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New legislatation on overtime in the first three years of separation

Hi Everyone.

Has anyone had any experience yet on the new legislation with regards to having overtime exempt in the first 3 years of separation?

I phoned CSA and got told 2 different stories and was then phoned back and told they have not had the training yet.
Well, that took all of 10 minutes, to find the relevant section in the guide and to also locate, the relevant section in the "The new Child Support Scheme and changes to Family Assistance" publication.

In the Guide it is section 2.5.2, in the publication it is on page 56 (Getting back on track after separation).


The Guide said
2.5.2: Additional income earned post separation

Version 2.0, Last updated 17 March 2008 5:00pm
Information in this version of The Guide applies from 1 July 2008
Refer to the current Scheme Guide for information until 30 June 2008

Context

A parent can apply to have extra income earned following separation excluded from their child support assessment.

Legislative references

Section 44 Child Support (Assessment) Act 1989

Explanation

What are the requirements for excluding additional income?

Additional income

The ordinary course of events

30% limit for reduction of adjusted taxable income

3 year limit on excluding additional income

When does an application to exclude additional income end?

Estimates of Income

Income or annual rate set

Parents with more than one child support case

Parents who reconcile and re-separate

Non-parent carers

Review rights

A parent may have extra costs to re-establish themselves following separation from the other parent of their child. As a result of these extra costs a parent may seek to earn additional income. Parents can have this additional income excluded from their adjusted taxable income for child support purposes in certain circumstances. Either parent may apply to have additional income excluded, regardless of whether they pay or receive child support.

As a parent's post separation costs diminish over time, exclusion of additional income post separation is limited to the first three years after the parents last separated before the start of the child support case.

What are the requirements for excluding additional income?

Parents may apply to have additional income (earned, derived or received after separation) excluded from their adjusted taxable income for child support purposes.

The requirements for excluding this additional income are:

    * the parents must have lived together on a genuine domestic basis for at least six months (section 44(1)(a));
    * the last separation of the parents occurred before the application for administrative assessment was made (section 44(1)(b)(ii));
    * the last separation of the parents occurred within the last three years (section 44(1)(b)(i));
    * at the time of the application, the parents remain separated (section 44(1)©);
    * the income must have been earned, derived or received in accordance with a pattern of earnings that was established after separation with the other parent (section 44(1)(d)(i)); and
    * the income must be of a kind it is reasonable to expect would not have been earned, derived, or received by the parent in the ordinary course of events (section 44(1)(d)(ii)).

Additional income

Parents may earn additional income from a variety of sources, including for example, from overtime, a second job, a career change to a higher paying job, or from investment income. For a self employed person, additional income may be earned, derived or received through extending the opening hours of their business, increasing production or developing new markets or new products (to a greater extent than before separation).

The ordinary course of events

Not all additional income that is earned, derived or received after separation will qualify for exclusion from a parent's adjusted taxable income. The new pattern of earnings must have been established after separation and would not have been reasonable to expect in the ordinary course of events.

Income that parents would have been reasonably expected to earn in the ordinary course of events can not be excluded from their adjusted taxable income. For example, it is within the ordinary course of events that parents will earn additional income through regular pay rises, or seasonal variations in income.

However, income that parents earn outside the ordinary course of events is able to be excluded from their adjusted taxable income. This could include income from overtime or second jobs taken on after separation, promotions or a shift to a higher paying job. However, transitioning from an unemployment benefit to employment is considered within the ordinary course of events. Any income to be excluded must still have been earned in a pattern established after separation.

30% limit for reduction of adjusted taxable income

The exclusion of post separation income can not reduce a parent's adjusted taxable income by more than 30% (section 44(3)(a)). If excluding additional income earned post separation would reduce the adjusted taxable income by more than 30%, CSA can only reduce the adjusted taxable income by 30%.

