Cuba rules for Child Support customers 277-07010060

When an ATO issued income becomes available, the customer record will automatically update or replace an existing income if:

• the case is active, or
• the income applies to multiple cases and all cases are active

If a case is ended, go to Step 5.

Return not Necessary (RNN) deemed income

If a customer has an RNN indicator on their ATO income tax records, see Australian Taxation Office (ATO) income for Child Support customers - Not required to lodge.

An RNN deemed income must be recorded for any financial year from 2022/2023 onwards. See Step 2, Table 2.

When a customer lodges their tax return via a tax agent, the lodgement date and income fields will auto populate in the Client Income window.

See Income processing for Child Support customers.

The department may receive notification that a customer’s taxable income has been amended. From 23 May 2018 the amended income will be taken into account in the child support assessment (including estimate reconciliations) in most circumstances. See Australian Taxation Office (ATO) income for Child Support customers.

Note: different rules apply for amended incomes initiated on or after 1 July 2008 and issued before 23 May 2018. In most cases, an amended income (initiated and issued during that period) will not be taken into account in a child support assessment that has already been made.

If an amended income issued prior to 23 May 2018 and the relevant child support period had already commenced, the amended income should only be used in the child support assessment if the parent’s income was amended from nil or if the amendment was due to one of the reasons in subsection 56(2) of the Child Support (Assessment) Act 1989 as it existed prior to 23 May 2018.

When notification of an amended income is received with an issue date before 23 May 2018, the amended income will be recorded with a status of FOR INFORMATION but will not change the assessment.

Determine whether the assessment should be amended:

• If, at the time an estimate of income is to be reconciled, the parent’s taxable income for the relevant year has been amended by the ATO (and that amended income is available to the Registrar), the amended income will be used in the reconciliation
• Where the Service Officer is satisfied that the amendment to the income occurred due to one of the reasons specified in sub-section 56(2) of the Assessment Act as it existed before 23 May 2018 (for example, the amendment was due to tax evasion or fraud)

If an amended taxable income is already being used in a child support assessment and the amendment to the income was initiated:

• before 1 July 2008, the amended income will remain in use in the relevant assessment
• on or after 1 July 2008 and issued before 23 May 2018, the amended income will remain in use until action is taken to manually remove it from the relevant assessment

There may be circumstances where a parent advises their income tax assessment amendment of their tax assessment was initiated prior to 1 July 2008 and the amendment was not due to tax evasion or fraud (or any other reason set out in sub-section 56(2)). Escalate these to a Program Support Manager (PSM) to seek Program Advice clarification.

Amended taxable income due to tax evasion or fraud

An amended taxable income issued prior to 23 May 2018 should be used in a child support assessment where the amendment occurred due to 1 of the reasons set out in sub-section 56(2) of the Child Support (Assessment) Act 1989 as it existed before 23 May 2018. For incomes issued prior to 3 May 2014, amendments were considered to have been due to tax evasion or fraud if they resulted in a higher income. These higher amended incomes were automatically applied to the assessment. For incomes issued from 3 May 2014 to 22 May 2018 we required verification of the reason for the amendment. These amended incomes had to be manually applied to the assessment. For example, tax evasion or fraud. See Table 3 Obtain an ATO issued taxable income in Income processing for Child Support customers 1 July 2008 to 29 June 2011 (21 November 2012 for WA ex-nuptial cases)

Unless there is reliable information to suggest otherwise, an amendment to a person’s income tax assessment will not be considered to be due to tax evasion or fraud if the amendment was:

• initiated by the person; or
• made within the person’s statutory time limit for an amendment

The statutory time limit from the date of the original tax assessment for an amendment is:

• Two years for most individuals or very small business taxpayers (small business entities) and
• Four years for all other business taxpayers, trustees, beneficiaries of certain types of trusts, taxpayers who entered into or carried out a scheme for the sole or dominant purpose of obtaining a scheme benefit and taxpayers in other high-risk categories prescribed by regulation

The ATO have advised that amendments made within the statutory time limits are not made due to tax evasion or fraud.

Escalate these amendments to the PSM for further assistance.

If there is a change to the ‘other components’ of a customer’s ATI which does not affect the customer's ATO income, the assessment will be amended using the amended ATI for all the days in the child support period that the ATI is relevant (subject to the ‘income rules’ set out in section 58A), regardless of whether the income increased or decreased.

If a prior year ATO income has been amended and that income has been used in the calculation of a deemed or indexed default income in another assessment, the assessment based on the deemed or indexed default income will change.

Note: Cuba will automatically use an ATO amended income to calculate a deemed or indexed default income if the amended income has a status of CURRENTLY USED. If it is determined that an ATO amended income with a different status should be used in the calculation, calculate and load the information into CUBA manually.

See Step 4 in Table 2.

