Reconciling an overseas estimate (from 1 July 2011) 277-07060030

When an overseas resident lodges an estimate to use in their Australian assessment, this is known as an overseas estimate.

Overseas estimates are made under the Australian Child Support (Assessment) Act in the same way as other estimates. They are for income in the Australian financial year from 01 July to 30 June.

Although overseas estimate reconciliations are processed in a similar way to domestic estimates, some extra processes must be completed:

• checking residency
• for some New Zealand residents, requesting information from New Zealand Inland Revenue (NZIR) via the International team,
• converting overseas income into Australian dollars (AUD)
• requesting that changes to collectable liability be notified to the relevant overseas authority

The notepad of the 'Est Rec Tax Ret Not Lodged' intray should indicate which year is to be reconciled.

If the intray does not identify the year to be reconciled, check the Client Income window for estimates not reconciled.

Note: some overseas estimates may have been keyed as an 'ESTIMATE INCOME' instead of 'OS EST INCOME'. However, the customer's residency details and the estimate notes should confirm if they were overseas estimates.

A customer may have lodged an estimate when they were an Australian resident and changed residency during the same estimate year. Treat these estimates as overseas estimates for reconciliation purposes.

Check the residency of the customer during the estimate period. It is possible a customer will have been a resident of more than one country during a single estimate period.

To check residency:

• in the Customer window > Go menu > Details
• from Individual Customer Details window > Go menu > Residency
• in the Client Residency window, check for any overseas residency within the estimate period

If the customer does not appear to have been an overseas resident for any part of the estimate period, consult an SSO.

Note: residency decisions are made by specialist Residency Service Officers. For more information, see Residency decisions for Child Support customers.

An ‘OS TAX INCOME’ in the Client Income window cannot be used to reconcile an Overseas Estimate.

If there is more than one ‘OS TAX INCOME’ in the Client income window, parts of each income CANNOT be added together to reconcile an Overseas Estimate.

In most cases, an ‘OS TAX INCOME’ has been calculated with income received in the financial year of the overseas country. When the financial year is different to the Australian financial year it cannot be used to reconcile an estimate. Only Australian financial year income can be used to reconcile an estimate.

For example, a New Zealand financial year goes from 1 April to 31 March. An OS TAX INCOME for a New Zealand resident will be for income earned from 1 April to 31 March. It would therefore be incorrect to use this to reconcile an estimate.

Note: There are some specific circumstances when an ‘OS TAX INCOME’ calculation does use income from an Australian financial year. If the notepad specifically states that this has occurred, consult an SSO to confirm if the income should be used in the reconciliation.

The following categories of income are used to reconcile an overseas estimate:

• Overseas income received within the Australian financial year, for example, from the overseas country the customer was a resident of for part or all of the year
• Australian income, for example, periods when the customer was an Australian resident or was still receiving income from Australia, and
• Target foreign income, for example, periods as an Australian resident when the customer also received income from an overseas source

Before seeking information on overseas income, check for any relevant Australian income through:

• ATO ICP or ATO TSF systems
• Client income screen in Cuba for non-taxable Centrelink or DVA income

Create a notepad on the overseas estimate to record all Australian income details found. Record the subject of the notepad as ‘Aust Income’. This information will be used later in the process. If no Australian income is found, note that searches have been completed.

For customers who were a resident of New Zealand in the estimate period, and:

• have a residency decision recorded in Cuba, and
• have the estimate recorded as an ‘OS EST INCOME’, and
• have an IRD (NZ Inland Revenue Department) number recorded in their details window

Information automatically received from NZIR will prepopulate in the notepad of the ‘Est Rec Tax Ret Not Lodged’ intray.

Open the ‘Est Rec Tax Ret Not Lodged’ intray to view any notepads.

Is there an intray notepad with the Subject of ‘NZ estimate rec required’?

• Yes, and the notepad includes:
• a dollar amount, of $0 or any other amount, for every month of the Australian financial year, go to Step 7
• the words ‘Not Available’ for some or all the months of the Australian financial year. Go to Step 8
• No, this means we have not requested automatic information from NZIR, go to Step 9

When the ‘NZ estimate rec required’ notepad includes a dollar amount, of $0 or any other amount, for every month of the Australian financial year, this means:

• Child support has already automatically requested income details from NZIR
• NZIR have provided income details for every month, and
• no further requests for NZ income are required

Highlight and copy all information from the intray notepad.

Create a notepad attached to the Overseas Estimate with a subject ‘NZ Income’.

Paste the copied information into the new notepad.

See Table 2, Step 1.