Example

F has an income of $30,000 at the date of separation from M. After separation F's income increases to $60,000 as F takes on a second job. F's child support liability is assessed on $60,000, as that was F's income for the last relevant year of income. F can apply to have the additional income of $30,000 excluded from their adjusted taxable income of $60,000, the extra $30,000 being additional income earned post separation. If F's application is successful, F's current income used in the assessment, $60,000, can only be reduced by a maximum of 30%. Therefore, F's income would be set at $42,000. F has $18,000 excluded from their income before the self-support component is deducted and F's children receive child support based on an adjusted taxable income for F of $42,000.

Three year limit on excluding additional income

Post separation income can not be excluded for more than three years from the date of separation (Section 44(3)(b)).

When does an application to exclude additional income apply?

If CSA accepts an application to exclude additional income earned after separation this will ordinarily apply from the start of the child support period for which the application is lodged until the end of the child support period. However, it will end sooner if the three year time limit (since separation) expires within the child support period.

A new application can be lodged for the next child support period if the other requirements are met and the three year time limit has not expired.

Estimates of Income

Parents who have lodged estimates of income may also apply for exclusion of post separation income (section 44(1)(d)). Where an estimate of income has been made, the CSA will consider excluding any additional income earned, derived or received in the remaining period for the purposes of the estimate of income, rather than additional income earned in the last relevant year of income. For more information about estimates of income, see 2.5.1 Estimates of Income.

Income or annual rate set

Where a parent's annual rate or income for child support purposes is set by a court order, child support agreement, or change of assessment decision, the parent is not able to apply for post separation income to be excluded from their adjusted taxable income. A parent must seek a new court order or change of assessment decision, or make a new agreement to have post separation income taken into account.

Parents with more than one child support case

Additional income earned after separation that has been excluded reduces the adjusted taxable income of the parent only the child support case between the parents who separated - not any other case the parent may have.

Parents who reconcile and re-separate

Reconciling and re-separating allows a new application for exclusion of post separation income only if during the last reconciliation the parents lived together in a genuine domestic relationship for at least six months.

Non-parent carers

Parents with a child support case involving a non-parent carer are able to apply to exclude additional income earned after separation. The separation must have been between the parents of the child, not a parent and the non-parent carer.

Review rights

CSA's internal review (objection) process allows parents to ask CSA to formally reconsider particular decisions made under child support legislation.

If CSA refuses an application for exclusion of post separation income CSA will give the parent written notice of the decision (section 44(5)). If a parent is dissatisfied with this decision they may object to the particulars of the unchanged assessment.

If CSA accepts an application for exclusion of post separation income CSA will give effect to the determination by amending any administrative assessment that has been made in relation to the child support period. A parent who is dissatisfied with that decision may object to the particulars of the amended assessment. See Chapter 4.1 for more information on objecting to CSA decisions.

The link to this is The CSA Guide. Section 2.5.2


The new Child Support Scheme and changes to Family Assistance Page 56 said
Getting back on track after separation
From 1 July 2008, if you earn extra money to re-establish yourself after separation you can apply for that extra income not to be included in your child support assessment. This will be done in a simpler way than the formal change of assessment process.

This means that extra income you earn after separation, for example from second jobs or overtime, can be excluded from your child support assessment for up to three years after separation, if you didn't earn that income before separation.

Both parents are entitled to apply to have post-separation costs excluded from the child support assessment.

The limits to this provision are:
-   income can only be exempt for three years after separation
-   exempt income can be no more than 30 per cent of your adjusted taxable income

The Included Example said
Max
Max separates from his partner, Liz, in September 2008. He last lodged a tax return in August 2008, showing his income was $40,000. His child support period starts in November 2008, based on his income of $40,000. He also starts working a second job, which he would not have done if he and Liz had not separated.

Max lodges his next tax return in August 2009, and this starts a new child support period. He earned $8,000 in his second job, as well as his normal salary of $40,000, so his tax return shows an income of $48,000. Max applies to have the extra income that he wasn't earning before separation excluded from his child support income. He is assessed on an income of $40,000.

