NSW Annualised Income - Child Support

[Brandon Taylor]

Hi,

Have recently lodged my tax return and a few days ago received a bill from Child Support saying that I owe in excess of $4500 based on my 'annualised income'. Was wondering if anyone has had any experience with Child Support disputes on annualised income that is MUCH more than their taxable income??

Back story:
Have always paid child support on my taxable income each year.
Wasn't working from August - January and received Newstart allowance. Child support was notified on my YTD amount and how much I would expect to make in the year based on my weekly payments. Child support was being taken from my Newstart Allowance.
In January, I started a new job as a mining operator (have been in mining for 13 years). Child Support was notified that I started this job in February and I backdated to the start date of employment in January. I estimated that from this point to the EOFY I would earn close to $60,000.
Based on my tax income, I made close to $80,000 for the year and they have "annualised" my income at approx $108,000 and are now trying to force my hand into paying out a large sum figure of $5000 to my ex (who earns provisionally every year as she does not work and solely relies on Centrelink)
I have sent through an objection to a decision and have been on the phone to Child Support on many occasions over the past couple of days, they just seem to be passing me on to the next muppet who can't explain anything other than "that is what the system does". Seem to be going no where.
Have a child on the way, (wife being induced on Monday) so my weekly child support will go down however we were really banking on my tax return to help with baby expenses etc.. As this is considered a debt, they are now saying that they can and will (if they need to) take my tax return.

 

[Rob Legat - SBPL]

Welcome to the wonderful world of child support. Yes, they will annualise your income and make their own calculations. I suggest you check them very closely, as they regularly make mistakes in my experience.

When you say they want you to pay $5,000, what period does that relate to? Eg: is it that you haven't paid a higher rate since you started your job and they want you to pay since then? Or is it the case that you have paid the higher rate and they want more?

Next, their annualisation seems wrong on basic figures. Backdating your employment to January, and accepting your $60,000 estimate for 8 months, gives a rough annual income of $90,000. Even if they threw Newstart in, it wouldn't reach $108,000.

As for the objection process, they must provide you with a written response as to the outcome. This is supposed to be provided within 60 days, but they seem to treat this as a guideline rather than a rule. If you disagree with their outcome, you can usually appeal to the AAT. But, be careful with that. The AAT has the power to look at the process all over again. That could turn out good, and it could turn out bad. I took a matter there where CSA made an obvious error resulting in an over calculation of income in the amount of $18,000, struck a grumpy adjudicator and ended up with a $35,000 increase in income.

Finally, they will take the amount out of your tax return or anywhere else they can get it. That includes ripping it out of your bank account and then notifying you about it afterwards. They are permitted to treat it as "pay first, argue later".

 

[Rod]

I haven't checked jurisdiction for the CSA. Is it possible to take them to the FCC or Fed Court instead of the AAT? If so would that be an alternative?

 

[Brandon Taylor]

Basically they have said that the estimated yearly income I was supposed to receive was roughly $36,000. This is based on the Newstart payment I was getting from a period of Mid August - Early January (1st period of 145 days) and then a calculated amount of roughly $27,000 from Early Jan - June (2nd period of 173 days). The issue with this is that when I called and advised child support of my new job, I advised that I would earn $57,000 from Jan - June (173 days) and was paying child support on that $57,000 estimate.

When you say they want you to pay $5,000, what period does that relate to? Eg: is it that you haven't paid a higher rate since you started your job and they want you to pay since then? Or is it the case that you have paid the higher rate and they want more?

I was paying on the higher rate and they are wanting more by saying the difference between the $36,000 their system calculated and the $76,000 that I actually earned is "too much of a discrepancy". However, I estimated in August that I would earn $12,000 based on the payment I was getting and previous income before that + the $57,000 that I estimated in January, it works out to $69,000 which is a mere $7000 difference.

Next, their annualisation seems wrong on basic figures. Backdating your employment to January, and accepting your $60,000 estimate for 8 months, gives a rough annual income of $90,000. Even if they threw Newstart in, it wouldn't reach $108,000.

