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I am the receiving parent of cs. I have 100% care. The father claims to have a low income and has applied a tax return less than $14,000. The fixed rate was applied as he had claimed he has a low income and not receiving income support payments from centrelink. Now apparently he has shown proof of low income and the fixed rate is not applied, taking the support to $30 a month, which is a few dollars more than the last few years of just $28 a month. My question is, what proof does someone need to provide to the csa for them to say that indeed he has a low income and living off less than $14,000 a year and raising a family of four with no income support payments. From what i have read from csa, they do not look at the tax return as proof when applying for the fixed rate to not be applied, but need some other proof, what other proof would he have provided? Is it because he does not have any care of the child, has no contact of the child? Dont they have the power to look into his business details, partnerships etc, to verify what he claims is true?
This should answer most of your questions :-


The CSA Guide - 2.5.3: Application to have the fixed annual rate of child support not used said
2.5.3: Application to have the fixed annual rate of child support not used

Version 2.3, Last updated 13 October 2008 5:00pm

Context

Where the liable parent has a low income but does not receive income support payments a fixed annual rate assessment will be made. The parent can make an application for the fixed annual rate not to be used.

Legislative references

Sections 5, 60, 65A, 65B, 66, 66A, 66B, 66C, 67A, Child Support Assessment Act 1989

Regulation 7D Child Support (Assessment) Regulations 1989

What is the fixed annual rate of child support?

The fixed annual rate is a set rate of child support payable per child. It is payable by low income parents not on income support payments (section 65A). It is intended to address the situation where parents minimise their taxable income in a way that does not fairly represent their true income, or real capacity to pay child support, and thereby reduces or avoids the contribution they should make towards meeting the costs of their children. See Chapter 2.4.11 for more information on the fixed annual rate of child support.

If parents are genuinely on a low income they would usually access social security, or other income support payments. Some parents may genuinely be on a low income and either choose not to access income support payments, or are not eligible to receive such payments.

For these parents, it would be unfair to impose this fixed annual rate. Therefore, they may apply for the fixed annual rate not to be used. This chapter discusses how that application is made and how CSA makes a decision on the application.

Application for section 65A (the fixed annual rate) not to be used

If CSA makes an assessment using section 65A the liable parent can make an application for the fixed annual rate not to be used (section 65B(1)(a)).

If immediately before the end of the previous child support period a determination had been made (under section 65B(4)) that section 65A not be used for that assessment, then the parent is deemed to have made an application that the fixed annual rate not be used in the new child support period (section 65B(1)(b)).

The parent making the application must provide evidence about their financial circumstances to CSA to show that their current income is no more than the relevant pension PP (single) maximum basic amount (section 65B(2)(a)). An income tax assessment for the last relevant year of income will not be sufficient evidence of the parents income. The parent must also show that it would be unjust and inequitable to expect them to pay the assessed amount (section 65B(2)(b)).

Decision on Application

CSA must first be satisfied that the parent's current income is no more than the relevant pension PP (single) maximum basic amount, before granting the application. A parents current income is generally their income for the 12 month period from the date of the application.

If the parents current income is more than the relevant amount the application must be refused (section 65B(4)).

If the parents current income is no more than the relevant amount CSA must then be satisfied that it would be unjust and inequitable to expect the parent to pay the fixed annual rate (section 65B(4)).

In making this decision, CSA will consider whether the parents income accurately reflects their real capacity to pay child support, including whether the parent receives goods, services or benefits which mean that their current income is not an accurate representation of their financial position. CSA may decide that it would not be unjust and inequitable to require the parent to pay the fixed annual rate despite their income being low.

If an application is granted, CSA will specify the day on which the fixed annual rate ceases to apply to the parent (section 65B(5)). In most cases, CSA will specify that the determination will apply from the first day in the child support period on which the fixed annual rate was payable. However, if making a determination that the fixed annual rate will not apply from the beginning of the child support period would create an overpayment for the payee, generally CSA will determine that the fixed annual rate will not apply from a date after the start of the child support period, for example, the date the application was made. In making this decision, CSA will consider the reasons for any delay in making the application.

If the fixed annual rate applies to only part of the child support period (e.g. where the parent lodged an estimate of income after the beginning of the child support period), the determination not to apply a fixed annual rate will not apply to the earlier part of the child support period.

