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In 2009 for tax purposes I became the owner operator of a family business. At this point I had all children in full care with me, and me ex was paying me $38 pm (only 1 child under 18). She had moved to the country to "re-energise." On returning from exile she rented a house in the next suburb & basically "stole" (willingly unfortunately, too much parenting in my house!!) my youngest child. She submitted a CSA claim. Because I was a salary earner she disputed my 2008/2009 income as the business made a significant loss, GFC & those other small business woes. My current partner worked in the business but was not paid, so wages etc were not over inflated, & we worked hard to reduce costs etc but losses still occurred. Once again these were not clever depreciation/non cash losses - I was actually using my salary to address cashflow & pay bills. CSA agreed with my ex that I had capacity to pay & assessed me at my full rate of salary thus ensuring she got in excess of $12k pa. CSA Rules suggest that they do look at Business losses/salary & wages etc but I was surprsied that I was given no quarter, no discount or no option, especially as I was actually contributing cashflow. I guess this was partly because I had a history of salary & wages & this was my first business venture. My questions is two fold - does this seem reasonable that none of the busines losses were considered in 2009. Secondly the same result has been achieved (or not achieved!!) for 2010. Will the fact that this is now not the first time be taken into consideration, and is CSA likely to have some empathy with small business owners who also earn a salary. In some ways my ex has first call on my money, and with 2 young babies at home the cash position is uncomfortable. Oh I was advised by a 16 year old CSA Officer to sell the business, which of course was easy given that it was not profitable & I am locked into a 5 year shopping centre lease!!! I was also advised by the Senior Case Officer, in writing, that I should support my ex as much as possible. Good advice given that she received 60% of the settlement at divorce and threw the 3 kids outs after 18 months (no I did not get any back!!), and for the next 5 years at most I received about $1000 pa in support, yet I paid over $120,000 in school fees by myself. Advice on the business losses would be appreciated.
I've done a quick check of austlii.edu.au and found some case law (i.e. appeals against SSAT decisions). Remember CSA slaveously follow SSAT decisions as they are meant to show how the law is applied, but when appealled against, the Fed Mag. Crt decisions are the ones you need to refer to to prove your case.

As a Tribunal, SSAT decisions are not bound by the law of precendent in their own previous decisions, but are bound by precedent in a higher court.

The decisions which involve company directors, loss and profit and incomes are as follows:
- Crabbe & Crabbe (SSAT Appeal) [2011] FMCAfam 24 (14 January 2011)
- Waites & Lawson (SSAT Appeal) [2011] FMCAfam 42 (21 January 2011)
- Bedell & Kastens & Anor (SSAT Appeal) [2010] FMCAfam 1250 (15 November 2010)

Go through the CSA objection process, quote the relevant application of law as determined in the above cases and if no joy, do the SSAT bit.
apologies MikeT but I do not know how to edit my post. spent ages searching but no obvious way unless you want me to copy & start again. apologies
There's a time limit in regards to editing posts. It's up to you but I for one will have little desire to untangle your post in order to respond. Although I would add that you may wish to do a search on this site for Ladd and/or Voss as these cases may well be worth looking at, as well as the discussions around them.
Thanks MikeT I will provide a synopsis of the original post.

I divorced & settled in 2001 with 3 children. I remarried in 2004 & have 2 further children as well as a step child.

In 2008, whilst having full care of my first children, I restructured my family business I started with my new partner from a Pty Ltd company to me as the sole trader. I have a registered trading name and an ABN. Apart from a short time in 2004 I have also been a salaried worker.

During this period a CSA assessment was in place with me as the carer & my ex paying a minimal amount - $38 pm in the last year I had care.

Due to the GFC & other business downturn the sole trader business made a significant loss in trading year 2 which reduced my assessable income to say $10,000. At the same time my child moved in with her mother and she lodged a CSA assessment. When my taxable income of $10,000 was received by CSA & then her, she lodged a COA as my income had significantly changed & my "employment had not changed." This was an actual operating loss, not clever depreciation or non cash expenses and I spent a significant amount of my salary propping up the cash flows and paying debt.

The COA team agreed that I had the capacity, through my salary to pay support at a rate of around $1000+ pm despite an assessed income of $10,000. They did not even consider my financial situation.

My first question is that this seemed very hard line, although the first time my income changed significantly, with no distinct rules being broken by myself, so is this standard practice where business losses are never factually considered? I am not a director but sole trader.

