Child Support customers impacted by the Douglas decision 277-24061449

Contact the customer by phone within 48 hours to discuss their enquiry where an initial referral has been:

• made by another service area in response to a customer enquiry, and
• the enquiry has been allocated (via the SGT Douglas Remediation intray)

Contact with the other parent is not required at this stage.

If contact with the veteran is unsuccessful issue a contact letter.

Contact the veteran:

• Confirm if they have been granted Disability Superannuation Benefit (DSB). For details about DSB, see Step 2
• Ask the customer if they have correspondence from Commonwealth Superannuation Corporation (CSC) to confirm they have been granted DSB. If they do, ask what the effective date is. This should align with the lower amended income years. E.g., if DSB was granted and effective from 21 November 2018, it is expected to see the lower amended incomes from 2018-19
• Request evidence of their DSB
• Discuss:
• any amended incomes received from the ATO, see Table 1, Step 3
• the Douglas decision and how the agency considers Douglas to be a special circumstance to allow lower amended tax assessments to be applied retrospectively
• Where the case is private collect or there are periods of private collection:
• discuss arrangements and determine if private collect arrangements have been met
• explain they may need to provide evidence for private collect periods where both parties do not agree that arrangements have been met
• Advise further contact will be made to advise of the outcome once processing of incomes is completed

Does the customer have written confirmation of their granted DSB from CSC?

• Yes, ask the customer to provide a copy, go to Step 3
• No:
• Ask the customer to contact CSC to obtain the relevant documentation and provide a copy to the agency
• The process can still proceed while the customer seeks evidence
• Go to Step 3

Veterans receiving military invalidity benefits may qualify for those benefits to be treated as a DSB. The 2 concepts are different.

If a veteran receives an invalidity benefit, it does not mean it automatically qualifies to be treated as a DSB.

A veteran’s income will only decrease because of the Douglas decision if they have been granted DSB.

To be eligible for DSB, a veteran must have had:

• an invalidity assessment process completed (and approved) by the Commonwealth Superannuation Corporation (CSC) where they have demonstrated physical or mental ill health, and
• two qualified medical practitioners certify that they meet the permanent incapacity definition

If DSB is granted, CSC will provide the veteran with a letter. The letter:

• confirms the decision and notes the start date of DSB
• may be provided to the customer online or by post

Review the customer’s Income window to determine if any Amended Tax Assessments have been received since December 2020 (the Douglas decision was handed down on 4 December 2020). Income years affected may date back to the 2007-08 year.

If any of the Amended Tax Assessments are higher than the original taxable income amount:

• it is unlikely, that income year has been impacted by the Douglas decision, or
• it may have been, but other income was omitted from the original return meaning the Amended Tax Assessment resulted in a higher amount. Higher amended incomes would have already applied to the assessment and are not considered as part of remediation activities

Make note of:

• the income years with an amended tax assessment for a lower amount than the original tax assessment for that year
• any estimates that may require re-reconciliation (or reconciliation - no change decisions) using any of the lower amended tax assessments

Note: some lodgement dates (for amended tax assessments) may be incorrectly recorded as the date the original tax assessment was lodged. Where this occurs, the lower amended income may have already applied to the assessment. Continue with the process and seek Program Support Manager (PSM) support before finalising the outcome.

Special circumstances are not defined in the legislation, but in general will be considered to be the same as the circumstances prescribed under Section 11 of the Child Support (Assessment) Regulations 2018.

The Government recognises that a parent’s lower taxable income (for previous financial years) resulting from the Douglas decision is a special circumstance. This is because the effect of the Douglas decision was not foreseeable and not within the control of parents.

Once satisfied the customer is affected by the Douglas decision and has been granted DSB, no other evidence is required to satisfy special circumstances.

Use the Income changes documentation template on the Resources page to document the decision regarding special circumstances on the notepad of each individual income in the Income window.

Review the collection history of the case for the income years affected.

Changes to the assessment may relate to private periods, agency collect periods or both.

Changes to liabilities for agency collect periods will be determined in accordance with Cuba calculations.

Private collect periods will need to be discussed with customers. During periods of private collection, it is expected the parties made arrangements to make sure their child support responsibilities have been met in accordance with their assessment.

Customer contact is required to make sure these private arrangements have been met before making a request for Act of Grace (AoG) payment. See Table 4 Step 1

Open ICP and enter the veteran’s Tax File Number (TFN) into the search function.

From the Client Home screen:

• Select Client calendar
• Select the Received lodgements tab
• Select Tax return individual from the Form type dropdown menu
• Select Search by period check box
• Key period start date and period end date, and select Search
• Locate the relevant year:
• review the lodgement date field to identify the amendment, and
• select View form

This will open the veteran’s tax return.

