, buy yourself a house to live in and then it will be free of Capital Gains Tax and Child Support.

Last edit: by Fairgo

As stated above, the best move would be to purchase your own place. Any investment that generates an income would be added to your income by the CSA - note that they seem to have some very different understandings of how finance works!

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