Max lodges his next tax return in September 2010, and this starts a new child support period. His tax return shows an income of $48,000. Max applies to have the extra income that he wasn't earning before separation, excluded from his child support income. He is assessed on an income of $40,000.

Max doesn't lodge another tax return until October 2011. However, because extra income for separation costs can only be excluded for three years from separation, from September 2011, Max is assessed on the total income shown in his previous tax return, that is, on $48,000. If Max ceases to work a second job, and this reduces his income by more than 15 per cent, he can lodge an estimate of his current income and he will be assessed on this current income.

Having this extra money excluded from the assessment will help parents with post-separation costs such as buying a new car, setting up a new home, and purchasing items to support the children during care.

This can be downloaded or ordered from here New Child Support Scheme and changes to Family Assistance

Thanks Mike T. I have read all that but when I phoned the officer for the relevant forms etc she had a different interpretation of the legislation and then put me on to her supervisor who had another interpretation of what it said. I suppose as time goes on someone will understand it. They have also indicated that if we do apply for this to be taken into consideration that we have to supply receits of what the  extra money is spent on. I was curious if anyone else has had any experience with it yet.
Annie

Everything MikeT has provided is about patterns of income earning pre and post separation.

There is nothing in it about how the money is actually spent, so receipts should be unnecessary.

Maybe try putting in an application worded around the actual requirements as given and see what happens.

My personal opinion without any experience is that the legislation does not require you to say how the money is spent. It assumes, reasonably, that there are extra costs after separation and seeks to make allowance for them

Cheers

katie



Here's the actual legislation :-

Child Support (Assessment) Act 1989 said
44  Post separation costs
Application for post separation income to be excluded
   (1)   A parent (the applicant) of a child may apply to the Registrar to amend an administrative assessment of child support payable by or to the parent for the child for part of a child support period if:
   (a)   the applicant and the other parent of the child lived together on a genuine domestic basis for at least 6 months; and
   (b)   the separation, following that 6 month period, of the applicant from the other parent occurred:
   (i)   within the last 3 years; and
   (ii)   before the application for administrative assessment of child support for the child was made under section 25 or 25A; and
   ©   at the time of the application under this section, the applicant and the other parent remain separated; and
   (d)   in the last relevant year of income, or in the remaining period (if the parent has made an election under section 60), the applicant earns, derives or receives income:
   (i)   in accordance with a pattern of earnings, derivation or receipt that is established after the applicant and the other parent first separate; and
   (ii)   that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events.
   (2)   If the applicant makes an application under this section, the Registrar may determine that the applicant's adjusted taxable income for the child for a day in the child support period is a specified amount that excludes the income referred to in paragraph (1)(d).
   (3)   However, the Registrar may make a determination under subsection (2) only if the determination:
   (a)   reduces the applicant's adjusted taxable income for the child for a day in the child support period by 30% or less; and
   (b)   applies in respect of a day in the child support period, being a day that is less than 3 years after the last separation referred to in paragraph (1)(b).
Registrar to implement determinations
   (4)   The Registrar is to take such action as is necessary to give effect to the determination by amending any administrative assessment that has been made in relation to the child support period.
Notice to be served if Registrar refuses application
   (5)   If the Registrar refuses to make a determination under subsection (2), the Registrar must serve written notice of the decision on the applicant.
   (6)   The notice must include, or be accompanied by, a statement to the effect:
   (a)   that the applicant may, subject to the Registration and Collection Act, object to the particulars of the assessment in relation to which the applicant sought to make the application; and
   (b)   that if the applicant 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.
   (7)   This section does not prevent the Registrar from making a new assessment for part of the child support period.
Note:   This section does not limit the power under section 75 to amend assessments (see subsection 75(5)).