Once the return is open:

• Select Print Form Options and select Print Form Option 2
• Select or scroll down to Calculations section
• Locate the Military Super Indicator – this is a Y/N field

Does the Military Super Indicator field have a ‘Y’?

• Yes, go to Step 4
• No, refer to the PSM for clarification with the ATO

Exit the Print Form option view and return to the veteran’s tax return.

• Select the Income tab
• Scroll to Label 8 which will display lump sum superannuation details. The untaxed element will have an amount recorded at ‘P’.

After reviewing the details at Label 8, select the History tab and review the same income section. This will display the original tax assessment (in italics), and the amended tax assessment details together.

See Resources page for an example.

Complete the same process for all financial years with an amended income.

The agency can be satisfied that the cause for the lower amended tax assessment is Douglas related and remediation can proceed where:

• the military super indicator is present, and
• the decrease in income can be identified by the increase in SLS untaxed element

Details may vary between customers. Escalate to the Program Support Manager (PSM) for clarification with the ATO if any details are unclear.

Is the veteran impacted by the Douglas decision?

• Yes, go to Step 6
• No, go to Step 7

When it has been determined the veteran’s incomes have been amended due to the Douglas decision, and remediation is to occur:

• lock the veteran and all other impacted customers
• create and route the SGT Douglas Remediation intray to the locked Service Officers Cuba position

After locking the customers:

• create a special contact indicator of ‘DOUGLAS CUSTOMER’ in the veteran’s Profile window
• include the following notepad

Notepad text

Subject: DOUGLAS REMEDIATION

Detail:

Customer is being reviewed for possible impacts from a decision of the full Federal Court of Australia (Commissioner of Taxation v Douglas) which may affect their taxable incomes. Only nominated SGT staff will action this work type or enquiries about this issue.

If customer raises amended incomes or Douglas decision, transfer to locked SGT officer (if assigned to an SGT Service Officer) or email SGT Douglas Remediation to advise of call. DO NOT TRANSFER CALL TO SGT QUEUE. Advise customer they will receive a call back in 48 hours to discuss.

Where it has been identified and confirmed that the customer’s incomes were not amended as a result of the Douglas decision:

• document this in the customer’s Client Details window
• discuss with the customer

Procedure ends here.

Run eligibility and check the pre-confirmation results to make sure there are no outstanding errors or issues before processing the retrospective income adjustments.

Process all incomes and estimate reconciliations on the same day, including removal of resulting overpayment from the payer account.

Determine whether the veteran is in the role of the Payer or Payee.

To apply the lower amended income/s to the assessment, from the veteran’s Income window:

• Highlight the lower Amended Taxable Income for the relevant year
• From the Edit menu, select Modify
• In the CRF/INC number field key 12345
• Change the Status to Currently Used
• As the Amended taxable income is lower than the Original Taxable income, update the lodgement date of the Amended taxable income to match the lodgement date of the Original Taxable income
• Select OK
• A warning message regarding effective dates will appear, select OK
• Select Yes when the dialogue box displays ‘Do you really want to modify this Income record?’
• Add a notepad using the Income Changes documentation template on the Resources page, then select Save

• Highlight the most recently used Taxable Income (Source ATO) for the relevant year
• From the Edit menu select Modify
• In the CRF/INC number field key 12345
• Change the Status to For Information and select OK
• A warning message regarding effective dates will appear, select OK
• Select Yes when the dialogue box displays ‘Do you really want to modify this Income record?’
• Add a notepad using the Income Changes documentation template on the Resources page, then select Save

Pend the letters until phone contact has occurred with both customers.

Note: Cuba may incorrectly reinstate an ITD income after an amended taxable income is applied in the assessment. The amended taxable income should replace the original taxable income (Source ATO) in the assessment. If there is an ITD income which the original taxable income has replaced, the amended taxable income should replace this even if the amended taxable income is lower than the ITD income.

However, in the absence of the original taxable income, Cuba compares the amended taxable to the ITD income. Because the amended taxable income is lower, it will only apply from the amended taxable income lodgement date. To make sure Cuba compares the amended taxable income to the original taxable income and replaces the ITD income, both the original taxable income and the amended taxable income should be set to Recorded.

Example

• Indexed default income for 20/21 of $66,498
• ITD income of $42,000 lodged replacing indexed default income from date of notification partway through CSP
• Original taxable income of $58,012 lodged late replaced ITD income
• Amended taxable income of $39,731 lodged due to Douglas decision. This should replace the original taxable income in the CSP. The CSP should use indexed default income followed by amended taxable income

Where an estimate has been reconciled using the original tax assessment and a lower amended tax assessment (resulting from the Douglas decision) for the same year is now available, follow the process in Manual reconciliation procedure for child support estimates (from 1 July 2011).