When the ‘NZ estimate rec required’ notepad includes the words ‘Not Available’ for some or all the months of the Australian financial year, this means:

• we have already automatically requested income details from NZIR, and
• NZIR have provided income details for any months they have data for, and
• they did not have data for the months that show as ‘Not Available’ and
• no further requests to NZIR should be made

Note: ‘Not Available’ does not always mean that the customer had no income in that month. It just means that NZIR do not have a specific figure for that month. This can occur for various reasons, for example:

• the customer was not resident in NZ during that month
• the customer had income from self- employment or another source that does not automatically report monthly income to NZIR

Highlight and copy all information from the intray notepad.

Create a notepad attached to the Overseas Estimate with a subject ‘NZ Income’.

Paste the copied information into the new notepad.

Consider whether any gaps in income have already been adequately explained by information recorded in our system. For example, if the customer was on a short break between jobs where the income was $0 or ‘Not Available’.

Have all gaps in income been adequately explained?

• Yes, go to Table 2, Step 1
• No, information must be requested from the estimating customer. Go to Step 9

Contact the estimating customer by phone, to request information and evidence about their income during the estimate period from 1 July to 30 June. Tell the customer we need this information to check the accuracy of the estimate and update the assessment if required. For more information on contacting customers and making international telephone calls, see Contact with Child Support customers. See Resources for international time zones and dialling codes.

Types of evidence required

The type of evidence required for the period 1 July to 30 June will vary from case to case, but may include:

• documents from employers such as payslips or a letter stating the income earned
• a statement from a relevant government department showing payments made to the parent
• documentation from an accountant or tax agent
• documentation of allowable deductions for tax purposes in the customers country of residence

Note: estimates relate to an Australian financial year for the 12 month period starting 1 July and ending 30 June.

Financial years in other countries may be for a different period. For example, the New Zealand financial year is 1 April to 31 March. Using this income would result in an incorrect reconciling income.

Provide the customer with a reasonable due date for any information requested.

In the overseas estimate notepad, document contact attempts and details of any information provided by/requested from the customer. The notepad subject should be ‘Customer Contact’ and must include the due date for any information requested.

Was phone contact successful?

‘Successful’ phone contact means that a Service Officer has spoken with the customer and explained which information is required and when.

• Yes: and the customer:
• was a New Zealand resident for all or part of the estimate period, go to Step 11
• was not a New Zealand resident for any part of the estimate period, go to Step 14
• No, go to Step 10

If phone contact is unsuccessful, send a manually generated MX1-1 Request for Client to contact CSA letter:

• Use pre-approved text 'Estimate reconciliation more information required (International and Domestic)'. See Item 4 in CAL text options - Specific action pre-approved text table of Letters Cuba Process Help
• Include a suitable response date in the letter. See Standard response times

Once the letter is issued, if the customer:

• was a resident of New Zealand for all or part of the estimate period, go to Step 11
• was not a resident of New Zealand for any part of the estimate period, go to Step 14

Check the Overseas Estimate notepads for any NZ income information.

If we have already received a response from an automated NZIR request, the information should have been manually copied into a notepad on the Overseas Estimate (as per Step 7 or 8 above).

Have we received automated information from NZIR?

‘Information’ means any income details and/or the words ‘Not Available’.

• Yes, go to Step 14
• No, go to Step 12

Overseas income information can be requested under the Australia New Zealand Agreement. Customers need to be on salary/ wage (not self-employed) and/ or benefit income for NZIR to provide this information.

Service Officers can send a request for income information to the International NZ Administration Team once successful phone contact is made or a request to contact letter is issued.

To request NZIR information:

• complete the NZ income request template:
• Complete the blue coloured fields in the template. The green coloured fields will be completed by NZIR
• To find the Customer's Inland Revenue Department (IRD) in the Customer window of Cuba > Go menu > select Details. If available, the number will be in the field 'OS ID' on the top row
• Include the User ID of the Service Officer who is managing the estimate reconciliation and their Team Leader, in the relevant field of the template
• email the template to International NZ Administration Team and copy in the Team Leader of the Service Officer who is managing the estimate reconciliation

From the Client Income window:

• add a notepad to the overseas estimate and document that NZ income information has been requested through the international team

If the customer is a:

• payer, add the notepad to the Collection window, see NZ Inc requests - Cuba recording
• payee, add the notepad to Communication, see NZ Inc requests - Cuba recording

Allow 2 weeks for a response. If no response, contact the International NZ Administrative team.