When CSA refuses to grant the application, CSA must notify the unsuccessful applicant in writing (section 66C). That person can then object to the particulars of the assessment.

Meaning of Income

In considering an application under 65B for the fixed annual rate not to be used, CSA must use the definition of income in section 66A(4) to determine if the parents current income is no more than the relevant pension PP (single) maximum basic amount. In that section, 'income' is not restricted to taxable income. A taxation assessment is not sufficient evidence of the income of the parent for the purposes of this section (section 65B(3)). In section 66A(4) income is defined as:

    * any money received, earned or derived for personal use or benefit; or
    * any periodic payment by way of gift or allowance.

The only exclusions to this definition are prescribed in the regulations (regulation 7D). They are:

    * amenity allowances or gratuities (incidental payments for personal items or other minor expenses, but not payments for work, study or participation in approved programs) paid to prisoners; and
    * disability support pensions, pensions paid to veterans who are totally and permanently incapacitated and Special Rate Disability Pension for veterans, where at least 85% of the pension is paid to another person for the provision of ongoing care to the pension recipient.

In considering a parents financial circumstances 'money':

    * includes coins and bank notes, cheques and deposits into bank accounts (but not goods, services, or some other benefit, even if the payment is capable of being valued in money terms);
    * is 'earned' when it is received in return for labour or service, in compensation or as profit;
    * is taken to be 'derived' in accordance with ordinary business and commercial principles. It includes capital payments, trust distributions and royalties;
    * is taken to be 'received' when it comes into a person's possession. This covers most money which comes into a person's hands including capital payments, e.g. a tax refund, Lotto wins, lump sum compensation, profit from the sale of an asset, deposits into a joint bank account;
    * must be received for the person's own use or benefit. Income received by a person in another capacity isn't included.

Examples


A trustee does not receive trust funds for their own use or benefit.

A person receiving Family Tax Benefit or child support is receiving that money for the children concerned and not for their own use or benefit.

A partner only receives money for their own use or benefit when the person receives their individual share of the partnership profit.

Only net income is considered. CSA will deduct the person's expenses (that would be recognised for taxation purposes) that directly relate to them earning the particular type of income from their gross income. However 'paper expenses' (such as depreciation of property or assets or carried forward losses) should not be deducted, as they are not considered to relate directly to earning the income and/or do not reduce cash flow.

If expenses claimed are discretionary (e.g. repairs to a rental property) CSA must be satisfied that they were necessary before they will be deducted from income.

Example

The landlord of a rental property should be able to show that the property would not have been let if the repairs claimed were not carried out.

Although taxable income is calculated by taking the total amount of deductions away from the total amount of assessable income, CSA will consider each individual source to determine if the amounts in total are no more than the relevant pension PP (single) maximum basic amount. Losses from one source will not be deducted from income from another source.

Example

A liable parent has made an application for the fixed annual rate not to be used for a child support period starting 1 August 2008. The liable parent has an adjusted taxable income of $6,300. For section 66A(4) purposes, the parents separate types of income are identified as:

Employment Income $10,300

Superannuation pension $5,000 (not taxable)

Lotto win $1,700

Loss from share investments $4,000

The loss from the share investments is not taken into account in calculating the liable parent's income. Only net income from each source is considered and losses are not offset against other income. The liable parent's income is $17,000 ($10,300 + $5,000 + $1700). Note that the superannuation pension and the lotto win, both non taxable income, have been included in calculating the income for section 66A(4) purposes. The liable parent's application for the fixed annual rate not to be used will not be granted as the total income exceeds the relevant pension PP (single) maximum basic amount.

Example:

F is assessed to pay child support to M for their children A and B. F has regular care of A and B. F did not receive an income support payment in the last relevant year of income and had an adjusted taxable income of less than the relevant pension PP (single) maximum basic amount. The assessment has been made using the fixed annual rate.

F makes an application for the fixed annual rate not to apply. F does not receive any income support payments due to the income of their current partner. F has no other sources of income, and does not receive any non-monetary benefits that are relevant to the assessment.

CSA is satisfied that Fs current income is no more than the relevant pension PP (single) maximum basic amount. CSA is also satisfied that it would be unjust and inequitable to expect F to pay the fixed annual rate. A determination is made under section 65B(4) that the fixed annual rate not apply.

