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Child Support and renting our granny flat

I have thoughts of renting out my granny flat which is on the grounds of the home I live in and I am wondering how CSA will treat that income.

My ex and I have shared care of our son.  Currently neither of us pay CS to the other because our circumstances and income are very similar as far as CSA are concerned.  This works well for both me and my ex.

My question is around my thoughts of renting out my granny flat which is on the grounds of the home I live in and I am paying off (mortgage).  I would like to know if CSA will include the amount I rent it out for as part of my income used in the CS assessment.  (I would have to include utilities in the rent).

All I can find on the CSA website is information that tells me that negative geared (?) amounts are included as part of income for CS assessments.  I am not clear if renting out my granny flat will come under this clause or not as I will be still be living in the house.

Any information would be greatly appreciated.  Thanks.

I believe they will treat it as income.

Even if you rent it at a loss, they will still add back the income.

I would suggest you use the calculator on the CSA site, adding the extra income from renting, and see if there is any affect.

If that is too tricky (and the new calc is a bit tricky) I would suggest a phone call to CSA, you do not have to name yourself, and ask them about the implications.

I think it would still be worth doing and declaring. You may only have to pay a small amount to your ex.

I always recommend being truthful to CSA, as it is never pretty when a government dept discovers you have been fibbing.

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. 
Lifeinsite are you sure about the interest deduction being able to reduce what CSA claims as income. I thought general CSA ignored all deductions for the purposes of calculating income for CSA purposes - i.e. different to the way the ATO does it. It would open up a range of possibilities if they started allowing deductions to reduce CSA income.

 Maybe I am not explaining myself well enough
The house I live in and the granny flat are together under my own mortgage as both are on the same property.  So how would CSA calculate if the rent I would get for the granny flat is a profit or loss?

The only way I can logically see CSA would do it (being mindful that CSA seems to rarely use 'logic') is that they would calculate what % of the living space (including the house) the GF makes up on the property.  Then use this % to calculation what amount of the mortgage payments is for the GF.

Lets say the under-roof living space on my property is 100m sq. and 15m sq of that is the GF would mean the GF is 15% of the living space.  Right?  Then say my mortgage is $200 per week.  15% of $200 is $30.  Therefore if I rent the GF out for more than $30 per week then its a profit; and if I rent it for less, its a loss.

I'm not worried about paying my ex some CS.  I just don't want to be worse off than I am now.

Guest said
My ex and I have shared care of our son.  Currently neither of us pay CS to the other because our circumstances and income are very similar as far as CSA are concerned.  This works well for both me and my ex.

My question is around my thoughts of renting out my granny flat which is on the grounds of the home I live in and I am paying off (mortgage).  I would like to know if CSA will include the amount I rent it out for as part of my income used in the CS assessment.  (I would have to include utilities in the rent).

All I can find on the CSA website is information that tells me that negative geared (?) amounts are included as part of income for CS assessments.  I am not clear if renting out my granny flat will come under this clause or not as I will be still be living in the house.
CSA is ONLY allowed access to yr tax assessment and not the whole return

So whatever the ATO did with rentals appears on tax assessment, but in 1999 CSAAct was amended so that if you actually save tax by neg gear, that is added back… some deletions by admin that are not clear as to the terms used and point in not phoning CSA did not have merit, substance or explanaton.

Last edit: by Secretary SPCA

Jon - As mentioned in LifeInsight's message, rental losses are added back as profits are already included in the taxable income calculation. C$A also allow normal deductions in the tax return such as travel expenses, donations, uniforms etc…. to come off the child support income assessment. C$A may have operated as you suggest in the past but not in my recent experience.

If you and your ex are friendly you could also both verbally arrange for CS NOT to collect on your behalf which would then mean that any money made isn't taken into consideration. This arrangement can be changed at any time by either person. OR the other alternative is to have a formal written agreement not to collect CS, a form is available from the agency or off their website. Apparently this is a legally binding document and cannot be changed.

When you are swimming down a creek and an eel bites your cheek, that's a Moray.
Thanks Lifeinsite - that represents a big thing for CSA if they allow some deductions and would be a real incentive for people to declare all the tax deductions they can - I suppose things like salary sacrificing super, buying a rental property (interest only loan), work related deductions maybe a whole lot of things could make more effective use of peoples income - especially if they are treated properly by CSA. Its not something I have ever done or really investigated with an accountant but is sounds like it could be a worthwhile exercise for some people.