75(5) is :-

Child Support (Assessment) Act 1989 said
(5)   Where a provision of this Act or the Registration and Collection Act expressly authorises the Registrar to amend an administrative assessment, that provision does not by implication limit the power of the Registrar (whether under this section or otherwise) to amend the assessment.

There is nothing in here about having to supply receipts for expenditure. I think that's pretty conclusive.
Annie

It is easy to see how the confusion arose if they have not had the training yet.


MikeT said
Here's the actual legislation :-


There is nothing in here about having to supply receipts for expenditure. I think that's pretty conclusive.

  I agree this is pretty conclusive, but not just not because, as MikeT points out, there is no mention of receipts. A request for receipts could be said to be an administrative requirement only.  After all, there is no mention of receipts in the legislation about, for example, change of assessment due to special needs, but receipts are requied because the legislation talks about increased costs so it is reasonable to ask for proof of increased costs.

It is reasonable for a CSA officer with no training yet on this topic to assume that receipts are required because other issues require receipts as proof of expenditure.

In this case, there is no mention in the legislation of how the money has been spent so there should be no requirement to confirm expenditure.

It is all about the earning patterns and the timing. Spending is simply not relevant.

Hopefully, the training should clear that one up, but hey, why not go ahead and apply, quoting both the legislation and the Guide and see what happens?

Last edit: by BriarRose




Good Idea Katie, all we can do is try. I cannot see the value in getting receipts as it must be obvious to all that starting all over again costs money. We will try and see! thanks
I think it's a good habit to get into regarding keeping receipts. I have always kept receipts concerning my daughter in case questions ever become a concern, especially if the X tries to claim utter crapolla.

You may never use them but you then have them.

Mind I may be a little paranoid  :ninja:
MikeT said
There is nothing in here about having to supply receipts for expenditure. I think that's pretty conclusive.
This is a very good question to ask CSA Legal at the conference on the 14th .. Please keep this one in  mind. I understood you needed evidence of expenditure but that is from old habits not the new legislation. Our family keeps receipts for everything from meals, to shopping, to "Bunnings" to the local garden center. I have been involved in CSA cases in previous years that did go to court and the court seemed to want to have "evidence" of expenditure… Hard to "prove" you actually spent something without documentary evidence.

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
 
I disagree with the need to supply evidence.  A regulator can only request information for a valid legal purpose.  The law makes no reference to having to prove expenditure in these circumstances so, on the surface, such a request would breach the Privacy Act.  The problem with CSA is that they are 20 years behind the rest of the Commonwealth on this point.
Bigred, yes after thinking about it I was going to question the Privacy legislation aspect and also why there would be an administrative reason to have such data, especially considering that no such requirement is asked of those receiving CS.

Yep Secretary_SPCA one that should be asked at the conference. I'll make sure I have that one with me.
Yes, please push the Privacy Act angle hard.  Just today I was asked to complete all the questions on a change of assessemnt form when I wasn't claiming finacial hardship, just that they had neglected to include 3 aspects of her income in the assessment.  I refused citing the lawful purpose requirement n the IPPs.
Bigred said
Yes, please push the Privacy Act angle hard.  Just today I was asked to complete all the questions on a change of assessemnt form when I wasn't claiming finacial hardship, just that they had neglected to include 3 aspects of her income in the assessment.  I refused citing the lawful purpose requirement n the IPPs.
 
Secretary SPCA

Yes, please follow this up.

I think what Bigred is talking about above is a little different to the issue of extra earnings in the first three years after separation, but it still needs raising as a separate but related issue.

Like you, I also keep every receipt, and these are relevant when asking for a change of assessment where extra costs are the issue.  For example, when asking for school fees to be added to the assessment, it is reasonable to expect school related receipts to be produced; same goes for extra medical expenses etc.

However, I have had the same experience as Big red where hardship was not being claimed by either party, yet I was expected to produce receipts for (literally) every loaf of bread, block of cheese and litre of petrol because the other party demanded them.  Fortunately, I had the receipts, but a lot of time was wasted going through them in a change of assessment conference.

