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CSA trying to add tax exempt payment to gross annual earnings

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after 1.5 hours talking with CSA they have put the onus on me to prove that an amount of money that has been declared on tax return (tax exempt) is actually income they can add to total income. they have put the onus on me that its tax free money (carers allowance) now the tax office have told me its tax free and centrelink cannot print me off any information of my payments because its tax free. i cant believe this! to add to the fire we are talking about an assessment for 2008 2009 tax year! i have lodged a 2009 tax return and 2010 return why hasnt this "arrears" been rectified already! they are asking me to come up with payslips going back to a period of 3 months in 2008. if we were talking about a few bucks id let em garnish it or rectify the "arrears" but we are talking about 750 bucks of an outstanding amount. i tried to tell them that my ex is working and that im still actually overpaying child support but they work on the last tax return she put in which was in 2007-2008! so im overpaying past 3 years they dont want to know or rectify that until she puts in her latest tax return. im wondering if what they are doing is within legislation as ive been told if its over 3 months old they cant backdate that far considering that ive done 2 tax returns since the disputed time....
Here's what the CSA Guide says in regards to allowances:-
CSA Guide - 2.4.4: Child support income (extract) said
Tax free pensions or benefits

Only the following tax free pensions or benefits received by a parent are included in the adjusted taxable income:

    a disability support pension under Part 2.3 of the Social Security Act 1991;
    a wife pension under Part 2.4 of the Social Security Act 1991;
    a carer payment under Part 2.5 of the Social Security Act 1991;
    an invalidity service pension under Division 4 of Part III of the Veterans Entitlements Act 1986;
    a partner service pension under Division 5 of Part III of the Veterans Entitlements Act 1986;
    income support supplement under Part IIIA of the Veterans Entitlements Act 1986;
    Defence Force Income Support Allowance under Part VIIAB of the Veterans Entitlements Act 1986;

but only the amount that is:

    exempt from income tax; and
    not a bereavement payment, pharmaceutical allowance, rent assistance, language, literacy and numeracy supplement or remote area allowance (section 5).

Child Support Assessment Act said
Section 43 of the Child Support Assessment Act confirms this:

43  Working out parents adjusted taxable income
   (1)   Subject to this Part, a parents adjusted taxable income for a child for a day in a child support period is the total of the following components:
   (a)   the parents taxable income for the last relevant year of income in relation to the child support period;
   (b)   the parents reportable fringe benefits total for that year of income;
   ©   the parents target foreign income for that year of income;
   (d)   the parents total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
   (e)   the total of the tax free pensions or benefits received by that parent in that year of income;
   (f)   the parents reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year of income.
Note 1:   Other provisions that relate to a persons adjusted taxable income are section 34A and Subdivisions B and C of Division 7.
Note 2:   The components of the definition of adjusted taxable income are defined in section 5.

However, if the other parent hasn't lodged tax returns for two years, without being exempt from doing so, then the CSA should be applying an income of 2/3rds of the annualised MTAWE (Male Total Average Weekly Earnings). For 2011 this amount is $41,187. If the other parent has reported an income less than the maximum parent payment single amount ($15909) without satisfying the registrar (CSA) that they are on a genuinely low income then the fixed rate of child support ($1226 for 2011) should be used to offset the annual amount of CS.

As for the CSA going through previous years, very unfairly so, the legislation does appear to allow this. Unfortunately the legislation is not what it makes itself out to be. In reality support of children is a disguise for a tax. That is, that for a $1 collected or transferred FTB payments are reduced by 50c (and I believe assumed to do so, for reporting/budgeting purposes, even when they don't). If Child Support were actually the issue then a parent's financial responsibility would not exclude the expenditure of money received on behalf of the child or children and this would then greatly reduce the neglect of children. Furthermore, implementation of a satisfactory system would also provide data on the actual cost of children rather than the current use grossly inflated amounts that support the taxation aspect of child support. It would then be a much fairer system the the current system which is slightly fairer than the fundamentally flawed predecessor system.
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