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Starting a Business and Possible/Extent of CSA Involvment ?

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Am about to start my own business and my partner will be my employee and i will be paying him a salary. As my partner has to pay CSA i was wondering can the CSA take any of my business money.

Hi everybody, I am new to this site.

I was wondering if anybody can help me please.

I am about to start my own business and my partner will be my employee and I will be paying him a salary.

As my partner has to pay CSA I was wondering can the CSA take any of my business money.

Appreciate everybodies help.  Thanks.

Jaz
Jaz,
     under normal circumstances (i.e. formula assessment) they cannot. If a reason 8 change of assessment (a parents income, property, financial resources, or earning capacity ) is called for then considering some of the very underhand decisions that I have been aware of (e.g. using business loan applications, that are years old, to impose a business incomes far in excess of what actual accounts show, applying unsubstantiated incomes and excluding the tax free threshold) then I have little doubt that they would at the minimum try, perhaps under the financial resources aspect. Your partner working for you likely wouldn't change this.

If you paid your partner well under the rate for the type of work done, then this could also be an area where they would also consider intervening.

If your partner has voluntarily taken a reduction to become employed by yourself, then your partner could be subject to capacity to earn. Here's the criteria for earning capacity :-

The CSA Guide - 2.6.14 : Reason 8 (extract) said

When can CSA take into account a parents earning capacity?

From 1 July 2006, CSA can only determine that a parents earning capacity is greater than is reflected in his or her income used in the child support formula if it is satisfied about all of the following three matters:

1. The parent is either:

    * not working despite ample opportunity to do so (section 117(7B)(a)(i)); or
    * has reduced his or her weekly hours of work to below full time work (section 117(7B)(a)(ii)); or
    * has changed his or her occupation, industry or working pattern (section 117(7B)(a)(iii));

AND

2. The parents decision about his or her work arrangements is not justified by either:

    * his or her caring responsibilities (section 117(7B)(b)(i)); or
    * his or her state of health (section 117(7B)(b)(ii));

AND

3. The parent has failed to show that the decision about his or her work arrangements was not substantially motivated by the effect this would have on the child support assessment (section 117(7B)©.

CSA must be satisfied that all three compulsory criteria are satisfied before it can change an assessment to take into account a parents earning capacity, rather than his or her actual income.

If the parents circumstances satisfy only one or two of the criteria, CSA cannot make a decision based on the parents earning capacity.

CSA must also be satisfied it would be possible for the parent to increase his or her income by changing his or her work arrangements. That is, work must be available for the parent in his or her area and the parent must have the necessary qualifications and experience to perform that work.

You should be very wary of providing any information regarding yourself to the CSA, perhaps always insisting under what legislation and for what reason are they asking for each and every piece of information. If they cannot give good reason and the legislation that allows them to demand the information then they would be acting in contradiction of the privacy act.

You could do a lot worse than have a good look at the CSA guide for a reason 8 change of assessment and perhaps even look at the underlying legislation as the guide does not always accurately reflect the legislation. Here's a link The CSA Guide - 2.6.14: Reason 8 - a parents income, property, financial resources, or earning capacity
It is important that salary and PAYG payments are made in a way which can not be misunderstood. For example some start up business do not pay wages but take drawings. There is a big difference especially if taxation provisions are not made up front. Some businesses pay the tax amount only each week or fortnight and draw lump sums as and when they can. The area of a family member especially a partner working in the home buisiness is a very tricky area. Especially when it comes to a  COA under a reason 8. You must have excellent records to support what you are doing. This means proper books, receipts for everything to support and accounts.

ATO is one thing but CSA another. You will be required to remit funds to CSA as the employer on a weekly or fortnightly basis (Where there is no private agreement) and comply with the requireemnts. See the Webguide CSA employer area where we describe fully what is required.

Runing your own business is hard enough without worrying about any possible investigation by CSA under a COA. Mike T has described some of the key areas that could be looked at. You can get advice from CSA also about this if you give them a call and get some ideas for what is a mandatory requirement and what would be nice to have in place if you can. We have been involved in some quite difficult cases where a CSA Payer (A little different from yours as you are employing the Payer) has employed their spouse and under a COA some large add backs were made including what we thought were ligitimate business expenses. It was also claimed that the wife was not actually getting the salary and that the salary was added back also. These are some of the minefields to navigate.

I would suggets a start up business employ the services of a good local taxation advisor or accountant. :)

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
 
I am in a similar situation to your husband. My wife is the boss both at work and at home ;-)

The CSA recently ruled that I have arranged my employment, business and financial affairs to impact adversely on the child support assessment. I am objecting.

One item that maybe of interest to you. During the "informal" meeting with the case officer, he presented me with financial information from my wife's private company. This included turnover, profit and the amount paid to wages. I do not have access to this information so I cannot repudiate. My inability to explain proved my guilt. Ironic heh? The information could only come from the ATO. He requested that I ask my wife for the current financials - she declined.

When I received the written judgment, all of the financial information presented to me was also included in his reasoning. This means my ex now has private information about my current wife's business. A business my wife has owned since before we met!

I now have an ex who thinks I have been ripping her off, a wife who is extremely angry that her private affairs have been revealed to multiple third parties and kids that think I am depriving them of what is legally theirs. The damage cannot be undone…

Think hard not only about the reality of the situation but also about ALL possible views. Take the most sinister and that is how you will be judged (at least by the CSA). Goodluck.
Hi BobinLaw
I have been in your current Wife's position, where CSA asked for my details to calculate my partners Child Support Payments, I had to expressly write to CSA telling them they did NOT have my permission to investigate any details about me either personally or Financially, if they did it was an invasion of my privacy and i would take the matter further.  What they have done is invade the privacy of your wife is she did not give permission and if you push that with them and not let them bully you you will find they can not do that.

However the flip side i this… if they cant have access to her information they will consider any bills coming into the house (and businesses if Sole Trader) as 50/50 to be paid between yourself and your wife.  If she happens to earn more than yourself CSA will consider she gives you whatever the difference is between your 50% total of the bills and your income, and then calculate your CSA payments on that adjusted income, which is unfair and probably completely unjustified.  We were only able to circumvent this by creating Family Trusts and Companies to run my business, complicated and expensive for most small businesses.

 Push the invasion of Privacy, i actually spent 2 days sitting at the CSA office waiting to be seen and to have the matter cleared up and i believe it was only my persistance and refusal to be bullied that gave us a sane resolution in the end.

Missus Boss to P2P
(lol)
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