Lodgement rules for income in Cuba 277-07010050

All Child Support customers who are parents are required to lodge a tax return unless they satisfy the exemption rules specified by the ATO.

In the latter circumstances, a customer should complete a Non-lodgement advice with the ATO. This will result in a ‘Return Not Necessary’ status (RNN) being placed on their ATO income Tax records for the relevant financial year.

See the ATO website for detail about lodgement not required.

The due date for individuals to lodge their tax return or a Non-lodgement advice with the ATO is 31 October each year. If a customer uses a tax agent, they will have a later lodgement date according to the ATO tax agent lodgement program. Cuba will determine if a return has been lodged late.

The key lodgement dates for businesses alter depending on what is required to be lodged. These dates can be found on the ATO website.

Key lodgement dates determine the date of effect:

• for amended ATO incomes where they are replacing earlier ATO incomes, see Australian Taxation Office (ATO) income for Child Support customers
• for ATO incomes when they are replacing provisional incomes in Cuba
• when a provisional income replaces another provisional income in an assessment

For details about ATO notification of non-lodgement advice, effective dates and how to replace a provisional income when an RNN or FRNN indicator is present, see Deemed and Default Child Support incomes

A provisional income will be used in the assessment if the customer’s ATO issued income tax details are not available when a new child support period starts.

The date a tax return is lodged determines if income will be:

• backdated to the start of a child support period to replace a provisional income, or
• used from the date the tax return was lodged

Cuba will identify if an income received from the ATO was lodged by a tax agent on the customer’s behalf and will automatically update the income in accordance with the ‘backdating’ rules. See Exceptions to the income date of effect rules in certain circumstances for information about exceptions to automatic backdating rules.

Note: when the tax assessment for a Last Relevant Year of Income (LRYI) has been received, no new provisional income can be created for that LRYI. The system may incorrectly create new provisional incomes after the tax assessment has been received for that year, particularly when multiple tax assessments are received on the same day. These incomes will need to be investigated and any incorrect provisional incomes removed.

If a case is identified where:

• a provisional income may have been created after the tax assessment for the LRYI was received, or
• any instance where multiple tax assessments were received on the same day

review the case to identify if Cuba incorrectly created and applied new provisional incomes.

If incomes are to be removed from the assessment, follow the Correcting a complex Child Support Error instructions and refer the submission to a Service Support Officer.

If unsure if provisional incomes should be removed from the records, seek support from a Service Support Officer.

When a new ATO income is received, the date of effect to the assessment is the beginning of the relevant child support period where:

• the tax return or non-lodgement advice for the last relevant year of income is (or can be) lodged on time
• the new ATO income is higher than the current income, even if the tax return was lodged later than the ATO timeframe
• the customer was genuinely unable to lodge their tax return due to prescribed circumstances, see the Prescribed circumstances table in Exceptions to the income date of effect rules in certain circumstances, or
• the customer was a resident of a reciprocating jurisdiction and the customer responded to the request for information within 60 days

Otherwise the amendment to the assessment will take effect from the lodgement date of the tax return or non-lodgement advice for the remainder of the child support period.

If a customer lodges their tax return for the last relevant year of income late, and their ATO-issued income is lower than the provisional income, the assessment will be amended from the ATO lodgement date. The income will not be used from the start of the child support period.

In some prescribed circumstances, a customer may request their ATI be applied from the start of the child support period.

For more detail and examples, go to Step 4.

If the new ATO income is:

• higher than the provisional, the provisional income is replaced from the beginning of the child support period
• lower than the provisional and the customer did lodge their tax return on time, then the provisional is replaced from the beginning of the child support period
• lower than the provisional and the customer did not lodge their tax return on time, then the provisional income is replaced from the issue date of the tax return unless prescribed circumstances apply

If a Child Support customer does not lodge their tax return, their child support assessment may not be accurate. If an ATO income is not available, then Child Support must determine a customer's income amount. If this income is incorrect, the customer may be paying too much or not enough child support. This could cause a debt when the customer does lodge their tax return.

Lodgement enforcement

Each year, the Lodgement Enforcement Program (LENF) refers all customers with any outstanding taxation obligations to the ATO in priority order. There is no need to send referrals to the LENF mailbox.

Note: for Ministerial, Ombudsman and high profile cases, see Lodgement Enforcement.

Return not necessary (RNN)

If a Child Support customer lodges a RNN with the ATO and the Return not Necessary (RNN) deemed income has been recorded in Cuba for a financial year, this financial year will not be included on lodgement enforcement reporting to the ATO.

A provisional income (derived, RNN deemed, deemed and default) can only be updated with another provisional income if:

• new income information is received that is more reliable and accurate than the old provisional income, including an Income Tax Declaration (ITD). This includes:
• locating additional income information for a customer whose income has been derived by Cuba on Centrelink/DVA income only, or
• manually recorded in Cuba based on ATO information (RNN deemed)
• all efforts to contact the customer and encourage lodgement of a tax return or to obtain an ITD have failed

The new provisional income can be more or less than the original provisional income. When a provisional income is updated or replaced with another provisional income, determine the impact on the assessment. If an overpayment results, see Child support overpayments and other payee debt and Income Cuba Process Help.

If an assessment uses a provisional income and later a better provisional income is calculated, Cuba automatically amends the assessment based on the income in accordance with the key lodgement dates. For example, if a customer provides an ITD for a particular Last Relevant Year of Income (LRYI) and still has time to lodge that LRYI's tax return on time, the assessment will be amended from the first day in the child support period, otherwise the amendment to the assessment will take effect from the date the new provisional income (that is, the ITD) was determined for the remainder of the child support period.

If the re-calculated figure is:

• higher than the income currently used in the assessment:
• the amount will be applied to the assessment from the first day the previous income was used
• lower than the income currently used in the assessment:
• the amount will be applied from the date of notification to the end of the child support period, see Exceptions to the income date of effect rules in certain circumstances for information about exceptions to automatic backdating rules

Note: Cuba will not always apply a lower provisional income from the correct date based on the key lodgement dates. For instructions on how to have Cuba apply the income from the correct date see Derived income for Child Support customers.

See Income Cuba Process Help.

Note: do not amend a default income unless satisfied that there is now more correct information. Contact an SSO for assistance if necessary.

For more information on how a new provisional income is applied see Cuba rules for Child Support customers, Provisional incomes.