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I was wondering if income from the sale of shares is taken into account as income for child support


I was looking on the CSA website but cant find an answer
Namaste,
            I believe that such things are declared on tax returns and are thus covered by the ATI. Net losses, I believe, are also now covered and included on the tax return and then added to the ATI.


CSA Guide - 2.4.4: Child Support Income (extract) said
Net financial investment loss

A net financial investment loss is the amount by which the parents expenses for their investments, e.g. from rental property, shares, managed investment and forestry managed investment schemes, exceed the gross income from those investments (section 5), if this loss was deducted from the parents income for tax purposes.

Note: Prior to the 2009/2010 financial year only losses incurred in relation to rental property investments were included.
Long story short… YEP…

Even legitimate tax deductions accepted by the ATO will be added back.

In my view, (gained from dealing with the C$A over a VERY short period) there is absolutely NO benefit in working towards financial security post separation.

What you will lose in capital gains tax, then after the C$A cop a sniff of your astute financial management, recalculate your current C$ assessment, plus send you a bill for the back assessment, minus the cost of funding any investment, with no consideration as to whatever stress may be associated with building an investment nest egg, if you were to calculate your Nett return, you would be better off buying scratchies and hoping like hell to have a win fall.

(just make sure you are legally divorced as well, otherwise you may find an win fall could be deemed part of the joint asset pool)

(And when I do, I'll spend it on replacing my aging car, (the ex has a new one though) take my kids on a holiday… Oh, my ex gets those as well… Treat myself to a night out with a nice meal… Yep… she does that on a regular basis.. I'm sure some get the point)
Thanks for that, I thought that probably was the case but wanted clarification
TryHardDad - All I want to say is that C$A will only add back tax deductions if in the midst of the Change of Assessment process, and they want to find a way to increase your child support income because they believe the ex (Opps should have said your kids!) needs more than the usual C$A assessment, and they think you can bear the extra financial burden.

Everything else you say is quite true - although I must say that life is not a rehearsal.
mmm. I wonder what is different in my case then.

The C$A added in my capital gain from share sales, added in all my tax deductions back in. (not that there was many, but one was the deduction I got for buying my children a computer and all without a COA.

And then when they got win of the capital gains from a property sale, they have accounted the capital gain of $145 000 as extra income  and generated another C$  assessment. Now that is something that I had to initiate a COA for so I can get the capital gain removed from the assessment as it is not "ordinary income".

Funny how I first lodged an objection, only to be told it can only dealt with/adjusted via a COA… No wonder, as it means/meant I had to detail ALL my particulars.

Now I'm expecting to have the $145 000.00 removed but more than expecting an increase on my pre-capital gain assessment.

Why…I think it was yourself Fairgo that gave me an insight into the 0.5% bonus for C$A staff…
So why is it that us dads who genuinely do the right thing and pay child support every month without fail still get screwed over?
The system needs to change- I want to invest MY money from the property settlement and it should not be taken into account as income
The way around it is to become regarded as a share trader.  The ATO has a set of ruleson their website of hwta you have to do - follow them and only the net profit can be included, which is a far better treatment over the ATI approach. Oops, probably shouldn't point this out.

solution to your problem

It you have a large capital gain then this is going to affect your ATI. But lets say your gain will bring your ATI from 100K to 120K. In the following CS period you can just say to CSA- I dont think 120K refects the ATI for this new year and therefore I would like to make an estimate of my ATO of $100K. You can do this is you have a strong belief that the current year ATI is going to be at least 15% less than the last's years ATI.

So:

1. Do your tax return and decare your Capital gains on shares

2. Get your new assessment from CSA once your tax return has been processed

3. Call CSA and make an estimate of $100K based on the reason that there was a capital gain and therefore this years ATI will be no where near last years ATI of $120K.

This should work.
Guest said
1. Do your tax return and decare your Capital gains on shares

2. Get your new assessment from CSA once your tax return has been processed

3. Call CSA and make an estimate of $100K based on the reason that there was a capital gain and therefore this years ATI will be no where near last years ATI of $120K.

This should work.
 
This is what happened to me  Was forced to sell joint investment property Capital gains of 60,000 My share is $30,000   

File taxes and assessment come out and say CS amount based on the Income + Capital Gains  almost $85,000

In really since the other party got 70% of the Capital gains I only received 18,000 But had to pay the tax on the $30,000 oh well

Called C$A and told them increase was the result of one time sale of property and they asked me to Estimate new income   Gave them figure of 58500 and they accepted it

Filed Taxes for next year income was 58948 - Under payed by 448 dollars and the only reason for this was ex dragged property settlement on for over a year and money in joint account earned more interest than I thought.  

So I guess in about 20 years C$A will say I owe them money 
This is only what I have been told but if it's wrong i'm sure someone with the knowledge will correct me.
Our friend has not had his share income taken as CSA income for 3 years - he claims this is as he claimed and set them all up as self managed super fund somehow - he uses the yearly bonus thing too add back into it - he says this secures him financially for the future, he won't be retiring pre children turning 18 and his ex can't touch it, he has been through 2 COA's in this time specifically relating to his shares and got away with it.
so if this is correct maybe it's the way to go……..

CSA and late tax returns

Guest said
It you have a large capital gain then this is going to affect your ATI. But lets say your gain will bring your ATI from 100K to 120K. In the following CS period you can just say to CSA- I dont think 120K refects the ATI for this new year and therefore I would like to make an estimate of my ATO of $100K. You can do this is you have a strong belief that the current year ATI is going to be at least 15% less than the last's years ATI.

So:

1. Do your tax return and decare your Capital gains on shares

2. Get your new assessment from CSA once your tax return has been processed

3. Call CSA and make an estimate of $100K based on the reason that there was a capital gain and therefore this years ATI will be no where near last years ATI of $120K.

