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CSA Overestimated income.

CSA have over estimated my income and have requested I pay $243/ wk  in child support.

I own a retail franchise and last year my income was $94000 and so paid $192/ wk in child support

My ex put in for my income to be re-assessed in Sept 2011 and it was and was re-assessed at $109 000 per year ( they added the benefit of a  car I lease through the buisness and valued it as $14k even despite it being a vehicle of which benefit would not be calculated as it carries greater than 1 tone)

At the time of her re assessment my business profits were  62 % down from last year which equates to my earnings as being $52 000 making it ver difficult to pay child support based on my previous income .

In the change of assessement I said that I was earning less however it was later mentioned I didn't have proof of the lowered income and the assessment was bumped basing my income on $109k instead of $52k.

I have since written a later of objection adding with it proof of my lowered earnings.

Apparently it takes 60 days for the decision to be changed however I can't afford to pay $243 in the interim. I am paying $192/wk as I  did previously however my ex's family benefits from centerline have dropped assuming that I'm paying $243.

Aside from my letter of objection I have rung CSA 3 x now saying that I can't afford to pay more.

I have calculated based on my new income that I should only be paying $99 /wk so I am still paying slot more than I should.



What can I do?
What penalties will I incur by only paying the reduced amount?
If my assessment is changed to my current income $52k and i have asked that this be backdated to sept 2011 will I still have to pay arrears calculated on $243/wk in missed payments?

Any advice would be appreciated.
Graeme70,
              change of assessment has been termed by some as "Deem and Destroy". Unfortunately it is quite likely that the objection will not be successful or even if so that it will result in a COA that establishes the same amount of 109k by other "pie in the sky" jiggery pokery accounting(sic); most especially if you run your own business. We are aware of the CSA SCO's using years old business loan applications to determine the income to suit, of stripping off all very obvious work related deductions as being for personal use, of turning debits into credits.

If the objection is successful you will then basically have to go through COA again unless the objection shows that there was no special reason in which case your taxable income would be used for a formula based calculation of CS.

If the objection is not successful then you have a right to have the matter looked at by SSAT (Social Securities Appeals Tribunal). Unfortunately SSAT appears to now be inundated for ex SCO's from the CSA who will very likely apply what those ex SCO's are used to applying and will very likely add some other amounts. If you disagree with the SSAT decision then the only option left is to take the matter to court. Court can only be on a matter of law and it is with great ease that a magistrate can turn a very obvious injustice into something that is not a matter of law as the CSA legal people would very likely, if not automatically, put forward as their case. You could be lucky in court and get a magistrate who sees an injustice (a search on here for Ladd will reveal a few cases where justice has been done at least partly).

Unfortunately, the best advice would really be to somehow find ways to readjust your finances so that you can afford to pay the higher amount as it is quite likely that, no matter how wrong, once the CSA get their claws in, they will not let go and if that means that you end up in the grave, as the "two Joes" warned (Hockey and another who I can't recall now) you will be chased to the grave, then they will have no fear of doing that. Perhaps the best advice would be to try to get out of running your own business and get employed by an employer where you will be better protected.


Graeme70 said
What penalties will I incur by only paying the reduced amount?
Here's what the CSA Guide - 5.1.6: Late payment penalties has to say:
The CSA Guide -5.1.6: Late payment penalties said


Late payment penalties apply whenever a person fails to pay their child support debt by the due date. CSA can remit late payment penalties in certain circumstances.
Legislative references

    Sections 66, 67, 67A, 68, 69, 80 and 89 Child Support (Registration and Collection) Act 1988

Explanation
Applying a late payment penalty

CSA imposes a late payment penalty on a person whenever they fail to pay their child support debt by the due date (section 67). The purpose of a late payment penalty is to encourage people to comply voluntarily with their obligation to pay child support and discourage late payment.

A late payment penalty is a debt due and payable to the Commonwealth (section 67(2)). Any late payment penalties CSA collects are paid into consolidated revenue. They are not paid to the payee.

CSA calculates late payment penalties on the unpaid balance of a persons child support debt after the due date for each payment period. The rate of the penalty is the general interest charge rate under subsection 8AAD(1) of the Taxation Administration Act 1953 (section 67(3) of the R&C Act).

Prior to 1 January 2008 late payment penalties were linked to the annual rate of the penalty for unpaid income tax under the Income Tax Assessment Act 1936 and were calculated as follows:

    Late payment penalty for a weekly payment period is 1/52 of the annual rate of penalty for unpaid income tax.
    Late payment penalty for a fortnightly payment period is 1/26 of the annual rate of penalty for unpaid income tax.
    Late payment penalty for a 4-week payment period is 4/52 of the annual rate of penalty for unpaid income tax.