Similar demands were made and entertained in two other assessments,  until at another assessment the SCO said they are simply not interested in those kinds of details when neither party was claiming hardship.

Would it be possible to ask about getting a consistent approach to the parts of the Change of Assessment form that ask about basic daily living expenses, perhaps so that those parts only need to be filled in if one or other party is specifically pleading hardship?

Ta

katie



Katie

These are the actual words I used:

"I have not answered the detailed questions about my financial circumstances; it is my view the information is not required to apply the law in this case (refer to Information Privacy Principles contained in the Privacy Act 1988)."
Katie said
I think what Bigred is talking about above is a little different to the issue of extra earnings in the first three years after separation, but it still needs raising as a separate but related issue.

Like you, I also keep every receipt, and these are relevant when asking for a change of assessment where extra costs are the issue.  For example, when asking for school fees to be added to the assessment, it is reasonable to expect school related receipts to be produced; same goes for extra medical expenses etc.

However, I have had the same experience as Big red where hardship was not being claimed by either party, yet I was expected to produce receipts for (literally) every loaf of bread, block of cheese and litre of petrol because the other party demanded them.  Fortunately, I had the receipts, but a lot of time was wasted going through them in a change of assessment conference.

Similar demands were made and entertained in two other assessments,  until at another assessment the SCO said they are simply not interested in those kinds of details when neither party was claiming hardship.

Would it be possible to ask about getting a consistent approach to the parts of the Change of Assessment form that ask about basic daily living expenses, perhaps so that those parts only need to be filled in if one or other party is specifically pleading hardship?

Katie,
       I think the post separation costs, has nothing to do with hardship, it has to do with allowing a person after separation to take on extra work to help re-establish their life after separation. Thus there is no need for a claim of hardship, just a claim to what one is entitled to according to the new legislation. With a claim of hardship, one would expect that claim to be substantiated, whilst what needs to be substantiated here is that the work is extra work, receipts amongst other things are mentioned for that purpose.
The issue is that the regulator is seeking to collect personal information that they do not require for the administration of that part of the legislation.  I used my example of my COA application, but the logic flow also seems to apply here.  

Remember, a regulator lacking in experience/confidence will adopt a default position of collecting everything they can.

If in doubt, one could suggest that the CSA seek the advice of the CSA's Agency Privacy Adviser or the Privacy Commissioner directly.
Annie,
         I asked this question of the CSA representatives who attended the SPCA conference. Basically their reply was that if it was a change of application (COA) 10  evidence was required, however if it is under the new legislation, this is not a COA and no evidence is required. I'd suggest that your issues is the latter, so perhaps that needs to be made clear to the CSA employee.
Mike

Just to be clear, I take it you mean no evidence is needed regarding  what the money was spent on, but evidence of earning patterns pre and post-separation would be required?



Ok. It was my understanding it would be a separate issue to COA. I was hoping it would just be a form to fill out. It will be intersting to see how the CSA staff apply this one.
annie said
Ok. It was my understanding it would be a separate issue to COA. I was hoping it would just be a form to fill out. It will be intersting to see how the CSA staff apply this one.
  annie

If I recall correctly, your settlement was six years ago, so you are talking about a retrospective assessment of cost incurred in the first three years, a period which started six years ago and ended three years ago.

Is that right?

The new rules specifically allow for extra income earned to cover the expense of re-establishing in the first three years, and Mike has confirmed that the costs do not have to be proven, so that is a moral victory for you.

However, looking at a COA for a retrospective change in the period when those costs were not so readily recognized sounds like doing a Sisyphus to me.

You have so much on your hands already it may be best to cut the financial losses on this won and claim the moral victory. (interesting Freudian slip in that sentence)

Easy for me to say, but it is what I have done on other issues and it feels good to just let some rocks roll to the bottom of the hill and stay there.

How much money are you talking about?

Worth it?

Katie



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