When speaking to the "estimator" he explained that because the amount of $76,000 was different to what the CSA system created, they had to establish when the money was made. So they added an additional $13,000 to my initial $12,000 estimate for the 1st period to make it approx $25,000 and annualised that to $64,000. Then they added the rest $51,500 to the 2nd period and annualised that to $108,000.

I'm still trying to wrap my head around why annualisation needs to occur when I have income breakdown written up for them and was paying the appropriate child support per period.
How are they able to try to force me to pay child support on approx $30,000 that I didn't earn?

I never have needed to estimate my income prior to losing my job but I would definitely not recommend estimating income to anyone! Just let CSA adjust it to your taxable income each financial year.

 

[Brandon Taylor]

I haven't checked jurisdiction for the CSA. Is it possible to take them to the FCC or Fed Court instead of the AAT? If so would that be an alternative?

Really hoping to sort it out outside of court as I am already taking my ex back to the Federal Circuit Court of Aus for contravention of court orders. I currently have over 250 contraventions (over a 2 year period) and am thankful that to file for contravention costs nothing.

 

[Rob Legat - SBPL]

You also need to be careful doing estimates as CSA can institute a penalty for getting it wrong. If you receive any form of trust distribution, you make estimates at your own peril.

 

[Rod]

Have you read this: Objections to child support decisions - Australian Government Department of Human Services

If you want to avoid court, object, then if they won't budge appeal to the AAT.

 

[sammy01]

Lets keep this simple.... How much did you earn GROSS this financial year?
Put that number into the CSA estimator
Child Support Estimator

Sorry I'm no good at math... But I think it could be entirely possible that you do have a debt.

One more thing - how much do you reckon you're gonna earn next financial year? I'd call CSA and ask them what happens if you over estimate the income and hence over pay throughout the year.. What happens to the overpayments once you do the next tax return.

I don't pay child support anymore. But when I did I deliberately over-estimated my income by about 15% to avoid a debt, they treat you like a criminal when there is a debt

 

[Brandon Taylor]

Gross, I earned about $81,000 but after deductions it was $76,000.
I was paying child support on my initial 1st estimate ($12,000) and then in January, I called and said I would make $57,000 for the rest of the year. Child Support changed my estimate to $57,000 instead of $69,000. Now, I should have corrected this with them but with a baby on the way, the extra $50 a week that didn't go towards Child Support was money away for the new bub.
I knew there would be a debt but I worked out that the debt would be approx $1500-$2000, not $5000. Child Support are claiming that I should have made $108,000 based on their "annualised calculation" and therefore I should pay Child Support on that instead of what I have actually made.

This financial year, I expect to make about the same $80,000 - $90,000 (over the past 6 months, I worked ALOT of overtime to be able to have time off for the new baby). I have asked Child Support what happens if I over-estimate my earnings and they have said:
1. You won't receive anything you over paid throughout the year back or in credit.
2. If you estimate either over or under 10% of what you actually earned, then you get stung with a $466 charge as well.

After reading some info online, I believe that people are under no legal obligation to estimate. Child Support will be adjusted as per your taxable income each year.

Another question - After I went on the Estimator page, I entered in the appropriate numbers for this year's Child Support and the estimate is the same as the assessment I received. I then added the new baby (wife currently overdue so expecting bub any moment now) and the payment is only dropped by $21. My other child is 5 years old - goes to Prep (Kindy). How does this make sense? Considering both children are aged between 0-12 years but one is allocated $116 and the other is allocated $21?
It's to be noted that my wife does not work as she lost her job at 22 weeks pregnant and no one would hire her from there and because of my income, she does not qualify for any government assistance.

Just to be clear, I don't have a problem with paying Child Support, it's just this massive "debt" and just wanting some clarification on what happens when a new dependent is added.

 

[sammy01]

Ok so from July to January, they were working on an estimate of $12 000?
So you were seriously underpaying for that 6 months based on an actual income of $80 000.

Why such an insignificant reduction when child gets born? don't know... Maybe because child is not in the world for the whole financial year..

Mate CSA is a law unto itself... Don't underestimate - I do think (just opinion) that they are punitive if they think you're trying to rort