Before 1 July 1992, late payment penalties were calculated monthly at the rate of 20% per annum, with a minimum penalty of $20 per month imposed whenever an amount of child support remained unpaid after the due date.

CSA will vary the Register to remove any late payment penalties applied because a person failed to pay an amount of child support that is no longer due. Examples of situations where late payment penalty may be removed include instances where the persons debt is adjusted to take into account:

    a variation to the liability because of a retrospective court order, or an amended child support assessment,
    a payment made directly to the payee on or before the due date, or
    the correction of an administrative error.

Situations where a late payment penalty should be removed in part or in full are not limited to these examples.
Remitting a late payment penalty

CSA can decide to remit a late payment penalty in part or in full (section 68). CSA can decide to remit penalties whether or not they have been paid. CSA will use this discretion in a way that will further the objectives of the child support scheme, according to the particular circumstances of each case.

There is no particular form for a person to request CSA to remit late payment penalties. CSA can remit late payment penalties without a request to do so, if there is sufficient information available to make a decision.

CSA can remit late payment penalties in any of the following 3 situations:

    The person did not pay on time because of circumstances beyond their control, and they have taken reasonable action to mitigate those circumstances or their effects (section 68(1)(a)).
    The person did not pay on time because of circumstances within their control, and they have taken reasonable action to mitigate those circumstances or their effects: and it would be fair and reasonable to remit the penalty having regard to those circumstances (section 68(1)(b)).
    There are special circumstances in the case which make it fair and reasonable to remit the penalty (section 68(1)©).

Circumstances beyond the persons control

Some examples of circumstances that may be beyond a persons control:

    the persons employer failing to remit deductions to CSA
    short-term unemployment
    unpredictable adverse business conditions
    industrial accidents
    a debtor's failure to pay
    natural disasters.

Circumstances beyond the persons control are not limited to these examples.

CSA will take into account the circumstances that applied at the time each payment was due and when each penalty accrued when deciding whether to remit penalties that accrued over a number of payment periods. It may be appropriate to remit the late payment penalty for one payment period but inappropriate to remit the penalty for another payment period.

CSA will remit the penalty in full if satisfied that the circumstances leading to the late payment were beyond the control of the liable parent if it is satisfied that the person has taken reasonable action to mitigate the circumstances that contributed to late payment or the effects of those circumstances.
Circumstances within a persons control

Some examples of circumstances that may be within a persons control:

    financial difficulties due to a number of debts, such as rates and electricity, becoming due at the same time, or
    voluntary unemployment during which the person takes no action to vary the liability.

Circumstances within the persons control are not limited to these examples.

CSA will take into account the circumstances that applied at the time each payment was due and when each penalty accrued when deciding whether to remit penalties that accrued over a number of payment periods. It may be appropriate to remit the late payment penalty for one payment period but inappropriate to remit the penalty for another payment period.

CSA must consider whether the nature of the circumstances would make it fair and reasonable for CSA to remit the late payment penalty attributable to those circumstances. If so, CSA can remit the late payment penalty in part or in full but only if the person can demonstrate that they have taken reasonable action to mitigate the circumstances that contributed to late payment or the effects of those circumstances.
Reasonable action to mitigate the circumstances that led to late payment, or the effect of those circumstances

CSA will consider any steps the person has taken to reduce the effects of the circumstances that led to late payment. A persons payment history may be sufficient to demonstrate the efforts they have made to meet their child support liability, in spite of the circumstances that led to the late payment.

Some examples of attempts to mitigate the circumstances that led to late payment, or to mitigate the effects of those circumstances:

    part payment of the liability
    attempting to or succeeding in borrowing to pay some or all of the liability
    negotiating with creditors or debtors or both
    paying in full following resolution of a dispute (e.g. over arrears or a payment made directly to the payee)
    making and meeting an acceptable arrangement for payment.

Attempts to mitigate the circumstances that contributed to the delay in payment, or mitigate the effects of those circumstances are not limited to these examples.

Payments received as a result of CSA enforcement action such as:

    legal action to obtain payment;
    intercepting an income tax refund; and
    deductions made from Centrelink payments;

are unlikely to be a mitigating circumstance by itself. It will, however, depend on the circumstances of the case. For example, action may prompt the liable parent to make an acceptable arrangement for payment, or the liable parent may draw CSA's attention to an expected refund.

Special circumstances

CSA can remit part or all of a late payment penalty if satisfied that there are special circumstances in the case that would make it fair and reasonable to do so. Special circumstances include those circumstances all parents face regardless of whether or not they separated.

