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Seriously over C$A

Hi guys, C$A are doing my head in again  :(

Today I received a couple of Assessment letters from them. The first in relation to November 08 - March 09 (also stating a fixed rate had been applied), the second September 09 - April 10 ( stating the minimum rate has been applied).

In both cases the payer's income is based on estimates given to C$A October 06 and November 08 (which I know are grossly under-estimated). The payer has not lodged 06/07, 07/08, and 08/09 tax returns and there have been well over 20 assessments due to the payer constantly estimating income at around the Newstart payment levels despite working.

So I gave them a call to get some more info - turns out those periods have suddenly been reconciled. Now that didn't seem right to me so I've gone through both The Guide and the legislation and I cannot see how it can be reconciled on an ESTIMATE.


The Guide: Using the Child Support Guide | Child Support Guide The explanations it gives are
"Income estimate for a year of income, actual income known, single income election"
"Income estimate for a part of year of income, actual income known, single income election"
"More than one income estimate, first estimate for year of income, actual income known"
"More than one income estimate, all for part of year of income, actual income known"

hmmm… not mention of when actual income NOT known. Reading on to "Reconciliation using a parents determined ATI" and it starts to sound better - only CSA has stated that the reconciliation has been based on the payers estimate NOT a Determined ATI.


The Assessment Act isn't any more helpful for see why C$A has reconciled on an estimate:
Division 7AReconciliation of estimates of adjusted taxable income
  Subdivision AReconciliation using a parents actual adjusted taxable income
    64  Reconciliation using a parents actual adjusted taxable incomesingle income election (requires actual adjusted taxable income for the year of income)
    64A  Reconciliation using a parents actual adjusted taxable incomemore than one income election (requires actual adjusted taxable income for the year of income)


So, my version of logic  ;)  tells me that this should apply:

Subdivision BReconciliation using a parents determined ATI
64AB  Registrar to determine a parents adjusted taxable income for the purposes of reconciliation
             (1)  If:
                     (a)  a parent made an income election relating to a year of income; and
                     (b)  at the end of the period ending 12 months after the end of the year of income, the Registrar has not ascertained the parents actual adjusted taxable income for that year;
the Registrar may determine that an amount that the Registrar considers appropriate is the parents adjusted taxable income for that year for the purposes of this Subdivision.
             (2)  If the Registrar makes a determination under subsection (1) in relation to a parent:
                     (a)  the amount determined is the parents determined ATI for the year of income; and
                     (b)  the Registrar must give notice of the determination to the parent.
             (3)  The notice must include, or be accompanied by, a statement to the effect:
                     (a)  that the parent may, subject to the Registration and Collection Act, object to the particulars of the assessment to which the determination relates; and
                     (b)  that if the parent is aggrieved by the decision on the objection, he or she may, subject to that Act, apply to the SSAT for review of the decision.
             (4)  A contravention of subsection (3) in relation to a determination does not affect the validity of the determination.
    

I will be lodging an objection, but thought I would get some opinions from here first. Has dealing with C$A finally sent me loopy, or do you come to a similar conclusion that something is not quite right going on here?

Also, any tips for compiling an objection would be greatly appreciated. Thanks :)

"Decide that you want it more than you are afraid of it."
Bill Cosby
 :thumbs:
64AB exists to specifically deal with reconciliation of determined ATI's (i.e. where tax return has not been made for 2 years). See section 58 or 2.4.4 of the CSA Guide. The latter being :-

CSA Guide (extract) - 2.4.4: Child Support Income said
Determination of adjusted taxable income

If an ATO issued income is not available, CSA may determine an appropriate amount to be the parents adjusted taxable income for a year of income (subsection 58(1)).

This decision must be in accordance with the requirements of section 58:
Determination where parent fails to comply with requirement

CSA may make a determination if:

    * a parent has not lodged a tax return for the year of income; and
    * CSA or the ATO is unable to readily ascertain the parents adjusted taxable income on the basis of existing documents or information; and
    * CSA or the ATO has required the parent to give a return or information or to produce a document for the purposes of ascertaining the adjusted taxable income; and
    * the parent has refused or failed to comply with the requirement (subsection 58(2)).

Determination where income information provided

If a parent has not lodged a tax return for the relevant year of income and CSA or the ATO has been given information (either orally or in writing) or a document that specifies or allows CSA to work out the parents adjusted taxable income, CSA may use that income information to determine the parents adjusted taxable income (subsection 58(4)). For example, the ATO may have full year payment summary information recorded for a parent.

Example

An application for an assessment is accepted in July 2008, with the first child support period being 22 July 2008 to 21 September 2009. A parent, M, has not yet lodged their 2007/2008 tax return. M advises CSA that their adjusted taxable income for 2007/2008 is $40,000. Where satisfied of the accuracy of the information, CSA uses that figure to calculate the child support assessment.

If the parent has not lodged a tax return for the relevant year of income, or the previous year of income, but CSA is able to readily ascertain the parents adjusted taxable income for the previous year of income on the basis of existing documents or information then CSA may determine the adjusted taxable income for the relevant year of income based on the information available, for the previous year multiplied by an inflation factor (subsection 58(4) and regulation 7A).

