2.4.4.30 Amended Tax Assessments

Introduction

The Registrar may receive information that a parent's tax assessment has been amended by the ATO resulting in a different adjusted taxable income. There are rules about when a child support assessment can be amended to reflect this new information.

Act references

CSA Act section 56, section 57, section 58, section 58A

CSA Regs section 10

Overview

The changes introduced by the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018 apply to amended tax assessments issued by the ATO on or after 23 May 2018, regardless of the financial year to which the amended tax assessment relates.

If the ATO issues an amended assessment of a parent's taxable income for the last relevant year of income before the Registrar makes the child support assessment, the Registrar will use the taxable income shown in the amended tax assessment.

Once the Registrar has made a child support assessment based on a parent's taxable income, any subsequent changes to the parent's taxable income may be applied to the child support assessment for the relevant child support period depending on whether the amended taxable income is higher or lower than the parent's previous taxable income and the timeliness of the action taken to amend the tax assessment.

Higher amended tax assessments

Where an amended tax assessment results in an adjusted taxable income that is higher than the previous adjusted taxable income for the same financial year, or any income determined by the Registrar under section 58 of the CSA Act, the child support assessment will be amended retrospectively, from the beginning of the relevant child support period.

Similarly, where a parent's previous tax assessment is nil and an amended tax assessment is received by the Registrar, the amended tax assessment will apply from the beginning of the child support period.

Lower amended tax assessments

Where an amended tax assessment results in an adjusted taxable income that is lower than the adjusted taxable income from the previous tax assessment for the same financial year, the child support assessment will be amended prospectively, for each later day in the relevant child support period, and may also be amended retrospectively if certain criteria are met. The rules are different according to whether the Registrar made a determination of the parent's income under section 58 of the CSA Act in the absence of a tax assessment; whether the parent lodged their original tax assessment on time; and whether the original tax assessment was higher or lower than the Registrar-determined income (see 2.4.4.40 for more information about when the Registrar will determine a parent's adjusted taxable income).

Where the original tax assessment was lodged on time

For child support periods where the parent's original tax assessment was lodged on time (as required under income tax legislation), the child support assessment will be amended from the beginning of the relevant child support period if any of the following applies:

  • the parent applied for the amendment to their tax assessment within the relevant lodgement timeframe under income tax legislation for that year of income,
  • the parent applied for the amendment to their tax assessment within 28 days of receiving the previous tax assessment notice,
  • the parent applied for the amendment to their tax assessment within 28 days of becoming aware of an error in the previous tax assessment and the reason for not taking earlier action to correct the error was due to circumstances beyond the parent's knowledge or control, or
  • the Registrar is satisfied that special circumstances exist.

Example 1: The ATO issues a tax assessment for Max of $38,000 that starts a new child support period. The ATO then identifies what it believes to be an error and amends Max's taxable income to $45,000. When the Registrar receives notification of Max's higher taxable income, the higher taxable income of $45,000 replaces his original taxable income of $38,000 from the beginning of the child support period. Max lodges an objection to the amendment with the ATO within 28 days of receiving notice of the amended tax assessment. The ATO allows Max's objection and issues another amended tax assessment of $38,000. When the Registrar receives notification of Max's new amended taxable income of $38,000, it is applied to the child support assessment from the beginning of the child support period because Max took action to amend the previous tax assessment within 28 days of receiving notice of the previous tax assessment.

Circumstances beyond the parent's knowledge or control include situations where the parent relied on incorrect advice when preparing their tax return, or where a third party, such as their employer, tax agent or the ATO, made an error which resulted in an incorrect tax assessment. The parent may not be aware of the error when their tax assessment issues, but as long as they apply to the ATO for an amendment within 28 days of being notified or otherwise becoming aware of the error, they will satisfy this condition.

Example 2: In addition to a small wage from a part-time job, Adrian receives a non-taxable disability support pension. Adrian receives help with his tax return from a volunteer, who accidently includes his tax-free pension as taxable income. As a result of Adrian's tax assessment, his child support payments increase. Adrian seeks further information from DHS about the increase in his child support payments and subsequently identifies the error in his tax assessment. Adrian gets help to lodge an amendment to his tax assessment and does so more than 28 days after the original tax assessment was lodged, but within 28 days of becoming aware of the error. The Registrar is satisfied that the circumstances that prevented Adrian from becoming aware of the error in his original tax assessment within 28 days of receiving it were beyond his knowledge and control, and that Adrian took action to correct the tax assessment within 28 days of becoming aware of the error. The Registrar amends the child support assessment to reflect the lower amended tax assessment from the beginning of the child support period.