Examples of special circumstances may include:

    a serious accident,
    being unaware of the registration of the liability (if CSA does not know the person's whereabouts),
    an unexpected and unavoidable expense,
    serious health problems, or
    the liable parent acting on incorrect advice.

Special circumstances are not limited to these examples.

It may also be appropriate for CSA to remit a late payment penalty if it is satisfied that a person made their first payment late because they did not understand the operation of the child support scheme. This would not be an acceptable reason for CSA to remit a penalty on more than one occasion.

Where CSA is satisfied that special circumstances exist that would make it fair and reasonable to remit a late payment penalty, it does not have to consider whether a person has taken reasonable steps to mitigate the circumstances that led to late payment, or the effect of those circumstances.
Fair and reasonable to remit the penalty

CSA must be satisfied that it is fair and reasonable to remit a late payment penalty if the late payment was cause by circumstances within the persons control, or because of special circumstances. CSA will take into account the persons payment history, current income and necessary commitments, as well as the nature of the circumstances that led to late payment. It would not usually be fair and reasonable to pay other debts or acquire assets in preference to paying child support debts, although this depends on the predictability and nature of the expense.
Late Payment Penalty Incentive Offer

On 12 April 2010, CSA commenced a new Late Payment Penalty Incentive Offer aimed at encouraging compliance and rewarding that compliance with an upfront remission of a portion of the late payment penalty.

This offer replaces CSAs former incentive offer. Guarantees made under the former offer will be honoured where a person has complied with the terms of that negotiated payment arrangement.

Under the new Late Payment Penalty Incentive Offer, if a person enters into a reasonable payment arrangement to pay all arrears while maintaining full and timely payment of any current liability, and they satisfy the requirements of section 68:

    CSA will remit 25% of the current late payment penalty immediately; and
    at the same time, CSA will record a recommendation for the remission of the balance of the late payment penalty upon full payment of the arrears in accordance with the negotiated payment arrangement.

A reasonable payment arrangement will depend on the circumstances of each case.

Note: a payment arrangement can be renegotiated if financial circumstances change such that the agreed rate is no longer affordable.
Notification of decision

If CSA refuses a persons request to remit a late payment penalty in part or in full, it must provide the person with notice of that decision in writing (section 68(2)). CSA's notice must also state that the person can object to CSA's decision (sections 68(3)(a) and 80) and apply to the Social Security Appeals Tribunal for a review of CSA's objection decision if dissatisfied with it (sections 68(3)(b) and 89).

Graeme70 said
If my assessment is changed to my current income $52k and i have asked that this be backdated to sept 2011 will I still have to pay arrears calculated on $243/wk in missed payments?
You should not and if you have overpaid then you should have the overpayment credited to you, but beware the CSA will try to get you to gift an overpayment to the other parent or come up reasons, such as the other parent suffering to deny you the right to have the overpayment credited to you.
Thanks MikeT for your response. I feel doomed. I am already looking for employment elsewhere.
I think Mike T has given you the best advice - stop being self employed and get a job. The CSA have a bit of a reputation for not really understanding how businesses are run. I would advise anyone who is self employed to seriously think about getting a job so that they have some protection (easy to see income) and to save on their sanity.

Executive Member of SRL-Resources, the Family Law People on the site (Look for the Avatars).   Be mindful what you post in the public areas. 
With my evidence of lowered income I gave a copy of my profit and loss statements for the past 5 months which compared to the previous year showed I was 62 % down in profits.

Given that if my objection is satifactory and I have to complete another COA , am I better at this stage to complete an "estimate of income form " to get the ball rolling a bit faster ?
Unfortunately, if there is an income amount order (which there may be) then an income estimate would very likely be rejected:

The CSA Guide - 2.5.1: Income estimates for a year of income (extract) said
When can a parent estimate their income?

An income estimate can be made if:

    if there is no income amount order in force on the start day of the election or in the remainder of the financial year (sections 60(6) and 63(2A)); and
    in the case of a first election for a year of income  if the estimate is 85% or less than the persons adjusted taxable income for the last relevant year of income (section 60(1)(b)). The adjusted taxable income is based on the parents taxable income and must be:
        as advised by the Australian Taxation Office or
        where the parent is a resident of a reciprocating jurisdiction, as advised by the relevant overseas authority (section 58C); or
        a declaration by the parent of their adjusted taxable income which CSA is satisfied is correct (section 60(1)(b)(ii)).
    later income estimate elections for a year of income can be made at any time within that year of income, and the amount estimated may be higher or lower than the previous estimate (section 62A).