Before continuing, wait for:

• the response from International NZ Administrative team, or
• confirmation that the income details are not available

A response will be emailed to the Service Officer and their Team Leader. The response will be documented:

• for the payer - in the original Collection window request, including the date NZIR replied
• for the payee - in the original request in the Communication window, including the date it was received

The Estimate Reconciliation Service Officer must copy the income details from the response into the overseas estimate notepad including:

• the NZ income from each month in the Australian financial year
• the total of the NZ income

Wait until after the due date of any information requested from the customer.

Consider all available information:

• received from the customer by phone or in correspondence
• recorded on the customer's record
• from the Australian Taxation Office (ATO) through ATO ICP or ATO TSF systems
• from any NZ income response including information received automatically via an intray notepad or manually via an email response from our International team

Consider whether any gaps in the information have been adequately explained. For example, if the customer was on unpaid leave, had a short break between jobs or was awaiting government benefits for a period where the income was $0 or ‘Not Available’.

Is there sufficient information to reconcile the estimate?

• Yes, go to Table 2, Step 1
• No, go to Step 15

If there is insufficient income information for reconciliation, set the Reconciliation Status of the estimate to PARKED:

In the Client income widow

• Select the relevant Estimate entry and open
• Set the Reconciling Status of the estimate to Recon-No Change in the Estimate Income window
• Add the notepad to the estimate:

Subject: Recon Parked

Text: There is insufficient income information available to reconcile this estimate. (Add details of contact attempts, requests for information, any information received, and information still required).

The estimate has been set to PARKED.

If more information becomes available, estimate reconciliation may occur later.

Reference: Section 64AB Child Support (Assessment) Act 1989

• Select Save

Go back to the Client Income window

• Select the relevant Estimate entry and open
• Change the Reconciliation Status from Recon-No Change to PARKED

Procedure ends here.

Overseas income must be converted to Australian Dollars (AUD) before it can be used in an estimate reconciliation. The same exchange rate used for the original estimate must be used for the reconciliation. Refer to the overseas estimate notepad for the exchange rate used for the original estimate.

Multiply the overseas income by the exchange rate to convert to Australian Dollars. Seek help from an SSO if needed.

Note: if any income details were gathered from an intray notepad with the Subject ‘NZ estimate rec required’ then those amounts are in New Zealand dollars and must be converted.

Create a pended reconciling income:

• From the Client Income window > Go menu > Reconcile > select the year to be reconciled to open the Reconciliation Calculator
• Select 'INT' as the 'created reason'
• Keep the status as ‘Pended'
• Remove any pre-populated entries in the Reconciliation Calculator. Pre-populated entries may cause errors if not removed.
• Manually load the income information into the Reconciliation Calculator
• Ensure any Australian income is included as well as the converted overseas income

Manually load the income information into the Reconciliation Calculator. Ensure any Australian income is included as well as the converted overseas income.

Note: regardless of the financial year of the overseas country, all overseas estimates relate to an Australian financial year for the 12 month period starting from 1 July and ending 30 June.

On the reconciling income notepad, document the income information used. This includes the source, overseas currency amount/s, relevant period/s and the conversion rate to AUD. For example, document each separate month of NZ income provided by New Zealand Inland Revenue (NZIR) and the conversion of the total amount to AUD. If you have obtained the NZ income details from an intray notepad, copy all the month-by-month details. Paste those details into the new notepad and add the conversion details.

Does the estimate require reconciling, see Estimates Cuba Process Help?

• Yes, the determined income is higher than the expected income and reconciling will change the assessment in a way that is intended. For example, an increase in liability for a Paying Parent who has underestimated, or a decrease in entitlement for a Receiving Parent who has underestimated, go to Step 3
• No:
• The determined income is higher than the expected income but there would be an unintended outcome. For example, a decrease in liability for a Paying Parent who has underestimated, or an increase in entitlement for a Receiving Parent who has underestimated, go to Step 6
• The determined income is lower than the expected income, or there is no change to the assessment, go to Step 5

If the estimate requires reconciling:

• Save the Reconciling income as Pended
• Select 'Yes' when asked to send the ME4-4 Interim Estimate Reconciliation Pending letter
• Highlight the Pended Reconciling entry on the Client Income window
• Select the notepad icon to document

Subject: Pended Estimate Reconciliation

Text: yyyy/yy estimate requires reconciliation using a determined Adjusted Taxable Income (ATI).

Examination identified the determined ATI is higher than the expected ATI.

ME4-4 Letter sent advising of Pended Estimate Reconciliation.

• If customer contacts confirm:
• pended reconciliation information including deductions
• YTD income

An appropriate timeframe to respond is:

• for online customers: 14 days (as per the ME4-4 letter)
• for surface mail customers: follow the Standard response times

If the customer has not responded, continue with the Reconciliation.

If the customer has responded, adjustments to the Pended Reconciling Income may be required.

