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At risk payments
Posted 18 February, 2012, 07:02 PM
#45655
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Hi,

I've searched the guide and the both acts of CS law and can't find any reference to at risk/bonus payments. My ex usually goes to CSA when I don't do what she wants me to do so I'm expecting a COA any day now. My previous FY income was just under 100K, but I'm now looking like earning more like 130-140K for years to come. A portion of my income is at risk (a 'performance incentive payment', or bonus in simple terms), which means a maximum fluctuation of 13.5K per FY.

As this is not a guaranteed amount, how should I approach this so that CSA don't charge me the maximum only to tell me that if an estimate is inaccurate then I won't get the overpayment back? I have queried this with them and their advice was that they would charge at the full rate of the bonus plus my salary, and that if I then earned less than that it would be determined that I had the capacity to pay it then, so I wouldn't get any overpayments back.

The latter portion of their advice is wrong and I know I can force the issue and recover the overpayment, but what's the best way to approach this in terms of convincing CSA that it's not an iron clad/no questions asked 13K extra?
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Posted 18 February, 2012, 08:47 PM
#45663
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Sleepy said

The latter portion of their advice is wrong and I know I can force the issue and recover the overpayment, but what's the best way to approach this in terms of convincing CSA that it's not an iron clad/no questions asked 13K extra?

You are correct - it is wrong.  What you have to do is contact them and ask whoever you speak to to explain why they would deem a bonus payment you may or may not get, to be part of your salary, if it is a legislative requirement, if so what legislation they are using, if it is an internal CSA policy why they are applying it in this case etc etc.  If you cant get any satisfaction ask to speak to their legislative expert and have them explain whats going on.  If that fails put in a complaint.  Its not right you should have to go to lengths like this but unfortunately CSA staff are sometimes not as knowledgeable as perhaps they should be - as I think you have experienced.

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Posted 18 February, 2012, 09:41 PM
#45666
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This is extortion !!!!

Parents being assessed on income they havent even earned yet. WTF???

What happened to everyone putting in their tax return at the end of the fiscal year and CS being worked out on that.

This is the reason people take their lives after being chewed up and spat out by C$A.

I need a moment......i think i just broke something......
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Posted 18 February, 2012, 09:47 PM
#45668
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So if I can show them my EBA which clearly states that it's an 'at risk component' of my salary package, and the contract I signed to join the organisation under that EBA, then can I apply to have the at risk component excluded (it's paid in monthly allotments), but reconciled at the end of the FY instead? I'm not trying to dodge paying, but I don't want to be penalised for income I won't necessarily get, or to have to fight to get back overpayments.

Thanks for the info by the way folks. You're worth your weight in gold.
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Posted 18 February, 2012, 10:02 PM
#45669
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This is just another example of C$A applying their collection mentality. You should be able to provide an estimate that C$A will accept and then be reconciled when you lodge your tax return just like FAO do for calculating FTB entitlements for the past year. Estimate penalties should not exist.

Oldboy - perhaps you could call C$A and act as Sleepy's advocate - you seem to have access to the movers and shakers.

All us plebs have acces to is the Objection / SSAT processes which do not allow errors of fact to be reviewed.
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Posted 18 February, 2012, 10:44 PM
#45673
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Fairgo said

You should be able to provide an estimate that C$A will accept and then be reconciled when you lodge your tax return just like FAO do for calculating FTB entitlements for the past year. Estimate penalties should not exist.

So you think if people (payers or payees) show a consistent pattern of grossly underestimating income something should not be done about it?  I don't think it necessarily has to be a penalty but perhaps loosing the right to estimate it for a few years?

Fairgo said

Oldboy - perhaps you could call C$A and act as Sleepy's advocate - you seem to have access to the movers and shakers.

It has been quite a few years since I worked for CSA and any access I had to so called movers and shakers is long since gone.  I simply know the knowledge of front line staff can be wanting and you must keep at them and at them.  They have an obligation to explain things clearly and if they don't keep going up the chain until they do.  You shouldn't have to do that of course but hopefully by being persistent things will change.


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Posted 18 February, 2012, 10:56 PM
#45674
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Deliberately inaccurate estimates aren't applicable in this context oldboy as I can show C$A the exact conditions for my employment. I could send them the FWA link to my EBA if they wanted it, and my ex knows my approximate income too (hence I'm anticipating a COA), but she might not know how it's comprised.
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Posted 18 February, 2012, 10:58 PM
#45675
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Oldboy said

So you think if people (payers or payees) show a consistent pattern of grossly underestimating income something should not be done about it?  I don't think it necessarily has to be a penalty but perhaps loosing the right to estimate it for a few years?
That's just rubbish

Sleepy is talking about a potential bonus of 13k over a salary of 130k - hardly "grossly underestimating".