Note: the components of a persons adjusted taxable income changed as of 1 July 2009 (see Chapter 2.4.4).

The CSA Guide - 2.5.1: Income estimates for a year of income (extract) said
Income amount orders

An income amount order (section 5) means:

    a departure order made by a court or change of assessment decision under Part 6A of the Act that either:
        varies the annual rate of child support payable in a child support case by setting that annual rate; or
        varies the adjusted taxable income, or the child support income, of a parent by setting that adjusted taxable income or child support income; or
    provisions of a child support agreement that has been accepted by CSA that have effect, for the purposes of making or amending an assessment, as if they were such a departure order made by consent. That is, varying the annual rate of child support payable, the adjusted taxable income or the child support income of a parent by setting that annual rate, adjusted taxable income or child support income.

An agreement that provides for the payment of child support other than in the form of periodic amounts is not an income amount order.

An income amount order can relate to only one parent or to both parents. An income amount order relating to only one parent will not prevent the other parent from making an estimate (section 60(6)).

An order, agreement or change of assessment decision that varies a parents child support percentage, a parents selfsupport amount, a parents relevant dependent allowance or multicase allowance, the cost percentage, or the costs of children is not an income amount order.
Example

The child support assessment for parents, M and F, is based on a court order which sets Ms adjusted taxable income amount at $56,000. This is an income amount order for M only. F can still make an income estimate election.

Example

The child support assessment for parents, M and F, is based on a change of assessment decision which increases the annual rate payable by M by $5,000. As the change of assessment decision does not set the annual rate payable it is not an income amount order.


Example

Parents, M and F, enter into a child support agreement for child support for their child A. The agreement states that M will pay As school fees and the costs of all school excursions and uniforms. It states that an annual amount of $8,000 is to be credited against Ms child support liability.

M applies to CSA for acceptance of the agreement. CSA accepts the agreement and starts a new child support period reducing the annual amount that M pays F by $8,000. The child support assessment is based on Ms adjusted taxable income for the last relevant year, namely $72,000. Three months later, Ms income has reduced. M contacts CSA and advises that their current annual adjusted taxable income is $50,000. M is able to make an income estimate election. The child support agreement is an agreement for the payment of child support by nonperiodic payments to the other parent. The provisions of the agreement are not an income amount order.

Example

The child support assessment for parents, M and F, is based on a change of assessment decision. Ms relevant dependent child allowance was increased to take into account the special needs of Ms relevant dependent child. The change of assessment decision is not an income amount order.

Thanks MikeT I understand now it would be a waste of time.

Just another question

The CSA SCO added onto my income in the last COA
 the tax fringe benefit of a car I use for work , thus adding $14k to my income. I don't declare the care as a fringe benefit as it's a vehicle that is designed to carry greater than 1 tonne so is exempt from being calculate as a fringe benefit.

Should I point this out to CSA to reduce what they think is an extra $14K to my income?
Graeme70 said
Should I point this out to CSA to reduce what they think is an extra $14K to my income?

You most certainly should. However, as I said, it is highly likely that an SCO would simply ignore this when they wave the wand of magical accounting that they posses as one of their main calculation devices when it comes to working out small business/self employed incomes. I'd suggest having a look at Ladd and other cases and perhaps supporting it with relevant quotes from magistrates. Perhaps putting up what you intend to say on here for scrutiny.
Cheers MikeT much appreciated responses !!
Graeme.
I am self employed and love my job. If guys like you and me arnt self employed, then the country would go down the drain.

My case is very similar to yours and others, it is over 2 years old now.
I'll give you an idea what will happen.
The CSA objection that you lodge will be refused.
You then have to take the matter to the SSAT.
The so for called independant SSAT will back up the claims made by the CSA and they will find other amounts of your expenses to add onto the CSA findings. So you will have more to pay in CS.
As for getting a credit back from the CSA is very unlikely.
The next step is to take the matter to court if you disagree with the SSAT findings. You can only take the matter to the court if the SSAT have made an error in the law, thats a joke on its own.
By this stage your legal fees will be about $5k

This is what the ombudsman did for 1 person and the CSA agreed, but the CSA will not do the same for anyone else.

Chapter 7 | Looking at the agencies - CSA | Commonwealth Ombudsman Annual Report 2006-07

Keep us up to date with your battle Graeme, it wont happen that quick.

Mick

Thanks Mick… That's very depressing.

Is it just me or is the system bias? And are all SCO female?

How will CSA ignore the fact that I my profits are 62% down ( very common now in retail sector) last year on the profit and loss sheet my profits for July- nov 2010 were $55000 , for the same period this year my profits were $21000.