Check the reconciliation result based on the Pended Reconciling income:

• If the determined income is lower than the expected income, or if reconciliation will result in no change to the assessment, go to Step 5
• If the determined income is higher than the expected income but there would be an unintended outcome. For example, a decrease in liability for a Paying Parent who has underestimated, or an increase in entitlement for a Receiving Parent who has underestimated, go to Step 6
• If the determined income is higher than the expected income and reconciling will change the assessment in a way that is intended. For example, an increase in liability for a Paying Parent who has underestimated, or a decrease in entitlement for a Receiving Parent who has underestimated, go to Step 7

If reconciliation will result in no change to the assessment:

• Highlight and open Pended Reconciling entry on the Client Income window
• Select the notepad icon document:

Subject: Reco No Change Decision

Text: yyyy/yy estimate reconciled using a determined Adjusted Taxable Income (ATI).

Examination identifies determined income is lower than the expected income, or

Examination identifies reconciliation will result in no change to the assessment.

Estimate set to Recon-No Change accordingly.

Pended Reconciliation entry deleted.

Legislation: <insert the appropriate legislative reference below>

• Section 64, Child Support (Assessment) Act 1989 or
• Section 64AB, Child Support (Assessment) Act 1989

And

• Section 64AC, Child Support (Assessment) Act 1989, or
• Section 64AD, Child Support (Assessment) Act 1989'

After adding the document:

• Delete the pended reconciling entry
• Open the relevant estimate in the Client Income window and open
• Set the Reconciliation Status of the estimate to Recon-No Change in the Estimate Income window
• Add a copy of the same notepad above
• Save the Recon No Change

Procedure ends here.

• In the Client Income window, delete the pended reconciling entry. This should automatically delete the intray.
• In the Estimate Income window:
• Set status of estimate to Recon No Change
• Add notepad to explain the unintended outcome. For example:

Subject: Recon No Change

Text: The customer was assessed on the Fixed Annual Rate (FAR) based on their estimate and reconciliation would result in an assessment of less than the FAR.

In cases where reconciling an estimate with a higher income would benefit the estimating parent, the estimate must not be reconciled.

The status of the estimate has been set to Recon-No Change.

Reference: Table 1 Step 6 ‘Reconciliation with an unintended outcome’, in Manual reconciliation procedure for child support estimates (from 1 July 2011) 277-0706002.

Procedure ends here.

If the reconciliation will result in a change to the assessment:

• Highlight Pended Reconciling entry on the Client Income window
• Change Status to 'Recorded'

In the Client Income window select the notepad icon and document:

• Subject: Estimate Reconciliation

Text:

Reconciliation of estimate using a determined Adjusted Taxable Income (ATI).

Examination identified the determined ATI is higher than the expected ATI.

No response has been received to the ME4-4 letter. (Or, if there was a response to the letter, document details and any adjustments made).

Legislation:<insert the appropriate legislative reference below>

• Section 64, Child Support (Assessment) Act 1989, or
• Section 64AB, Child Support (Assessment) Act 1989

And:

• Section 64AC, Child Support (Assessment) Act 1989, or
• Section 64AD, Child Support (Assessment) Act 1989

Save the status of the Reconciling income as Recorded.

Check the resulting assessments and letters are correct.

If a case has been transmitted by Child Support for collection by an overseas authority and there is a change to the liability, a notice of this change must be sent to the relevant overseas authority.

To check if a case has been transmitted for overseas authority collection:

• from the Customer window > Go (menu) > Involvement List > Case
• from the Case screen > Accounting (menu) > International transmittal

If there is an entry in the International transmittal screen, a transmittal has been processed.

The entry will identify the jurisdiction the case has been transmitted to.

Repeat this process for all cases where the liability has changed.

Has Child Support transmitted a case (or cases) for overseas authority collection?

• Yes, go to Step 9
• No, procedure ends here

To request an amended certificate be issued for New Zealand:

• Create a NEW ZEALAND INFO REQUESTED intray
• Route the intray to:
• Office: International Hobart
• Stream/Team: MC S003 Cent Auth TM 1
• Position: NZ info Request

In the Client Income window add a notepad to the estimate to document: intray created and routed requesting an amended certificate.

For all other countries:

• Create a INTERNATIONAL STHOLD FOLLOWUP intray
• Route the intray to:
• Office: International Hobart
• Stream/Team: MC S003 Cent Auth TM1
• Position: Z Overseas Future Work

In the Client Income window add a notepad to the estimate to document: intray created and routed requesting an amended certificate.

If a customer disputes the outcome of an estimate reconciliation, see Customer disputes child support estimate reconciliation.