Donate Child Support Calculator
Skip navigation

Do the new CSA Guidelines encourage tax evasion/avoidance from receiving parents?

I'm undertaking a research project in relation to a Masters Degree in Law in relation to a Taxation Law unit I'm presently enrolled in. I'd be interested in feedback in relation to the following: Have the recent changes to CS assessment encouraged tax avoidance/evasion from receiving parents? It's fairly well documented in CSA literature, that CSA is aware of and comes down hard on paying parents who seek to minimise their taxable income through various means, especially those involved in small business, with the view to lowering the assessable income that CSA will use to determine how much they should be paying. Recent changes mean that the receiving parents income is now taken into account at a much lower level than was previously the case. However there appears to be little information relating to effort made or focus applied to receiving parents who may operate their own small business or utilise other tax avoidance measures in order that their income is seen as being lower than it really is so as to maximise Child support payments, family tax benefits and Centrelink payments. Does anyone have any thoughts in this regard?
Monash,
            I believe that the recent legislation changes have gone quite some way to reducing the relatively small number who avoid or take actions to reduce the CS paid. Perhaps the first point that you appear to have not come across which may be of interest is that the change of assessment process, primarily reason 8, is frequently used to inflate CS payments beyond what is just/fair, proper and reasonable. One example that can easily be found is the SSAT case that is published called Ryan v Ryan. In brief COA process puts payers income at $90,000. The payer objected and this was reduced to $62,000, this highlighting the lengths some in the CSA will go to collect and or transfer higher than just amounts. However the payer also took the matter to SSAT, who then found that $62,000 was too high and reduced the income to $58,500. Not only did SSAT find this but also that the CSA had ignored to apply the legislation to the recipient. They did and found that the recipient had a capacity to earn above the $25,000 and set the recipients income at $42,000. This then greatly affected the the CS payments as the parent's income percentage, which is used in conjunction with care reduction to determine the percentage of the cost of children that is paid, would have reduced from 92% to 63.12%. This also highlights another issue that you appear to have come across the bias that exists within the CSA against the payer.

Are you also aware that the debt that the Government often quotes includes the debts of the deceased? I believe that this is because the CSA does not or thinks that it does not have the ability to write these of.

I'm not sure what sort of depths that you're be going into, but if you'll be doing calculations then the child support calculators available on this site may be of use. The advanced calculator can actually do the calculations for all scenarios, the CSA's estimator cannot. The calculators are accessible from the home page.

In brief I believe that the CSA, in general, does not give section 4 of the Child Support Assessment act anything like the importance that it should be given and that there exists a view that child support is primarily about one parent paying as much to the other parent as is possible, whether or not it is the proper amount according to the full extent of the application of the legislation.

It very likely goes higher than this as the amount that the CSA collects or oversees being transferred is converted into savings due to the reduction of FTB paid by 50c for a $1 CS collected or transferred.

Perhaps in your research you may come across a report that actually shows that a child is actually being supported as fact rather than reports that simply say what has been transferred and or collected. I would welcome being made privy to such a report or reports if you do find one or more.

You say that the receiving parents income is taken into consideration at a much lower rate, however you also have to consider that this was countered by other changes to the legislation. One example being that parents with 10% or more care, but less than 35% of care, a pretty sizeable chunk of payers, can longer have a portion of the FTB in relation to the care. Also second paying families have been given an almighty blow by the changes to the legislation. The latter changes introduced to reduce what were considered large changes. However I believe that even larger changes have been introduced.

Due to the way the 14% and 65% care affect the formula. A parent can, for 1 nights change in the level of care, pay an effective rate of CS Over $3,000,000 pa i.e. 10,000 for the 1 nights change in level of care at these two pretty crucial care boundaries.

P.S. I'm a recipient in theory (elected to end case), although previously and over the legislation changes, I was a payer.
re the New Car and selling it :-

CSA Guide 2.6.14: Reason 8 said
Asset rich but income poor

In some cases a parent might have substantial property and assets but a low income used in the child support assessment. CSA may consider the parent's property and assets, as well as any income, in deciding the appropriate rate of child support to be paid (Abela and Abela (1995) FLC 92-568 and Bendeich and Bendeich (1993) FLC 92-355).

CSA will take into account that child support is intended to meet the day-to-day needs of the child, when considering a parent's capacity to contribute to supporting a child.

It is not sufficient for a parent to say that they are unable to pay child support because their assets produce little or no income or will only produce income at some point in the future. CSA will consider whether the parent has the capacity to restructure their financial affairs to produce an income stream from which to contribute to child support. In these cases, CSA may:

    * identify the relevant assets, determine ownership of such assets and enquire as to any structures designed to divest assets;
    * consider whether the assets are income-producing assets and, if so, when such income will be produced;
    * ascertain the value of the assets;
    * ascertain the parent's ability to convert the assets, or some of the assets, to cash;
    * consider the parent's ability to finance his or her lifestyle; and
    * consider the impact of any property settlement on the parent's assets.
Monash if you contact me via whisper with a phone number am prepared to give you a few thoughts.  
Monash,

Here are some of my thoughts on your post:

I think you always should look at the situation from the bigger picture.

The C$A is there to collect and as others have said they try to collect as much as possible often contrary to the law they are supposed to follow in order to justify their existence.

Evading tax is very different to managing your financial affairs for the lowest taxable income. However the the C$A does not appear to see any difference between these two scenarios.

For large families the motivation to maintain maximum Family Tax Benefits can be greater than child support for maintaining the lowest possible taxable income.

In general it is in every persons best interest to have the lowest possible taxable income.

As the C$A is a collection agency that appears to act only in the best interests of the payee and the Government and not the payer, it would not be in their best interests to scrutinise the payee like they do the payer.

One positive change that I am aware of is the requirement of recipients of FTB to lodge their tax returns on time.

Family Assistance and C$A have many similar functions with one major difference being that Family Assistance actually follows tax law and the C$A do not.


1 guest and 0 members have just viewed this.

Recent Tweets