Example 3: Jen lodges her tax return through an accountant and her tax assessment of $38,000 issues in October. In December, Jen receives her tax documents from her accountant. Jen does not review the documents until May, at which time she notices that income from a temporary job was counted twice, inflating her income by $5,000. Jen then lodges an amendment with the ATO. When her amended tax assessment of $33,000 issues, DHS confirms that Jen received her tax documents from her accountant in December, at which time she could have identified the error. Jen did not lodge an amendment until more than 28 days after receiving the original tax assessment and the reason for not taking earlier action to correct the error was not due to circumstances beyond her knowledge or control. Jen's amended income of $33,000 applies to the child support assessment from the day after the Registrar was notified by the ATO of the amended income.

The phrase 'special circumstances' is not defined in the CSA Act, however, it is generally taken to mean that the facts of the case must establish something special or out of the ordinary. In the context of amended tax assessments, special circumstances may include serious ill health, natural disaster, incarceration or some other exceptional circumstance that prevented the parent from applying for the amendment to their tax assessment in a timely manner.

Example 4: Bill lodges his tax return on time and when his tax assessment issues he notices an error that inflated his income. The following week Bill is hospitalised for several weeks with a serious medical condition. Three months later, Bill lodges an amendment to his original tax assessment with the ATO. When his lower amended tax assessment issues, the Registrar confirms that Bill's ill health prevented him from lodging the amendment within 28 days of receiving his original tax assessment. The Registrar is satisfied that special circumstances apply, and Bill's lower amended taxable income applies retrospectively from the beginning of the child support period.

Where the original tax assessment was lodged late

Where the Registrar has determined a section 58 income (see 2.4.4.40) and the parent's original tax assessment was not lodged on time and resulted in an adjusted taxable income that is lower than the section 58 income, different rules apply. This is because the section 58 income would not have been retrospectively replaced by the lower adjusted taxable income resulting from the first tax assessment.

An amended taxable income will replace the previous taxable income (but not the section 58 income) for all the days in the child support period that the previous taxable income took effect if:

  • the amended taxable income is higher than the original taxable income but lower than the section 58 income,
  • the amended taxable income is lower than the original taxable income but any of the following applies:
    • the parent applied for the amendment to their tax assessment within 28 days of receiving the original tax assessment notice,
    • the parent applied for the amendment to their tax assessment within 28 days of becoming aware of an error in the original tax assessment and the reason for not taking earlier action to correct the error was due to circumstances beyond the parent's knowledge or control, or
    • the Registrar is satisfied that special circumstances exist.

Example 5: The Registrar makes an assessment for a child support period commencing on 1 September 2018. As there is no ATO assessment or income information available for one parent, Pedro, the Registrar determines his income to be 2/3 Male Total Average Weekly Earnings (MTAWE). Pedro lodges his tax return late and his ATO assessed income is lower than the income determined by the Registrar. The child support assessment is amended to reflect the lower income from the day after the Registrar received notification of the tax assessment. Six months later, Pedro identifies an error in his tax assessment when he is filing his paperwork and lodges an amendment with the ATO. Pedro's amended tax assessment is lower than his original tax assessment. The Registrar confirms that there were no circumstances beyond Pedro's knowledge or control that prevented him from lodging the amendment within 28 days of receiving his original tax assessment. Pedro's lower amended income applies to the child support assessment from the day after the Registrar was notified of the amended tax assessment by the ATO.

Example 6: The Registrar makes an assessment for a child support period commencing 1 August 2018 based on one parent's ATO assessment for the 2017-18 financial year. The Registrar determines an income of $60,000 for the other parent, Jess, based on her 2016-17 ATO assessment. Jess lodges her 2017-18 tax return late and the lower ATO assessed income amount of $51,000 applies to the child support assessment from the day after the Registrar receives notification from the ATO. The ATO then identifies an error in Jess's tax return and issues an amended tax assessment of $55,000. Because Jess's amended income is higher than her original income, but lower than the income determined by the Registrar that still applies to an earlier part of the child support period, the Registrar amends the child support assessment to reflect Jess's higher amended income of $55,000 from the date her original ATO assessed income applied to the child support period.

Last reviewed: 13 August 2018