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QLD Will I Need to Pay Back Child Support?

Discussion in 'Family Law Forum' started by Sorbet, 1 June 2016.

  1. Sorbet

    Sorbet Member

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    Hi,

    From the 1st of July 2015, I have been unable to work due to a medical condition. After 3 months when I was advised by my doctor that I would not be able to return to work, I contacted the Child Support Agency to reduce my estimated income.

    As such, the child support I received increased. I have now been advised that my TPD insurance claim (as part of my superannuation) has been accepted and I am due to receive a lump sum payout inclusive of my current super amount.

    Will I be paying taxes on my TPD portion and so I assume some of it must be classed now as income?

    My question is, will I have to pay back any child support because of this?

    We currently have a private arrangement for child support whereby he pays me directly the amount advised by the child support agency. At this point, I am unsure as to when I will receive this payment and have been quoted that it could take 3 weeks to 3 months? Also not sure if I receive payment after this financial year would that make any difference to any amounts I need to pay back in Child support?

    Many thanks
     
  2. Sophea

    Sophea Well-Known Member

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    Hi Sorbet, I'm not an expert in this area, but I know that sometimes TPD payments do impact eligibility for and the amounts of other income supplements such as WorkCover payments etc, which are calculated on your income. I would assume this will be the same for the child support, however I'm not sure if you will have to back pay.

    For this reason, if a lawyer makes the TPD application on your behalf, they will often hold the amount you are paid out on trust until an ideal time to release the funds - when your entitlement to WorkCover or whatever has ceased or some other factors make it more favourable tax wise.
     
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  3. sammy01

    sammy01 Well-Known Member

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    How big is the payout?
     
  4. nose

    nose Active Member

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    Hi Sorbet,

    How did you go with child support and TPD? I am interested because I may have similar situation and need to know if I need to declare it to CS. How it will affect payments ?
     
  5. Sorbet

    Sorbet Member

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    Hi Nose,

    Just to preface this I'm not a lawyer however below is what I did in my situation and know to be correct.

    Yes you need to declare it to CS, and the sooner the better so they can adjust your CS payments However I only needed to declare the taxable portion.

    As I received mine in June and I had not accounted for it coming in for that year with my CS income estimate it created a CS debt to pay back to my ex - however as we have a private CS arrangement technically they said that they could not enforce this and it was up to me if I paid it. However as I wanted to keep a cordial relationship with my ex I negotiated with him to pay a portion of this debt back.

    I originally rang CS when I knew it was coming, and they advised me to contact them once it had landed in my bank account.

    However as Centrelink advised me when I declared it with them that it is not classed as income, I assumed that it wouldn't be classed as income with CS. So I didn't call back and officially confirm the payment I had received. But this is not the case with CS and with them it is classed as income.

    So my understanding is that if I had declared it to CS when I had finally received it, it would have only affected my payments for the remainder of the financial year and I would not have ended up with such a big debt (however I highly suggest you confirm this with them).

    For the next financial year it did not effect my CS payments at all as I was able to call up and amend that years income estimate to its original amount - and removed the TPD payment as it was a once off payment that I would not be receiving that year.

    Hope this makes sense and helps a little bit.

    If you have any other questions please let me know and I'll try to help as best I can.
     
  6. nose

    nose Active Member

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    Thanks Sorbet, all makes sense. Mine is paid to me as an income stream that only started 1 March so I wonder if all I have to declare is the taxable portion of each fortnight's payment ? I will get onto it so as not to cause myself a debt.
    I have sent CS my information of the income stream too to assess, interesting to see if they will see it as income or not.
    Can I ask what kind of payment you were/are receiving from Centrelink that didn't trigger TPD funds as income or asset for their tests?
    thanks again, cheers
     
  7. Dad in trouble

    Dad in trouble Active Member

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    The only thing I would note is that CS would be likely pro rata (inflate) all one-off payments received for the remainder of the year.

    Two examples to illustrate.

    If your one-off $100,00 payment was received on 1 July 2017 and viewed by CS to be income then that $100,000 is added to your current estimate for the whole year. After calculating the amount of CS payable based on this new figure ($100,000 + $x), the new CS payable amount would be applicable for the rest of the financial year.

    However if your one-off payment was received on say 1 April 2017 and view by CS to be income then that $100,000 will be inflated to $400,000 and this inflated income would be added to your current estimate for the who,e year. After calculating the amount of CS payable based on this new figure ($400,000 +$x), the new CS payable amount would be applicable for the rest of the financial year ie 3 months. It seems CS inflate it because $100,000 in the last three months is regarded the same as $400,000 over the course of the year. They do not regard it as a one-off payment.

    I'll post the CS Guide reference if I find it.
     
  8. Dad in trouble

    Dad in trouble Active Member

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    Extract from part way through 2.5.1 of the CS Guide March 2017 edition.

    Under the heading

    "Income estimate for part of a year of income

    If a parent has not made an estimate for the year of income and wishes to estimate their income during the financial year, after the first day of the financial year, they can make an income estimate for part of the year. If the parent has already made an income estimate election for the year of income, and wishes to make another estimate due to a change in their circumstances, they must make a later income estimate. The information in this section relates to the first estimate for a year of income which is for part of the year of income.

    The parent must inform the Registrar of their estimated income for each income component amount for the remaining period (CSA Act section 60(3)(a)). The remaining period is from the start date of the income estimate election to the end of the year of income (CSA Act section 60(4)).

    The total of the parent's income component amounts for the remaining period is their partial year income amount (section 60(4)). They must also inform the Registrar of their year to date income, that is, the total of the income component amounts they have received from the beginning of the year of income to the day before the start day of the income estimate election (CSA Act section 60(3)(b)).

    In order to calculate the amount to be used in the assessment, the partial year income amount must be divided by the number of days in the remaining period, to identify a daily income amount. That daily income amount is then multiplied by 365 to identify the annualised income which is the amount the parent is required to provide as their income estimate election (sections 60(3)(a) and 60(4)).

    Example: F has estimated their partial year income amount for the period 1 November 2010 to 30 June 2011 to be $26,500.

    There are 242 days in the remaining period. The daily rate is $26,500 ÷ 242 =$109.50413.
    The daily amount is multiplied by 365 to identify the annualised amount: $109.50413 × 365 = $39,969, which is the amount of the income estimate election.

    The annualised partial year income amount is the amount which will be used as the parent's adjusted taxable income when the assessment is amended using the estimated income (CSA Act section 61)."


    So there is a clear intent by CS to annualise income in most situations.
     
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