Pend all letters to all parties until phone contact has occurred with all parties.

When all income years and estimate reconciliations have been completed, go to Step 4.

When all income years and estimate reconciliations have been completed, review the case / account to determine the:

• overall outcome and make sure all incomes have applied correctly
• final agency collect outcome and/or the private collect outcomes

Did the final outcome result in a change to the assessment?

• Yes, the outcome resulted in an overpayment, go to Step 5
• No, due to the income not changing the assessment rate or the amended income/s do not affect any periods when the case was active etc:
• Use the Final outcome – no impact to assessment or incomes not used in assessment template on the Resources page to document the outcome
• Contact both customers to advise of the updates to the assessment and the resulting outcome being no change to any assessment rate. Advise they will receive letters advising the income amount/s have been updated
• Send a letter to advise of the final outcome
• Finalise all outstanding actions and manage in accordance with the Customer Management Approach

Where the final outcome results in an overpayment, where the veteran is the paying parent, or a debt, where the veteran is the payee:

• Document the outcome using the Final outcome – AoG payment sought or debt reduction only document template on the Resources page
• Contact both customers to advise of the outcome after the incomes have been applied to the assessment
• Make sure the overpayment is removed from the system (see below).

Note: debts that raise for non-veteran parents on an agency collect case will remain on their account until the AoG payment is received and applied to the debt. The non-veteran parent still has the obligation to meet their ongoing child support. No enforcement action will be taken against the debt increased as a result of this process.

Removing Overpayment

For CSA collect cases, use the Gift function to remove the overpayment in Cuba.

Removing the overpayment must occur on the day the overpayment is raised to ensure:

• the payee overpayment letters are not issued (overnight) before customers have been contacted, and
• any ongoing liability is not absorbed by the overpayment

When processing the overpayment removal, note the current account and collection details in place to ensure the full overpayment is removed, and the payee does not miss out on receiving their current entitlement.

Example:

• Current liability is collected through Employer Withholding (EW) which is expected 7/2/2023
• $523 has been raised on the payer account, but not yet due (but due to be received in Feb)
• Income processing for Douglas reduces the debt by $15,895
• In the Gift window, make sure $15,895 is entered when processing the removal
• This will present a message indicating a debt will be raised for the paying parent. Make sure the details are correct and select yes
• This will ensure the current liability of $523 remains on the payer account to be paid by expected EW in February
• Check the payer account to make sure the correct outcome has occurred

Contact the veteran after processing the income. If contact is unsuccessful issue a contact letter to the customer.

When speaking to the veteran, explain the impact/outcome of applying the amended taxable incomes retrospectively to the child support assessment including:

• where there is no impact to the assessment after incomes are applied, or
• affected incomes do not impact the assessment

Overpayments

• Where an overpayment has occurred, explain that a payment will be sought via an Act of Grace payment from the Department of Finance on the condition the veteran elects to not recover the overpayment from the other parent (CSA collect)
• Where the case/period is private collect and customers agree all arrangements have been met, explain that a payment sought via an Act of Grace payment from the Department of Finance. The other parent is not required to repay any overpayment for the private period
• Send a letter to the veteran confirming this arrangement, including a 7 day cooling off period where an election is made to not recover the overpayment from the other parent on an agency collect case
• The overpayment will be removed from the system (for agency collect cases) and a request made to Department of Finance for a payment to be made directly to the veteran’s bank account (private and agency collect)

Debts to the other parent

• Where a debt to the other parent has occurred, explain that a payment will be sought via an Act of Grace payment from the Department of Finance to recover the increased child support the veteran was entitled to receive
• Send a letter to the customer confirming this arrangement
• Once the payment has been approved by Department of Finance it will be paid on behalf of the paying parent, and disbursed to the veteran (CSA collect) or paid directly to the veteran (private collect)

Other discussion topics

• If the customer is concerned about Centrelink impacts, explain Child Support will explain the changes to Centrelink, then Centrelink will be in contact with them
• If veterans have any questions relating to their income and decisions made by the ATO, direct them to contact the ATO
• Discuss and document customer consent (including statement below) to provide information to Department of Finance
• Obtain bank account details to be used for payment (where one is being sought)
• Advise the letters provide the DSS website - dss.gov.au/douglas-decision, for more information

Document contact with the customers in the relevant Communication window (including consent).