If you get your tax returns in on time and CSA reconciles it against your estimate right away, the Payee gets a nice bonus as well...

Why on God's Green Earth should the CSA Trolls get a windfall in the form of a fine because Sleepy decided to use the guaranteed portion of the wage as the estimate.
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Posted 18 February, 2012, 11:40 PM
#45677
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Sleepy said

Deliberately inaccurate estimates aren't applicable in this context oldboy as I can show C$A the exact conditions for my employment. I could send them the FWA link to my EBA if they wanted it, and my ex knows my approximate income too (hence I'm anticipating a COA), but she might not know how it's comprised.

In your case this is a bonus you may or may not get and should not under any circumstances form part of your expected income IMHO - and I do not believe CSA can mount any reasonable case to do so.  The very least they should be able to do is cite the legislation that allows them to do it.  And of course it will hardly make a gross difference.

seriously said

If you get your tax returns in on time and CSA reconciles it against your estimate right away, the Payee gets a nice bonus as well...

Should that apply to payers and payees equally - this is gross differences I am talking about - not the type of differences Sleepy is talking about?
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Posted 19 February, 2012, 03:33 AM
#45685
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Old boy - apart from Objections and SSAT reviews we can't go any higher unless we go to the Ombudsman or Minister. If we had full appeals access to a court or the AAT like prior to 2007 then the situation might be different.

I think C$A's estimate system should be the same as FAO where they use the supplement as a means to collect any over payment of benefits. In the case of C$A they use a payers tax refund as the means to collect underpayment of liability and could use the payees FAO supplement to pay back an over payment. It is very hard for some people to estimate their income and they should not be penalised if not right.

Sleepy I guess they might ask you to estimate the bonus.
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Posted 19 February, 2012, 07:56 AM
#45687
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Oldboy said

So you think if people (payers or payees) show a consistent pattern of grossly underestimating income something should not be done about it?  I don't think it necessarily has to be a penalty but perhaps loosing the right to estimate it for a few years?

There are already penalties for under estimating income estimates and they apply even if a pattern is not established and therefore go even further. :

The CSA Guide - 2.5.1: Income estimates for a year of income (extract) said

Estimate penalties

A person will be required to pay an estimate penalty when CSA reconciles their estimate and their actual income for a year of income less any applicable year to date income amount is 110%, or more, of their estimated ATI for the year (section 64AF).

The penalty is 10% of the difference between the liability that would have applied if the original estimate or estimates was used to calculate the assessment, and the assessment(s) amended under section 64AA following reconciliation (section 64AG(1)). An estimate penalty is a debt due to the Commonwealth (section 64AG(2)).

Remission of estimate penalties


CSA can remit an estimate penalty, either in whole or in part, (section 64AH(1)) where:

    the difference between the adjusted taxable income amount and the estimated income was due to an amendment of the tax legislation, or a change to a ruling or determination under the tax legislation, or
    CSA is satisfied that it would be fair and reasonable to remit the penalties in the circumstances.

Amendment of a tax law, ruling or determination

When making an estimate, a parent cannot be expected to know that a change to the tax legislation or a change to a ruling or determination will increase their adjusted taxable income.

Example

If an expense that was deductible in previous years is no longer deductible, a parents taxable income may be higher than their estimate by the amount of the deduction.


This does not apply where a parents taxable income is amended for other reasons (for example, taxpayer error).

Fair and reasonable to remit the penalties in the circumstances


What is fair and reasonable depends on the circumstances of each case. Those circumstances do not need to be special, exceptional or unusual. CSA will remit estimate penalties if it considers the parent did not intentionally misuse the estimate provisions.

CSA may consider remitting if the person inadvertently underestimated or had some good reason for not correctly managing their income estimate during the year, such that it would not be fair to penalise them for the estimate being inaccurate.

CSA will consider whether a parent was or should have been aware of the conditions and implications of using an estimate.

A parent should use reasonable care and all information available to estimate their income. If their circumstances change, they should advise CSA of the change in circumstances and make a new estimate.

CSA will not remit an estimate penalty unless a parent has a reasonable explanation for failing to make a new estimate when their circumstances changed.

