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Large increase in income - can I delay Child Support increase

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Can I delay lodging tax return by using a Tax Agent

Last year my taxable income was around $90K and my child support is currently based on this.

For the year ended 30th June 2012, my income will likely be around $140K.

Normally I lodge my tax return myself online by 31st October each year.

If I use a tax agent, can I delay lodging my tax return this year until a later date. I believe if you have a tax agent you can delay lodging until January of the new year or possibly even later.

Are there any adverse implications in child support if tax return is lodged later such as January to delay a large increase in Child support payment.

Will CSA just start the new assessment when the tax return is lodged and not back date any assessment ?
You could end up with a rather large CSA bill as your assessments will be back-dated to the date you ex lodged her tax return i.e. if your ex lodges their return in October and you lodge your return in January, your CSA assessments will get back-dated to October.
I beleive that the CSA re calculate when they recieve notice from the ATO your income.

If your within the law in doing tax returns within a certain window with ATO i cant see ho it can be a problem?

If your CSA is worked out by your tax returns (not estimated) they cant backdate it.
parleycross,

If you dont submit your tax by Oct 31, C$A will make up what they reckon you would have earned ("provisional income")  and base a new assessment on this ficticious figure. Then when you do your tax, you will get another new assessment based on your ATI.

The only benefit in delaying your tax is that the ficticious figure C$A use will be marginally greater than the $90K you earned last year.
BDouble said
parleycross,

If you dont submit your tax by Oct 31, C$A will make up what they reckon you would have earned ("provisional income")  and base a new assessment on this ficticious figure. Then when you do your tax, you will get another new assessment based on your ATI.

The only benefit in delaying your tax is that the ficticious figure C$A use will be marginally greater than the $90K you earned last year.

But as I mentioned, my income may be around $140k this year due to working at a high paid contract role.
So if I only lodge in January 2013 by going through a tax agent, I may be able to delay for 3 months the inevitable big increase in my new child support payment.
Doesn't matter when you do your tax return, now or later, your CS will be adjusted for the previous financial year in line with the real income.  So you are going to get a bill by the looks of it, for the CS you should have paid if you had told CSA of your real income when it increased.  If your are entitled to a tax refund I think they take it out of that.
April said
Doesn't matter when you do your tax return, now or later, your CS will be adjusted for the previous financial year in line with the real income.  So you are going to get a bill by the looks of it, for the CS you should have paid if you had told CSA of your real income when it increased.  If your are entitled to a tax refund I think they take it out of that.

No I don't think that is right. They don't amend your previous assessment, they just start a new assessment period based on the most recent information from your recently lodged tax return.
So it seems to me the later you lodge the better, if your income has increased.
So as long as it is lawful to lodge later which you can do if you use a tax agent.
parleycross said
April said
Doesn't matter when you do your tax return, now or later, your CS will be adjusted for the previous financial year in line with the real income.  So you are going to get a bill by the looks of it, for the CS you should have paid if you had told CSA of your real income when it increased.  If your are entitled to a tax refund I think they take it out of that.
  No I don't think that is right. They don't amend your previous assessment, they just start a new assessment period based on the most recent information from your recently lodged tax return.
So it seems to me the later you lodge the better, if your income has increased.
So as long as it is lawful to lodge later which you can do if you use a tax agent.
 

If a COA is lodged, then yes they will back date it.



Why do you really need to do this?

"When we long for life without difficulties, remind us that oaks grow strong in contrary winds and diamonds are made under pressure"
parleycross said
April said
Doesn't matter when you do your tax return, now or later, your CS will be adjusted for the previous financial year in line with the real income.  So you are going to get a bill by the looks of it, for the CS you should have paid if you had told CSA of your real income when it increased.  If your are entitled to a tax refund I think they take it out of that.
  No I don't think that is right. They don't amend your previous assessment, they just start a new assessment period based on the most recent information from your recently lodged tax return.
So it seems to me the later you lodge the better, if your income has increased.
So as long as it is lawful to lodge later which you can do if you use a tax agent.
 

You earned 50 grand more than your assessment was based on.  Yes, you will get a bill as well as a new assessment.
April,
does this mean if you earn less than the previous tax year you get a refund for overpaying CS?
The CSA Guide - 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 lodgment program); or

Note Added by myself (i.e. it is found elsewhere in the guide (as below))

However, if the other parent submits a tax return first, thus a new child support period starts, that may result in a temporary change that considers inflation (read all of section 2.4.4).


(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).