Include the following consent statement in documentation for AoG recipient

XXXXX has voluntarily agreed for their name and reference number to be provided to the Department of Finance to facilitate the Act of Grace payment. XXXXX confirmed their understanding of the remediation outcome and requirement to share their information with the Department of Finance.

Contact the other parent/s to discuss the amended incomes received from the ATO for the affected customer (be mindful of privacy). If contact is unsuccessful issue a contact letter to the customer.

When speaking to the customer:

• Explain the impact of applying the amended taxable incomes retrospectively to the child support assessment because the agency is satisfied that special circumstances exist
• Where there has been no impact to the assessment, explain that the incomes have applied with no impact
• Where there has been a change to the assessment, but the customer is owed existing debt (by the paying parent), i.e., no overpayment has occurred, explain the debt reduction
• Where the case is private collect:
• discuss private arrangement and determine if private collect arrangements have been met
• there has been a change to the assessment resulting in a debt or changes to the liability in private collect periods, discuss and document customer consent (including statement below) to provide information to Department of Finance
• If the non-veteran customer wants more information about why the incomes were amended, refer the customer to the information:
• on the DSS website dss.gov.au/douglas-decision, and
• in their letters
• Be mindful of privacy and do not disclose details of the veteran’s DVA/CSC pensions and benefits
• If the customer indicates family and domestic violence (DVA) concerns and would otherwise meet the conditions for a referral to Capacity to pay (CTP), escalate to the PSM

Overpayment (non-veteran as the receiving parent)

• Where the other parent has been overpaid child support confirm that the paying parent (veteran) has elected to not recover the overpayment from them (CSA collect case will have overpayment removed from system)
• Confirm they are not required to repay the overpayment
• Confirm a letter will be sent confirming this arrangement

Increase in debt (non-veteran as the paying parent)

• Confirm that they are not required to pay the increased child support liability and the agency will seek an Act of Grace payment to cover this
• Confirm the agency will not take enforcement action against the debt, and they should continue to pay their usual ongoing liability
• Confirm once the payment is received it will satisfy the debt in full. Advise timeline of 8-12 weeks
• Confirm the agency will send a letter confirming this arrangement
• If customer is concerned about Centrelink impacts, explain Child Support will explain the changes to Centrelink, then Centrelink will be in contact with them

Document contact with the customers in the relevant communication window (including consent).

Include the following consent statement in documentation for AoG recipient

XXXXX has voluntarily agreed for their name and reference number to be provided to the Department of Finance to facilitate the Act of Grace payment. XXXXX confirmed their understanding of the remediation outcome and requirement to share their information with the Department of Finance.

The Child Support Program Advice (CSPA) team will seek AoG requests from the Department of Finance (DoF) on a monthly basis.

Information is to be provided to the CSPA team for the person receiving the AoG payment.

Example:

Where the veteran is:

• a payer and the final outcome is an overpayment to the other parent (either agency or private collect), the payment will be made to the veteran’s bank account
• the payee on:
• a private collect case and the final outcome is additional debt owed by the non-veteran paying parent, the payment will be made to the veteran’s bank account
• an agency collect case and the final outcome is additional debt owed by the non-veteran paying parent, the payment will be made to the non-veteran’s child support account. This means the non-veteran is the recipient of the AoG payment. It will then disburse to the veteran

Copy the Seeking AoG email template on the Resources page and completed the details for the recipient of the AoG payment. Delete any irrelevant options from the template.

Email the completed template to Child Support Program Advice and cc Solutions Gateway Team - Douglas remediation.

The CSPA team will seek payments from DoF on a monthly basis.

E.g., any requests received during September, will be collated and sought in early October. This means some customers may wait longer for a payment if their request is made early in the month.

Approval and processing of the payment may take 6-8 weeks once submitted to DoF. This means some customers payments may take 10-12 weeks to be received.

When the payment has been processed, the CSPA team will email the owning case officer (and cc Solutions Gateway Team - Douglas remediation) who requested the payment.

After the CSPA team confirms the payment has been made, send the finalisation letter to the customer receiving the AoG payment.

When processing has been completed, and/or an AoG payment has been requested, notify Centrelink by sending an email to Families and Child Care – Business Process and Design Branch.

Use either:

• No impact to the assessment template, or
• Act of Grace payment requested / Overpayment removed / Debt reduction template

Note: where the veteran is the payee and they receive the AoG payment as a disbursement (CSA collect case), Child Support must notify/update Centrelink when this has occurred, as it will impact on the veteran’s current entitlement and Centrelink need to take manual action to correct on their end.

Document the final email text in the Veteran’s Communication window excluding the other parent’s surname, DOB and CRN.