My seconed question is that for the 2009/2010 financial year I have again had an assessable income of $10,000 due to continued business loss. Will CSA again rule as per 2008/2009 & assess me at my full salary, or will they acknowledge existence of a tough small business situation & that this is not a new situation and allow me to keep some or all of this loss? I have a legal obligation to pay debt, I have a family to look after, and cashflow is very scarce. I feel as though my ex wife is a preferential creditor, I acknowledege my debt to my child from that relationship but whay is fair & legal?
asn993 said
My first question is that this seemed very hard line, although the first time my income changed significantly, with no distinct rules being broken by myself, so is this standard practice where business losses are never factually considered? I am not a director but sole trader.

Standard practice perhaps, perhaps not. What is very clear is that the COA process is very frequently applied by the CSA with disregard for the Child Support Assessment Act and for the true situation. In fact the Ombudsman found definite bias against liable parents when for determinations made via the change of assessment process. It is also very clear that the CSA especially target sole traders/small businesses. On a number of occasion there has been evidence that they have used years old business loan application to conjure up incomes. In Ladd v the Child Support Registrar, paragraph 33 FM Sexton deals with an instance where SSAT (and thus the basically the CSA) have very wrongly handled a loss treating it as income. In a case that I have information on, they have used one reason, which I believe would not make it in court, to knock back tax deductibles (cost of eating out away from home) to then knock back 12 other tax deductibles which would then place the public at large at risk of death, Furthermore the CSA neglected, contrary to the APS legislation, other legislation/regulations in regards to OH & S issues and so on, yet again placing the person in a position of having no option other than to put the public at large at risk of death in order to pay. When this went to SSAT an agreement was made, so this won't be published.

asn993 said
My seconed question is that for the 2009/2010 financial year I have again had an assessable income of $10,000 due to continued business loss. Will CSA again rule as per 2008/2009 & assess me at my full salary, or will they acknowledge existence of a tough small business situation & that this is not a new situation and allow me to keep some or all of this loss? I have a legal obligation to pay debt, I have a family to look after, and cashflow is very scarce. I feel as though my ex wife is a preferential creditor, I acknowledege my debt to my child from that relationship but whay is fair & legal?
Unfortunately the CSA, unless ordered not to, will very likely apply the same distortions in order to raise your child support payments in fact I think the COA will basically be ongoing. The problem that you have is that it is very likely that you have surpassed the time limits to a) object to the decision and to then, assuming that the CSA do not uphold the objection or only partially remedy the situation (e.g. set a lower rate that is still not according to the full legislation) and to then b) take the matter to SSAT and then c) to court. You are most likely to get a deal (still not fair) that is according to the legislation via the courts, less likely from SSAT (e.g. Ladd was SSAT not applying the legislation correctly), and very unlikely from the CSA.

As such you need to try to get the matter to court. Fairgo has a better understanding of this aspect. Hopefully Fairgo will provide some input. The earlier advice re looking at Ladd, Voss and the cases that Valere has listed should assist you in understanding some of the techniques the COA use for what has quite aptly been called their "Deem and Destroy" policy. Furthermore the CSA also have a record of doing the reverse for the recipient, so as to maximise what they can report as being collected or transferred. They will readily not look into recipients affairs. In Ryan v Ryan liable parent's income was set to something like $92,000 recipient to $25,000. Objection lowered the liable parent's income to something like $62,000, recipients remained as is. SSAT (if I recall correctly) set liable parent's income to around $58,000 but uncovered the CSA lacking and upped the recipients income, based upon capacity to earn (had worked in holidays so had capacity to do so) to something like $42,000. The ombudsman's report found that this is not a one-off.

In addition to trying to get the matter into court. I'd suggest also complaining to the Ombudsman, your local Federal MP, and the MP who has the DHS portfolio.  
 At this stage I have moved on from the 08/09 assessment. however my ex has only just lodged a COA for 09/10 so I am yet to put in my submission & thus trying to understand as much as possible my rights.

I was steamrolled the first time but I feel this time my assessable income has established a pattern of fact that hopefully I can defend.

on top of this, the original COA ended on 30/11/2010 and since then I have been paying unquestioned my assessed amount of $99 pm. some 3 months later my ex has suddenly realised so I will now have to battle the issue of potential back pay. even when you follow CSA direction it blows up in your face!!

a lot of the cases suggested are around directors & companies so I am very keen to find a view where a salaried person who runs a business as a sole trader which has made a loss and thus reduced their salary from  a tax perspective.
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