Would CSA view people reducing their income via tax deductions, investments,etc as avoiding their CSA responsibility? And is it something which can be done - in advance or only after a Tax return has been submitted for the previous year. It seems to me that while the Tax assessment might apply for the past financial year - in fact the income should really be considered as per the TAX assessment for the previous year - in other words - backdated and those excess CSA amounts recovered . Not to do so seems wrong and leave the payer financially out of pocket - unless they then calculate the new amounts for the next year to include the losses from the lats year as well.

 Maybe I am not explaining myself well enough
Thanks life there is hope.

I suppose I was checking to see the difference between net taxable income and gross taxable income. The first being what is concluded to be your income on which you will taxed. A lot of people spend a lot of time getting this as low as possible - even into future years.

But I am not sure CSA view of income is the same as ATO or even centerlink now you point it out.

There is possibly a mismatch between the view of a person net worth (yearly) depending on which agency is involved. It's very messy and nonsense from a layman's point of view.

I can imagine (and have seen) the lack of sense with treatment of income and deductions - it seems more like a game rather than anything fundmental.

AND MAYBE I am old fashioned enough to want a simple life with less complexity and rubbish in these government systems. Call me a dinsoaur :cool:

 Maybe I am not explaining myself well enough
Jon Pearson said
…But I am not sure CSA view of income is the same as ATO or even centerlink now you point it out.
I can absolutely assure you 110% that they are NOT the same. It has been and still is the view, that Child Support should be calculated on the Taxable income. I say taxabale because when it comes to taxable income there are a number of items which are NON reportable Salary Sacrifice items. These items are the only items allowed to be deductable. Can you imagine creative accountants and hi fliers who have a taxable income of a few dollars for ATO purposes and the calculation done on those few dollars.  That would be unreasonable surely?
Jon Pearson said
….it seems more like a game rather than anything fundmental.AND MAYBE I am old fashioned enough to want a simple life with less complexity and rubbish in these government systems. Call me a dinsoaur :cool:
It seems to me after spending some years in the system as a payer that it is reasonable system for those who are fair and reasonable. It is going to get some major changes come July 1 and that also makes it even fairer. Along with making it fairer means five fundemental major changes. These changes are to FTB part A related to new care levels, changes to the protected amount for the Payee, changes to the CAP, both parents now paying by way of combined incomes, and changes by way of definition to a new cost of children table based on MATAWE. It sure has not made it easier but perhaps fairer. You still get to deduct for purposes of taxation payments and get your tax breaks… What frustrates me Jon is that people moan and berate the system but few put forward any tangible operational alternate system. What alternative system would work? Some really good background reading on how we got to where we are today is the HORISP Report, where views from around the country were canvassed.. I didn't see you at Gunedah in 2004

As to a dinasour Jon. I would not be so presumptious as I am getting a bit long in the tooth myself. :$

Where are all the youngsters who will take over? :offtopic:

Executive Secretary - Shared Parenting Council of Australia
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The TAX system is overworked. After working there for 18 years I have seen a lot of government policy initiatives - also a passing interest the shape of Centrelink and CSA systems. It just seems too messy now and overly complex. On one hand GST was supposed to help reduce several taxes like sales tax, etc - the state governments invented their own taxes for land, resources and who knows what else.

So the cost of living for a person is quite complex and it tends to be the wage and salary earner who takes all the tax hits (although company tax and excise are good earners). I think too the Centrelink part supports a number of people quite well but the gap - and this is just my perspective and experience - is that as a male wage and salary earner going through divorce, assets and children issues in court - there tends to be extremely high costs and low support. In many ways there seems to be no encouragement to work at all - because so much just disappears to lawyers, taxes, etc.

As far as encouraging stay-at-home parents to work - we will see how that goes. I worked full time and had the children in before and after school care - because I thought it was the 'right" thing to do. Given the money handed out to others and the cost to me personally (on many levels) I really wonder whether I did the right thing.

Many people argue they should be supported to stay at home and look after their children. I am not sure who should have to pay for their lifestyle options.

The mismatch between how people are seen or characterised in various departments is a problem we have known about for years.

Apart from whole of government IT outsourcing initiatives - there have been major initiatives for years trying to get a whole of government approach. For this to succeed a WHOLE NEW CONCEPTUAL MODEL will have to be built to describe how society (us) wants to see and categorise people - using language which we all understand and does not delve into the complex and overly detailed view we have now. This is one of the challenges for 2020.

 Maybe I am not explaining myself well enough
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