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Hi, can anyone explain to me the effect of one party to an assessment lodging their tax late (The CSA officers I saw earlier today had no idea - excellent huh?).

I've just had my tax assessed and a new CS period was started as a result. The other parent doesn't seem to have lodged yet so until they do, the new assessment will use their 2008 taxable income plus some sort of indexing. The trouble is that the other parent took heaps of unpaid time off work that year so I believe their 2009 income will be significantly higher. I know CSA can't force them to lodge on time but if they choose to get a tax agent deferral and not lodge until May next year, will the assessment be revised with retrospective effect? I don't see why they should get almost 2 years' benefit from one year's lower income. I'm hoping when they lodge the actual income will be used to reassess back to the start of the CS period, and I'll have a credit balance. Can anyone confirm?
Hi there,

I was talking to CSA the other day on this very topic. I always used to do my and my ex's tax returns, and I doubt he will lodge his for a long, long time yet. They told me that generally, if they lodge it within a "reasonable" time period (she wasn't perfectly clear on what this meant - but did seem to hint it was the general ATO cut-off of 31st October) then the new assessment would start then. But if they delay their return beyond what is considered "reasonable" then they can backdate it to the beginning of the FY. As I said, it wasn't all crystal clear to me but that makes it sound like you would be better off if he at least left it til after Oct 31st to lodge his return!

Sorry I don't have a more definite answer for you, but at least now you know that the CSA officers everywhere are pretty clueless!
Sunnyside.

In brief, yes they can delay payment until May 31st (under the circumstances you describe), however I believe they have to notify the ATO by October 31st (if I recall correctly), and the CSA cannot make a determination until then, in that scenario. Basically the taxation legislation determines lateness (as per bolded part in the CS legislation).

Here's the relevant part of the CS legislation (plus a little extra that might interest you):
Child Support Assessment Act 1989 said
58 Registrar determination of adjusted taxable income
   
(1) For the purposes of assessing a parent in respect of the costs of a child in relation to a child support period, the Registrar may determine, in accordance with this section, that an amount that he or she considers appropriate is the parents adjusted taxable income for a year of income.

Note: The Registrar is required to amend an administrative assessment made on the basis of such a determination if the parents adjusted taxable income is subsequently ascertained or the Registrar makes a later determination under this section (see section 58A).
Determinations where parent fails to comply with requirement
   
(2) The Registrar may make a determination if:

(a) a parent has not, under an Income Tax Assessment Act, lodged a tax return for the year of income; and

b) the Registrar or the Commissioner of Taxation is unable to readily ascertain the parents adjusted taxable income for the year of income on the basis of the documents and information in his or her possession; and

c) the Registrar or the Commissioner has, for the purposes of ascertaining that adjusted taxable income, required the parent:

(i) to give a return; or

(ii) to give information (whether orally or in writing); or

(iii) to produce a document; and
   
d) the parent has refused or failed to comply with the requirement.
   
(3) If the parent also has not lodged a tax return for the year of income before the year of income referred to in subsection (1), the amount determined for the parents adjusted taxable income for the year of income must be determined to be at least two thirds of the annualised MTAWE figure for the relevant September quarter.

Determination if tax return lodged 2 years ago
   
(3A) The Registrar may make a determination if:

a) a parent has not, under an Income Tax Assessment Act, lodged a tax return for the year of income; and

b) the parent lodged a tax return under that Act for the previous year of income; and

c) the amount determined by the Registrar under subsection (1) is the amount based on the tax return for the previous year of income multiplied by a factor specified in the regulations for the purposes of this subsection.

Determination if Registrar given taxable income or total
   
(4) The Registrar may make a determination if:

a) a parent has not, under an Income Tax Assessment Act, lodged a tax return for the year of income; and

c) the Registrar or the Commissioner has, for the purposes of ascertaining that adjusted taxable income, been given:

(i) information (whether orally or in writing); or

(ii) a document; and

d) either:

(i) an amount was specified in that information or document as the parents adjusted taxable income for the last relevant year of income; or

(ii) that information or document allowed the parents adjusted taxable income for the last relevant year of income to be worked out; and

e) the amount determined by the Registrar under subsection (1) was the amount specified or worked out under paragraph (d) of this subsection.

58A  Subsequently ascertaining components of a parents adjusted taxable income
   
(1) The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:

a) the assessment was made on the basis of a determination under section 58; and

b) either:

(i) the Registrar subsequently ascertains the amount of the parents adjusted taxable income for the last relevant year of income; or

(ii) the Registrar makes a later determination under section 58; and

c) either:

(i) if subparagraph (b)(i) appliesthe amount that was subsequently ascertained is different from the amount that was determined under section 58; or

(ii) if subparagraph (b)(ii) appliesthe later amount that the Registrar determines is different from the earlier amount determined under section 58.

Retrospective determinations
   
(2) If:

a) at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388 55 in Schedule 1 to the Taxation Administration Act 1953); or

b) paragraph (a) of this subsection does not apply and:

(i) the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or

(ii) the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or

c) neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;

then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parents adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).