Surely a business not performing as it did previously is a "special consideration"- due to no fault of my own.?
Graeme70 said
Is it just me or is the system bias? And are all SCO female?

 



No they ar not

"When we long for life without difficulties, remind us that oaks grow strong in contrary winds and diamonds are made under pressure"
Thanks Gecko for clarifying that there isn't a female gender bias amongst SCOs
Graeme70,
              there is bias in the system. The ombudsman found that their is bias against the liable parent in change of assessments. We continually receive both empirical and factual evidence of bias, but are unfortunately limited in what we can say or publish. The legislation itself is biased in that it does not consider the proper financial responsibility of parents (as indicated that it should in the very object of the acts). There is nothing in the legislation that imposes anything on upon the recipient to responsibly spend the money they receive for the child or children. There is also bias against the liable parent,  I believe surreptitiously introduced by the CSA in the Spring 2010 changes, that basically gives a green card for the abuse of children as that legislation rewards a parent who denies court ordered, or otherwise agreed upon care.

There is without count bias in the system. I think Voss, if I recall correctly, itself is evidence of the CSA protecting the recipient by not correctly applying a capacity to earn upon the recipient.

Gecko, is only correct in that not all SCO's are female. However, the CSA does have far more females than men.

An extrapolation from the above report that Taylor mentions:

Mr F, the payer, complained that in the course of assessing his child support income under the change of assessment process, the CSA included the value of the depreciation expenses claimed against his business income. This decision resulted in Mr Fs child support income being tripled and, in turn, his child support liability being increased significantly. After unsuccessfully objecting to the CSAs decision, Mr F appealed successfully to the Federal Magistrates Court and his child support assessment was reduced.

Mr F lodged a claim with the CSA for reimbursement for his legal costs. He complained to the Ombudsman when the CSA refused the claim. In examining the CSAs compensation decision we formed the view that, in completely disregarding the payers depreciation deduction as an expense and adding the full amount back as income, the CSAs change of assessment and objection decisions demonstrated a lack of understanding of general accounting principles. They also created a situation such that Mr F had little choice but to appeal the outcome.

The CSA accepted our view and offered compensation to Mr F.

Things have not changed that much since then.

Executive Member of SRL-Resources, the Family Law People on the site (Look for the Avatars).   Be mindful what you post in the public areas. 
Monteverdi said
Things have not changed that much since then.
I'd dispute that. I believe that there has been a major change and that is that former SCO's have been moved into SSAT thus depriving liable parents of fair and just decisions from SSAT. Things are now worse; likely in response to some fairness and justice that was being handed out.
Monteverdi
Things have not changed that much since then.

Things have not changed at all.

I have put my case to the CSA twice, then the SSAT
I am waiting for my court case in May to fight my matter
about depreciation, the same as Mr F

I would love for someone who could find that court case about Mr F for me.

Graeme its not that depressing, you just have to run with the system as it takes time.
Graeme - Like others I have been there too - SSAT and Court. The process is not designed to be easy but is there so the Government can say that you have access to a court (although somewhat very limited).

If an estimate is not viable at this stage then prepare your evidence for the objection decision review and possibe SSAT case. It might be worth the effort now as I don't believe they will back date your lower income for the past year.

Evidence of your lower income needs to be very clear and concise. I have answered some of your other posts with some advice that might help and I think you are on the right track re the business paying your super issue.

Some general advice re C$A:

Deal with them in writing only so you have a paper trail on everything. Use phone only for general enquiries.

When talking to C$A or SSAT be very carefull with the information you give. Better to prepare everything in writing and when they ask you a question, refer only to your notes or ask for time to think about your answer so you can provide them with a written response at a later time. They will claim in their decision that you said something that you know you didn't, and in any review (appeal of a SSAT decision) the law does not allow you to appeal errors of fact.

If at any time you feel that you are not treated properly make sure you complain in writing to CSA, The minister of DHS, and the Ombudsman.

Keep records of any costs you incurr or losses in dealing with C$A issues as you may be able to hit them with a CDDA claim after any dealings with them. Just google CDDA to know what this is all about.

Do not pay any penalties as you can get these remitted at the end of any dispute with them.

Check your statements very carefully to make sure you are not paying more CS than you should be and they have not coverted penalties into child suport.

Re the work vehicle - does it have enough seats to carry you and your children? It's not much use to you if it doesn't.

Remember C$A can't access funds held in any of your bank accounts if they are in joint names. Otherwise they will access funds from your bank accounts to collect child support without informing you.

As per the others advice if C$A causes your business to become unviable then I have outlined in another of your topics where you can earn income and avoid income tax and C$A.

Good luck!
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