As F has regular care of the children, and is therefore contributing to the cost of the children, the minimum rate of child support (section 66) does not apply. F is not required to pay child support for A and B.

Example:

M is assessed to pay child support to F for their children A and B. M has regular care of A and B. M did not receive an income support payment in the last relevant year of income and had an adjusted taxable income of less than the relevant pension PP (single) maximum basic amount. The assessment has been made applying the fixed annual rate.

M makes an application for the fixed annual rate not to be used. M has an adjusted taxable income of $10,000 and is a director of a family business which operates through a trust. M provides CSA with financial records regarding the business. CSA determines that M receives goods, services or benefits with a significant annual value through the business.

Ms current income of $10,000 is less than the relevant pension PP (single) maximum amount. However, CSA decides that Ms income does not fairly represent Ms real capacity to pay child support, and that it is not unfair and inequitable to require M to pay the fixed annual rate. Ms application is, therefore, refused.

Example:

F is assessed to pay child support to M for their children A and B. F has regular care of A and B. F did not receive an income support payment in the last relevant year of income and had an adjusted taxable income of less than the relevant pension PP (single) maximum basic amount. The assessment has been made applying the fixed annual rate.

F makes an application for the fixed annual rate not to be used. F has an adjusted taxable income of $10,000 and receives a superannuation pension (not taxable) of $10,000.

As Fs current income of $20,000 is more than the relevant pension PP (single) maximum basic amount the application must be refused.


Amending an assessment if section 65B conditions no longer satisfied


CSA may become aware that the liable parent no longer satisfies the requirements of section 65B after a determination for the fixed annual rate not to be used has been made. If CSA is satisfied that the parent no longer meets the conditions for the determination that the fixed rate not apply then the assessment may be amended to have the fixed annual rate again apply (section 66B(b)).

CSA will amend the assessment from:

    * the date of the change in circumstances that meant section 65B is no longer satisfied, if that date can be ascertained;
    * the date the fixed annual rate was first not applied, if section 65B was in fact never satisfied; or
    * the date CSA became aware of the change in circumstances that meant section 65B is no longer satisfied.

Example


F was assessed to pay the fixed annual rate to M for their children A and B. F made an application for the fixed rate not to be used. CSA was satisfied that Fs current income was no more than the relevant pension PP (single) maximum basic amount and that it would be unjust and inequitable for F to pay the fixed annual rate. A determination was made under section 65B(4) that the fixed annual rate not be used from the start of the child support period.

Three months later, CSA became aware that F had always been working and the information provided with the application for the fixed annual rate not to apply was inaccurate and incomplete. As Fs current income is in fact more than the relevant pension PP (single) maximum basic amount they do not satisfy the requirements of section 65B. CSA amends the assessment under section 66B to reinstate the fixed annual rate from the start of the child support period.

CSA must notify the liable parent in writing that the fixed annual rate will again apply and that the assessment has been amended (section 66C). That person can then object to the particulars of the assessment.


leosign said
Is it because he does not have any care of the child, has no contact of the child?
I'm pretty sure that this is not a factor. If you have reason to believe that it is a factor that the CSA have applied then you should likely complain and also object to the decision. My understanding is that CS generally increases with less care, there is the potential for this to not be the case if substantial costs to communicate and spend time with the child are involved, however I'm not aware of any situations where such a reductions has actually occurred and I have little doubt that the CSA would do whatever they could to not let it happen, especially as this would be a decision made by the change of assessment team who have this unique near magical quality about them as described below.

leosign said
Don't they have the power to look into his business details, partnerships etc, to verify what he claims is true?

The CSA has been given the powers and have very likely used such powers. It is clear that the CSA are currently focusing even more on increasing the amount that they report as transferred or collected. I somehow doubt that they would overlook the powers invested in them unless it was not economically viable to do so. In fact they are also on record for doing as such, most especially for own businesses, and inventing amounts that are simply not derivable by a fair and just accounting process.

If you have evidence then that the person is not on a genuinely low income then I there is little doubt that the CSA would be interested and either re-apply the fixed assessment or bring about a registrar or client initiated reason 8 change of assessment.
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