The Importance of Filing your Tax Return
Part of the calculation of a child support assessment is based on the latest income data the CSA can get from the ATO. The best information is the newest information. If you don’t lodge your tax return there can be costly child support consequences.
The Department of Human Services (DHS) – Child Support administers the child support scheme, delivers the scheme and provides services to parents and carers. Child support obligations are based (among other things) on income.
The best source of information for DHS about both parents’ incomes is their last tax return statement. Typically, unless advised otherwise, DHS will use the income outlined in the latest tax return as the parent’s expected income for the upcoming 12 months.
Therefore, any unforeseen change of circumstances, such as losing a job or earning less income, may affect the payments that are required to be paid. This is why it is important that any change to income is advised. By keeping the DHS informed, you’ll be paying or receiving the correct amount of child support.
In a recent case before the court, the liable parent had filed his tax return in the 2011 financial year, during which he had sold a property and incurred a capital gains taxation liability. As a consequence, that parent’s income for 2011 was inflated by the capital gain, which lead to an increase of the assessment of child support that was required to be paid.
Typically, this would have been rectified, if that parent had advised the DHS of the circumstances or upon filing of the next year’s tax return and a reduction in the assessment of child support due to a lower income. This did not happen because the parent did not file a tax return for the next few years, nor inform the DHS. The parent continued to pay the higher assessed amount of child support.
Accordingly, the parent’s application before the court (not until 2016) was to seek a Child Support Departure Order and specifically seek that payments made to that date and at the higher rate should be calculated towards future assessed child support. The Judge accepted this and considered it appropriate to make such an order.
Had the liable parent sought advice from a specialist family lawyer early on, they would have been advised of the importance of filing their taxation return or at the very least advising the DHS of the increased income. This would have meant the fortnightly payments the liable parent made over the next five years would have been significantly reduced and they would not have had to go through the expense of the application to the court.
If you have a query regarding child support obligations, we recommend you get advice from a family law specialist. For a fixed-cost no obligation initial consultation contact Michael Lynch Family Lawyers on (07) 3221 4300.