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What is acceptable income deviation and CSA back dated assessments

Assessments, income deviation

Hello all,

I have just been recently had my c$a account reconciled from way back in the periods of 2005-2006 and 2007-2008 and have to go about calculating my income and associated deductions.  On top of having to explain my income they have imposed a reconciled amount of over $1500.  This investigation would rival some complex murder mysteries and is not a very enjoyable process.

My question is this, I am trying to find out what is the acceptable amount or percentage by which CSA will allow your income to deviate.  Also at what percentage/amount is it when csa levy a penalty 10%?  Any advice on refuting these penalties?    

I was working in a casual position during these time period and had to try and estimate a highly fluctuating income which now I have to go back and piece together through bank statements :(.  I have tried to search the csa website for this information and found nothing.

Any assistance would be greatly appreciated   

So what is the total amount of arrears they are seeking?

If the figure is high I would take them court under section 110 of the Child Support (assessment) Act and seek a change to the new assessment.

To present your case get an accountant to show how C$A have deviated from the ATO in assessing taxable income. Given the legislation prior to July 2008, the review process where C$A would annualise income from tax years to child support periods can be seen as unfair is some ways.

C$A are meant to use only your taxable income (plus their adjustments) to determine your child support liability. If you are working on estimates they have to review them at some point of time - either when you file a tax return of if the payee is demanding more $$$ through the change of assessment process.

Estimate penalties are usually calculated by taking the estimate and the reviewed figures and working out 10% of the difference between the two.

Usually you can get penalties remitted if you pay off the arrears or take them to court, SSAT or AAT and get an order or decision. So do not pay them at all and try to reason with them.

It is best to not to use the estimate system and instead plan your finances ahead. If you can't do this then underestimate rather than over estimate.

Don't give them information over the phone - only use the phone for general enquiries or to get info from them. Otherwise only communicate with them in writing (Snail-mail) and do not disclose any financial information with them other than what is contained in your tax return.
Hi Fairgo,

The total amount of arrears that they were seeking was approximately $1700 from two assessment periods in 2005-2006 and 2006-2008.  I undertook as mentioned in the previous post a significant investigation of the reconciled amounts provided by CSA and I found several glaring omissions. 

The first reconciled assesment period CSA claimed that the estimate period ended on the 23/8/2006 even though right above the state child support period date ended on the 31/5/2006 due to a new assesment being lodged.  I only picked up this significant glaring omission after doing a detailed chronology of the times in which assessments were lodged and the dates in which previous assessment period ended.  The result of this was upon contacting CSA that no formal acknowledgment of this glaring mistake was noted, that this assessment for the amount of $357 was closed.  So I urge all parents faced with this horrible process of reconciling amounts to request all amusements provided in the period in writing and make a detailed chronology of when assessment periods and estimate periods commence and finish. 

The second mistake on this same assesment was simple mathematical mistakes while a pro rata formulation was applied to calculate income earnt over the estimate period the amount listed as being earned in the period was significantly higher resulting in a increased child support bill.  I once again questioned this and had that amended prior to the assessment being left off for the reasons above.

Thirdly to all parents due to the unfair way in which child support periods are reconciled on 1.5 year periods instead of taxable financial year periods ensure that the income being earned during the assessment period used to calculate total income is accurate of the income actually derived in this period.  I successfully challenged CSA on the  the income figures on my second assessment removing dividend income from shares which was earned outside the period.  I also increased my work related deductions in the period to take into account that a significant proportion of my deductions was actually earned inside the assessment period. 

Fairgo that is true about that underestimating your income and managing your income proactively is the best way to approach CSA.  Hopefully with the review process being undertaken ATM that they will move to reconciling your income over financial years rather than those strange child support periods. Also as you have said communicating over snail mail is far better medium to interact with CSA as they will try to push you for answers over the phone, usually when you don't have time to analyze what they are saying and have full access to your own financial information.

Overall the resultant $1700 bill for 2 periods was reduced to 1 period ($357 removed) and also by challenging the figures used in the income periods for the 2nd estimate was able to reduce the bill by over $200 and get the penalty removed.

Thanks for your advice fairgo.  Good luck to anyone whom may be undertaking the process and remember check everything CSA says as they make some very glaring mistakes sometimes.

Have you been Self Employed at anytime or is this all payg income from an employer we are talking about? If you were not self employed were CSA deducting the correct amounts. I have noticed over time a number of payers are complaining that there are arrears built up, through no fault of theirs, except that there has been insufficient notice of assesed income changes to the payroll officers when there has been a change due to someone filing a tax return or some notified change of income.

Executive Secretary - Shared Parenting Council of Australia
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