This should work.
 

 Does this mean if tax return (including capital gains) is submitted late and after the new tax year is in fact over, will CSA take the actual income for that financial year in account or will they insists on using the inflated return that includes the capital gains, which effectively will not have been the accurate income for the following financial year? Do you know what I mean?
Guest, basically if late (according to tax law), then the highest amount will be used until the date that the new tax information has been processed. Here's what the CSA Guide says :

2.4.4: Child support income said
New information about adjusted taxable income for assessments from 1 July 2008

Where CSA has made a determination of a parent's adjusted taxable income for a particular year and subsequently ascertains the parent's actual taxable income for that year (when a tax assessment issues for the parent), the child support assessment must be amended immediately. 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 (section 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) the parent lodged their tax return on time, 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

© paragraphs (a) and (b) do not apply and the parent was genuinely unable to provide CSA with timely information due to the parent being unaware that an assessment had been made; illhealth; natural disaster; remote location; imprisonment; or other exceptional circumstances and the parent provided income information as soon as was practicable in the circumstances (section 58A(2) and regulation 7B(1)); or

(d) paragraphs (a) and (b) do not apply and the parent resided overseas, 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(2)).

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)).

Example

M rings CSA on 20 July 2008 and advises their adjusted taxable income for 2007/2008 is $40,000. CSA uses that figure to calculate the child support assessment for the child support period 1 August 2008 to 31 October 2009.

0n 15 July 2009, M's tax return for 2007/2008, lodged late, issues and their adjusted taxable income is $43,000. As M's income is higher, the child support assessment would be adjusted from 1 August 2008.

If M's adjusted taxable income was $38,000 then the child support assessment would be amended from 15 July 2009. This is the date the adjusted taxable income was determined, as this amount is lower and M's tax return was lodged late.

Example

F has not lodged 2006/2007 tax return when child support period commences 1 March 2008. CSA determines an adjusted taxable income for 2006/2007 of $80,000 (from the taxable income in the year prior to the LRYI) and uses that figure to calculate the child support assessment for the child support period 1 March 2008 to 30 May 2009.

On 1 November 2008, F's tax return for 2006/2007 issues and their adjusted taxable income is $55,000. As F's income is lower, the child support assessments would be amended using income as follows:

    From 1 March 2008 to 30 June 2008: $55,000 (pre-1 July 2008 legislation);
    From 1 July 2008 to 31 October: $80,000;
    From 1 November 2008: $55,000 (s58A(3)) as F's tax return was lodged late).

New information about adjusted taxable income for child support periods commencing after 1 July 2011

The information included above about how assessments are amended from July 2008 still applies to assessments for child support periods commencing on or after 1 July 2011.

Where CSA has made a determination of a parent's adjusted taxable income for a particular year and subsequently ascertains the parent's actual taxable income for that year (when a tax assessment issues for the parent), the child support assessment must be amended immediately.  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 (section 58A(1)).

How the assessment will be amended will depend upon when the later information became available, or when the later ATI was determined, as described above.

If more recent ATO income information becomes available that would allow CSA to determine a more current indexed income for the parent another ATI will be determined and the assessment will be amended to use the more recent information (section 58A(1)).

Example

CSA made an assessment for a child support period commencing 1 August 2011. The most recent ATO assessment for M was 2006/2007, the ATI used in the child support assessment was $41,187, 2/3 MTAWE. On 26 September 2011 M's 2008/2009 tax assessment issues, an ATI of $45,000. CSA considers determining a 2010/2011 ATI based on the 2008/2009 ATI.

The AWE amount for the September quarter of the last relevant year of income (2010/2011) is the August 2010 amount of $982.90. The AWE amount for the September quarter of the tax year (2008/2009) is the August 2008 amount of $897.90.  The ATI indexation factor is therefore $982.90/$897.90 = 1.094.

M's 2010/2011 ATI is $45,000 x 1.094 = $49,230 or 2/3 MTAWE; as the indexed value is greater the ATI is $49,230.

CSA amends the assessment from 1 August 2011 using the ATI of $49,230 for M.

If the ATI determined under section 58 results in the parent being assessed based on an income that is higher than their actual income, the parent may choose to lodge their tax return so their assessment would be amended to reflect their actual ATI.  However, the new assessment can only take effect with retrospective effect in a limited range of situations (as described above).
So best to get your returns in ASAP, take any capital gain hits etc… as they come and plan your finances ahead of time so you are in control.

Yes a good way to plan for your retirement and avoid excessive C$A liabilities is to run your investments through a self managed super fund.

How does it play out if the cs period in question has already been replaced with a new and current one based on the latest tax return? Hence, the capital gains scenario happened in a tax year prior to the current one. MikeT, the part your pointed out in the guide does not seem to address this...
Babushka, I believe what has been posted is not specific to the current period rather that it applies to a period which could be in the past hence terms such as "particular year" and "that year".
RE: late Tax Returns…be aware! If payee fails to file return until three years (as in my case) and it happens that they decided to be "unemployed" for a long period of time…oh yeah…then throw in the face that the child then goes to reside with them…then this sucks…especially when the @#$!!! didn't pay CSA anyway…I had to apply to the FMC because the whole thing was over 18 months. hey…still amusing…the @#$!!! had costs against him…[ words removed ] …but it still doesn't help when the whole system is balanced on the premise that everyone files their tax affairs on time, every time.



The ATO seem not to care when chronic non filers seem to get away without filing for over two years…because CSA change the assessment…as discussed…but COA process is quarantined for the previous 18 months.

Last edit: by Secretary SPCA

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