You may wish to have a good read of The CSa Guide - 2.4.4: Child support income

The following is also relevant:

The CSA Guide - 2.3.2: When do child support periods start? (Extract) said
CSA makes an assessment when the ATO issues an income tax assessment for one of the parents

CSA must make a new assessment when an income tax assessment issues for either parent for the latest financial year that ended during the existing child support period (exceptions detailed below)(section 34A). CSA must do this as soon as it is practicable after the ATO issues the assessment (section 34A(2)).

CSA's business rule is that it is practicable to make an assessment in the month that the tax assessment issues if it issues on or before the 15th of the month. If the tax assessment issues after the 15th of the month CSA will make the assessment in the following month.

CSA's new assessment applies to a new child support period that starts on the first day of the month after the month in which the assessment was made (section 7A(2)(d)).

Also:

Guide to lodging your tax return - When to lodge your tax return said
When to lodge your tax return

Tax returns cover the financial year, not the calendar year. The financial year begins on 1 July and ends on 30 June the following year. After the financial year ends you have until 31 October to lodge your return (unless you use a tax agent).

For example, you should have lodged your tax return for the financial year 1 July 2009 - 30 June 2010 by 31 October 2010.

If you use a registered tax agent to prepare your tax return you can lodge later than 31 October. See your registered tax agent before 31 October to qualify for their lodgment dates.

If you cannot lodge your tax return by 31 October or by your registered tax agent's lodgment date, phone us on 13 28 61 as soon as possible to find out if you can lodge at a later date. You should not lodge your tax return if it is incomplete.

Guide to lodging your tax return - When to lodge your tax return

Last edit: by MikeT

Here's one for the gurus,

If I submit my tax return in July (2012), and the OP doesnt do theirs until Oct, do I have to wait until the OP's tax return is processed until I get a new CS assessment?

If I earn less this year, I will of course want my new assessment asap to take advantage of the new reduced CS that will follow the tax return. So can I do my tax in July, submit an "estimate of income" using my new tax return as evidence of my reduced income, and have it applied to a new assessment from the date I submit the income estimate, instead of waiting until the OP does their tax?
B Double said
If I submit my tax return in July (2012), and the OP doesn't do theirs until Oct, do I have to wait until the OP's tax return is processed until I get a new CS assessment?
No. Each return will trigger a new assessment unless both returns are in the same processing month (see 2.3.2 in the previous post).
Mike T,

And what about submitting an income estimate to C$A using the Tax Assessment as evidence? I have always had to wait 3 months to get  a new CS assessment after doing my tax.
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.


The way I read that example from Mike T's post is that if your real income turns out to be more than you said it would then the assessment gets backdated, and then you get a bill/a debt is raised.
April, In that example it says the return is lodged late.

I am asking what happens if I lodge my return on time, being after Oct 31 thru a tax agent.

My current assessment is based on last years tax return. This years tax return will show a large increase admittedly, but will they amend my old assessment or just start a new one based on the income.
They will do both, amend the old one so you owe CS, and then begin a new assessment.

This is bad news for you and I am sorry you didn't know this.

I think you can earn more money for a period after you first split up, and it doesn't cound for CS but I don't know anything about how it works.  If you are newly separated then maybe look into this.

Hopefully someone else will give you a straight answer.
April,
So in my case if I submit an estimate to C$A  in July 2012, using my 2011/2012 tax return, C$A will apply it straight away.
Then 3 months later the ATO finally catches up and tells C$A that my tax has been done and it is exactly what I estimated. So I now dont have to wait for the OP to do their tax before I get a new CS assessment.  :thumbs:
BDouble, please don't ask me direct questions about CS I am no expert on the topic.  I am just answering parleycross because I think he may misunderstand how it works and get a shock when he finds out he has a bill.

I am happy to be wrong on this.
BDouble said
April,
So in my case if I submit an estimate to C$A  in July 2012, using my 2011/2012 tax return, C$A will apply it straight away.
Then 3 months later the ATO finally catches up and tells C$A that my tax has been done and it is exactly what I estimated. So I now dont have to wait for the OP to do their tax before I get a new CS assessment.  :thumbs:
 

Bdouble - both will happen if necessary.

Parleycross - if you do not give the correct amount you are earning then CSA which catch that up, that is why they keep insisting that everyone updates their income as soon as it changes. If you have to change it every week then so be it. I still ownder why it is such a big deal for you to dodge your responsibilities, a question you still are yet to answer.

"When we long for life without difficulties, remind us that oaks grow strong in contrary winds and diamonds are made under pressure"
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