Prospective determinations
   
(3) If subsection (2) does not apply, then the Registrar must immediately amend the administrative assessment for the child support period on the basis that for each later day in the period the parents adjusted taxable income for that year of income is the amount that was subsequently ascertained or later determined (as the case requires).
No taxation assessment required
   
(4) This section applies whether or not the Commissioner of Taxation has made an assessment under an Income Tax Assessment Act of the parents taxable income for that year of income.
Here's something I happened across, whilst checking that Oct 31st is the date for late return, which could have a similar effect:
ATO Website said
If your tax return is incomplete  for example, if it is not signed  we may send it back to you. If that happens, we consider that your tax return is lodged on the date it is returned to us complete.
I've just come across this in the Guide at 2.4.4:

________________________________________

New information about adjusted taxable income for assessments after 1 July 2008

Where CSA has made a determination of a parent's adjusted taxable income, the child support assessment must be amended immediately if CSA subsequently ascertains the parent's adjusted taxable income (when the parent's tax assessment issues) and that amount is different to the amount previously determined. CSA must also amend the assessment if it obtains other new information about a parent's adjusted taxable income and makes a later determination of the appropriate adjusted taxable income amount (subsection 58A(1)).

The date of effect of the amendment to the child support assessment will be the beginning of the relevant child support period where:

(a) at the time, the parent has lodged, or still has time to lodge, his or her tax return on time as required under the income tax legislation (for example, under a relevant tax agent lodgement program); or

(b) paragraph (a) does not apply and the adjusted taxable income subsequently ascertained or later determined by CSA is higher than the amount previously determined; or

(c) paragraphs (a) and (b) do not apply and the parent was genuinely unable to provide CSA with timely information due to ill-health, natural disaster, remote location, imprisonment or other exceptional circumstances OR the parent resided overseas and was not required to lodge a tax return and the parent provided information about his or her income to the Registrar within a reasonable time in the circumstances (section 58A(2) and regulation 7B).

Otherwise, the amendment to the assessment will take effect from the date the adjusted taxable income was ascertained or determined, for the remainder of the child support period (section 58A(3)).

_______________________________________

I take it to mean that if the other parent lodges on time; it'll be backdated (paragraph a). If they lodge late and the new income is higher; it'll be backdated (paragraph b). If they lodge late and the new income is lower; it won't be backdated (final line).

Can anyone confirm?

PS. MikeT thanks for your reply - I hate trying to read this particular act and guide - I need things dumbed down a bit more these days! 

Sunnyside,
                I think the interpretation is that if a tax return is not lodged late, then there is no backdating, rather a new child support assessment period starts from that date. Only if there is a late tax return can backdating be applied and as a punitive measure, i.e. not for a lower income and only if the tax return is late can a registrar make a determination (i.e. apply an ATI based upon other than a tax return).

I looked at that section of the guide and to be honest the legislation seemed to be the easier to interpret, hence why I used the legislation. It might just have been a phase I was going through though. The guide now seems clearer.

This phrase is quite pertinent I think "Where CSA has made a determination of a parent's adjusted taxable income,", for the CSA to make a determination requires the absence of a current tax return.

Also pertintent is :-

The date of effect of the amendment to the child support assessment will be the beginning of the relevant child support period where:

(a) at the time, the parent has lodged, or still has time to lodge, his or her tax return on time as required under the income tax legislation (for example, under a relevant tax agent lodgment program); or


These together say that if the tax return is lodged on time, then the ATI applies to the relevant CS period. However it omits to add what is covered in section 2.32 of the guide which says :-

CSA must make new assessments at particular times. A new assessment starts a new child support period. Amending an assessment, for example because a parent has lodged an estimate of their income, does not start a new child support period.

So in fact a new CS period starts when an assessment is lodged and thus as long as the tax return is on time, there is no backdating.

I hope that's clearer now. It is for me, I think. :)

sunnyside said
PS. MikeT thanks for your reply - I hate trying to read this particular act and guide - I need things dumbed down a bit more these days!
I reckon I hate it more. :)
I finally found someone at CSA who seems to at least half know what they're doing. Apparently if the other parent lodges a new and higher income amount down the track the assessment will be recalculated (and my payments reduced) from the start of the CS period. Fair enough too I think, I wore the higher assessment for the last 12 months even though I knew his circs had changed for the better. I don't want to go to COA process (I think it encourages fallouts by its nature), I just want to ensure we are both fairly assessed under the formula. I figure if each assessment is accurate for the time, it will be swings and roundabouts year to year and that's fine.

BUT (and hey I recognise this isn't a big issue in the grand scheme) what I still don't understand is why it takes so long to start a new CS period. My ATO assessment was issued 16/7. I understand why this didn't help me on 7/8, there has to be a cut-off point in the prior month; I get that. But the CSA now tells me my new payment rate only kicks in from the payment of 7/10. When I asked why, all I could get was that "payments are in arrears, so the 7/9 payment is for August". Why isn't August at the new rate based on my new income, issued in July??? I know it sounds petty but my income has dropped a little this year (not my fault and the ex knows it, so it's non-contentious for us) and I could really do with that extra $25-30 or so in reduced payment come 7/9. The kids are with me full-time at the moment, and CSA doesn't seem to care, they just see me as the PYR and if I query anything I think they assume I'm a deadbeat mother or something. I just want fairness, and don't want to have to fight or negotiate with the ex for it; we are both committed to doing what the CSA prescribes and doing so is meant to remove the aggro. This agency is supposed to take out the hostility by issuing objectively fair assessments so that I don't have to argue with him, isn't that right?? It's how I thought it worked.

Does anyone know if they are right about it normally taking this long to issue a new assessment?? Can I do anything such as an estimate?? I feel like the whole system is against me just because I earn a paltry amount more than he does. Frustrated!!!!
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