If the parent has also failed to lodge a tax return for the previous year of income, the amount determined for the parents adjusted taxable income in the above circumstances must be at least 2/3 of the annualised MTAWE figure for the relevant September quarter (subsection 58(3)). The figure to be used in assessments for child support periods beginning in each calendar year is published before the beginning of the calendar year. See Chapter 2.4.2 for the relevant figures.
Determination where tax return lodged two years ago

If a parent has not lodged a tax return for the relevant year of income but has lodged a tax return for the previous year of income, CSA may determine the adjusted taxable income based on the tax return, for the previous year multiplied by an inflation factor (subsection 58(3A) and regulation 7A). In these circumstances, CSA is able to readily ascertain the parents adjusted taxable income and it is not necessary to seek information from the parent.
Determination of overseas income where parent is a resident of a reciprocating jurisdiction

If CSA has sufficient information and documents, CSA may use that information to determine an amount of overseas income for the purpose of working out the parents adjusted taxable income (section 58C). When determining the income of a resident of a reciprocating jurisdiction CSA will look at the parents income in the last relevant year of income in the country in which the parent lives.

If CSA does not have sufficient information despite requesting income information from the parent or an overseas authority under section 162A, CSA may determine an appropriate adjusted taxable income, which must be at least 2/3 of the annualised MTAWE figure for the relevant September quarter (section 58D). If CSA does not have sufficient information to determine an overseas income and is unable to serve a notice under section 162A on the parent or the relevant central authority then CSA is unable to determine an overseas income for that parent.

I can't see that they've done anything wrong according to the legislation.

i.e.

64AB(1)(a) has been met (i.e. other parent made an election)
64AB(1)(b) have been met (i.e. at least a year after the end of the income period AND no tax return (or in other words the registrar has NOT ascertained the ATI))

So sections 64AB(2…) may be applied and most importantly :-
64AB(2)(a)  the amount determined is the parents determined ATI for the year of income; and …..

                     (b)  the Registrar must give notice of the determination to the parent.

Perhaps it needs to be noted that ascertaining and determining are purposefully used differently. Ascertaining being along the lines of finding out, whilst determining means determining the income according to section 58 (i.e. based upon previous tax returns, applying a minimum of 2/3rds AMTAWE (annualised male total average weekly earnings)).

In laymen's terms (I hope). No tax returns for 2 years as well as income estimates means that the CSA can reconcile based upon an ATI determination. The ATI determination being based upon previous tax returns received.
This is where I'm getting confused MikeT - shouldn't in determining ATI there be some regard to any previous tax returns, in this case for the 05/06 financial year?

Perhaps it needs to be noted that ascertaining and determining are purposefully used differently. Ascertaining being along the lines of finding out, whilst determining means determining the income according to section 58 (i.e. based upon previous tax returns, applying a minimum of 2/3rds AMTAWE (annualised male total average weekly earnings)).

Urgh, It never ends with this lot!!


"Decide that you want it more than you are afraid of it."
Bill Cosby
 :thumbs:
Tulip re-reading your post.

The application of the fixed rate, for the Nov 2008-Mar 2009 assessment, indicates that a determined ATI has not been used but that the estimate has been used and that the estimate is lower than the maximum normal parenting payment single (something like $13980 for 2008) without justification of it being genuinely low and that the person is not on income support. Similarly the next assessment (Sep 2009-Apr 2010) using the minimum rate of CS indicates that a determined ATI has not been used but that the other parent is either on income support or has convinced the CSA that the income is genuinely low.

Considering the CSA's bias toward transferring and collecting the highest amount it is quite unlikely that the other parent did not supply information, in March 2009-Sep 2009, that they were on a genuinely low income. As such it is very likely that the estimates, in terms of reconciliation, were pretty much irrelevant (i.e. if fixed rate or minimum with proof of genuinely low, then that covers a range from $0-circa $14000). Or another way of saying this could be; as both fixed and minimum rates are outside of the formula, then there is no need for a reconciliation.

I'd suggest that the important aspect is that the change from fixed rate to minimum rate indicates that an application to not used the fixed rate (Section 65(B)) has been successfully made. Looking at the application there does not appear to be an requirement to inform the other parent only the applying parent (S66(C)) (likely as to do so would be a breach of privacy as the proof of a genuinely low income is something that the other parent has to prove only to the CSA). It may be this need to protect that information that is causing the confusion as the CSA would be in breach of privacy laws to reveal this (I think).
I've been looking back over what payments I've received.

For the Nov 08 - March 09 period the payer was on income support and payments were distributed from Centrelink to C$A.

For Sep 09 -  April 10, same payment source.

I know this may seem like I am going against what I said earlier (that the payer was usually employed) but I also know that they defrauded Centrelink on several occasions.

Considering there have been 6 assessments for the first period, and 5 for the second, it takes so much time and effort trying to work out what is going on. Let alone even more confusion being thrown in.

Thanks MikeT for the help :)

"Decide that you want it more than you are afraid of it."
Bill Cosby
 :thumbs:
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