ATO issued incomes are not automatically applied to the assessment if at least one of the child support cases that the income applies to is ended.

If the income is not automatically applied, a New income for ended case intray will generate. Check the changes to the assessment and run Eligibility to apply the ATO issued income.

Note: this is not applicable to customers that advise of non-lodgement. Service officers need to update the RNN deemed income manually in the Client Income window. See Deemed and default income for Child Support customers.

If the case is ended as the payee or payer is deceased, do not action the intray or run Eligibility. Transfer the customer to the DCM team. See Customer Referral Guidelines for Child Support staff.

If an ATO income is not available when a new CSP is due to commence, Cuba will create a provisional income for the following year. See Income processing for Child Support customers - deemed income.

If an income provided by the ATO is a negative amount, the taxable income amount is considered to be zero. The amount of zero is recorded in the Client Income window and an explanatory notepad is automatically added advising that a negative income has been received from the ATO.

When a new child support period is generated and a taxable income is not available, Cuba will look for the following:

• derived income – an Income Tax Declaration (ITD), manually derived income or 10 months of Centrelink or Veterans Affairs automatically derived, or
• a Taxable income from the year immediately prior to the last Relevant Year of Income (LRYI) to calculate a deemed income

If none of the above options are available, then Cuba will:

• locate any financial year taxable income and calculate an indexed default income, then
• apply the higher of either 2/3 MTAWE or the indexed default income

If a customer advises the ATO of non-lodgement advice (RNN), manually record an RNN deemed income for any financial year from 2022/2023 onwards.

Before recording the RNN, confirm the customer has lodged an RNN for a financial year by checking in the customers’ record in their ATO record (ICP). The customer will have a lodgement status of Return not Necessary for the financial year.

Do not load the RNN deemed income until it is in the customers ATO Income Tax records even if a customer advises they:

• have recently notified, or
• will advise the ATO of non-lodgement required (RNN)

If the ATO Income Tax record has a lodgement status of Return not Necessary for the financial year, manually load a RNN deemed income for the customer. See Deemed and default income for Child Support customers.

The date of:

• notification will default to the date the income is loaded in Cuba
• effect rules of this income on the assessment is as per business rules

If a customer advises they have notified the ATO of non-lodgement required (RNN) and it is not yet displayed on their ATO record ask the customer:

• to call back after they have completed their lodgement advice
• for an ITD or see if a more accurate income can be derived while waiting for the RNN status on their ATO record

Note: RNN does not mean the customer’s income is zero.

Cuba will attempt to create a deemed income, if when a child support period is due to commence and the following income types are not available:

• relevant year ATO income
• relevant year ATO amended income

Cuba will automatically multiply the previous year ATO income by the ATI indexation factor and apply the inflated income amount to the assessment if the customer:

• has not lodged an income tax return, or supplied an ITD, for the LRYI
• has lodged an income tax return for the year prior to the last relevant year (subsection 58(3A) and section 58AA)

See Deemed and default income for Child Support customers.

Note: the ATI inflation factor cannot be applied to a deemed income and Cuba will not automatically inflate an ITD. If a better income is available, see Derived income for Child Support customers.

If:

• ATO income for the LRYI or previous year
• ATO amended income for the LRYI or previous year

is not available when a child support period is due to commence, Cuba will:

• locate the taxable income for the most recent financial year and calculate an indexed default income: then
• apply the higher of either 2/3 MTAWE or the indexed default income to the assessment

To process manually, see Income Cuba Process Help.

If a deemed or indexed default income has previously been calculated and the income used in the initial calculation has been replaced or a more recent taxable income becomes available, the new taxable income may be used to re-calculate the deemed or indexed default income.

If the re-calculated figure is:

• higher than the income currently used in the assessment; or lower than the income currently used in the assessment but the parent still has time to lodge:
• 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 and the parent is out of time to lodge:
• the amount will be applied from the date of notification to the end of the child support period

Date of effect

If an assessment uses a provisional income and later a better provisional income is calculated, Cuba automatically amends the assessment based on the income accordance with the key lodgement dates. For example, if a customer provides an ITD before 31 October, 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 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

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

See Income Cuba Process Help.

Do not amend a default income unless satisfied that there is now more correct information. Contact an SSO for assistance where necessary.

Where a new low income is added to Cuba that produces an annual rate below the relevant minimum annual rate and the fixed annual rate of child support does not apply, the assessment will be based on the minimum annual rate (MAR).

Where a new low income is added to Cuba, the fixed annual rate (FAR) may be payable for a child by a customer if:

• the customer did not receive an income support payment in the LRYI
• that parent’s ATI for the LRYI is less than the pension PP (single) maximum basic amount or an estimate of the customer's current income has been accepted and the estimated income is less than the pension PP (single) maximum basic amount
• that customer has less than shared care of the child

See Fixed annual rate not to apply applications.