Example

M made their first estimate when their hours of work were reduced due to a fall in business for the company. M made a second estimate when they lost their job because the company stopped trading.  M was not sure if they would receive a termination payment, and did not include such a payment in their second estimate. M did in fact receive a termination payment of $9,000 on 30 May. As their ongoing circumstances had not changed M did not contact CSA about the payment.

Ms actual income was higher than their estimated income so the estimate was reconciled, the assessment amended and an estimate penalty imposed. M contacted CSA and requested the estimate penalty be remitted. CSA considered the facts of the case and decided it would be fair and reasonable to remit the penalty, as M had not intentionally misused the estimate provisions.


CSA will remove any penalty that has been imposed incorrectly (for example, through error or miscalculation, or by a subsequent variation which decreases the liability).

If CSA makes a decision to remit only part of the penalty, or to not remit any part of the penalty, it must give written notice of that decision to the parent required to pay the penalty. The parent may object to that decision (section 64AH(2)).

Disclaimer - I apologise for any adverse reaction/feeling you may have if you are not of sound mind and therefore take this disclaimer and everything I post ridiculously out of context and see the hidden gender-biased messages that my lack of self-awareness allows me to actually be aware of and compose without actually even composing them.

Thanking Larissap for the inspiration behind this signature.

When asked about hand written notes on the document marked as Exhibit 3 the best that the Applicant maternal grandmother could say was :
 It looks like my handwriting!
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Posted 19 February, 2012, 08:05 AM
#45688
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So in Sleepy's case, if the estimate is for the basic wage, even if the bonus is more than 10% extra, clearly it would be fair and reasonable to remit the penalties in the circumstances.

If only CSA could be relied upon to be fair and reasonable, Sleepy would not need to be concerned about this at all...
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Posted 19 February, 2012, 09:19 AM
#45692
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Sleepy I think this covers the situation (however as is so often the case, it relies upon the registrar being satisfied which really means they can do as they wish)

Child Support Assement Act said

64AH  Remission of penalty
   (1)   The Registrar may remit the whole or a part of a penalty that a parent who made an income election is liable to pay under subsection 64AF(1) if:
   (a)   the parent underestimated an income amount in making the income election because of an amendment of an Income Tax Assessment Act, or because of a ruling or determination under that Act; or
   (b)   the parent underestimated an income amount in making the income election for some other reason, and the Registrar is satisfied that it would be fair and reasonable in the circumstances to remit the whole or that part of the penalty.
   (2)   If the Registrar makes a decision to remit only part of the penalty, or not to remit any part of the penalty, the Registrar must give written notice of the decision to the parent by whom the penalty is, or but for the remission would be, payable.
   (3)   The notice must include, or be accompanied by, a statement to the effect:
   (a)   that the parent may, subject to the Registration and Collection Act, object to the decision (the original decision); and
   (b)   that if the parent is aggrieved by a later decision on an objection to the original decision, he or she may, subject to that Act, apply to the SSAT for review of the later decision.
   (4)   A contravention of subsection (3) in relation to a decision does not affect the validity of the decision.

I would suggest that you could write a letter asking how such a circumstance, as "impossible to determine potential income" should be handled with regard to 64AH as it is unreasonable to expect a parent to predict payment of a bonus. Like complaints, use a top down approach to save the time it would take to get to someone who could answer. I'd suggest mentioning that you want the policy.

An answer could also be obtained through FLWG and then the SPCA and we could raise an emerging issue that is put to CSNSEG (CS National Stakeholder Engagement Group). It would assist if you could complete what you can of the attached form and then PM it to either myself or Secretary_SPCA. I have to say though, that, CSNSEG is slow.



Attachment

» Download: CSNSEG Emerging Issue Template.docx (100 Kb, 94 downloads so far)

Disclaimer - I apologise for any adverse reaction/feeling you may have if you are not of sound mind and therefore take this disclaimer and everything I post ridiculously out of context and see the hidden gender-biased messages that my lack of self-awareness allows me to actually be aware of and compose without actually even composing them.

Thanking Larissap for the inspiration behind this signature.

When asked about hand written notes on the document marked as Exhibit 3 the best that the Applicant maternal grandmother could say was :
 It looks like my handwriting!
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Posted 19 February, 2012, 09:57 AM
#45693
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Under the COA process where the ex shows financial hardship etc... they could easily deem your income higher due to your capacity to earn. Whilst I believe this to be unfair this is what C$A do with their court-like powers. IF C$A acted more like FAO in these matters by not reopening the property settlement (as this is what they are effectively doing when they utilise the COA process), there would be few issues with child support.
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