Exceptions to the income date of effect rules in certain circumstances 277-17102600

Was the customer’s Adjusted Taxable Income (ATI) ascertained or determined after their tax return lodgement due date (whether upon receipt of the customer’s ATO assessed income or a new provisional income is calculated) and less than the ATI currently used?

• Yes, go to Step 2
• No, the ATI should already have been applied retrospectively and Section 11 is not relevant. Procedure ends here

Consider if the customer was affected by one of the following prescribed circumstances:

• the customer was unaware that an assessment had been made
• the customer had a serious illness or injury (including serious mental illness)
• the customer was incarcerated
• the customer resided in a remote location which made it difficult to contact Child Support
• the customer was prevented from contacting Child Support due to a natural disaster, or
• the customer was prevented from contacting Child Support due to some other exceptional circumstance which may include:
• customers with literacy issues, which may include those who find our forms and requirements difficult to understand or complete
• customers with communication issues, including customers from non-English speaking backgrounds
• homelessness, in a similar way to a person who resides in a remote location. Both are unusual living situations which reduce a person’s access to communication
• circumstances, other than those listed above, which made it difficult for the customer to contact Child Support

Note: exceptional circumstances are not limited to the above list, however they must be unusual or out of the ordinary compared to those of other child support customers. E.g., extreme family breakdown may be considered unusual among the general Australian population. However, it would reasonably be considered commonplace for child support customers so would be unlikely to fit the definition of ‘exceptional,’ unless there was a combination of other factors that made a customer’s particular circumstances more unusual (such as family violence).

If exceptional circumstances are being considered, seek assistance from a Service Support Officer. See Technical support in Child Support.

Has the customer been affected by a prescribed circumstance?

• Yes, go to Step 3
• No, the ATI cannot be applied under Section 11, go to Step 5

Determine if the prescribed circumstance prevented the customer from providing their income information to Child Support sooner.

Consider the timing of the prescribed circumstances (they must have occurred at the time the assessment was made), as well as the extent to which they affected the customer.

The customer’s income can only be applied retrospectively if Services Australia is satisfied that a prescribed circumstance prevented the customer from providing their income information at the time the assessment was made. For e.g.:

• If a customer was not able to provide their income information due to being incarcerated, they must have been incarcerated at the time the assessment was actually made, rather than for the period when they should have lodged their tax return or for some other period. If satisfied that a person was incarcerated at the time the assessment was made, it can generally be accepted that the person was prevented from providing their income information (unless there is evidence to suggest otherwise).

In situations where prescribed circumstances affected a customer for an extended period or on an ongoing basis, e.g., a customer who has poor English language skills, it might be more difficult to assess whether they were prevented from providing their income information at the time the relevant assessment was made. For e.g.:

• A customer who speaks English as a second language, has been in Australia for only a short period and has a new Child Support case, may find their circumstances make it difficult for them to understand and comply with our requirements, including understanding how to access support (such as using authorised representatives or interpreters) to the extent that they are prevented from providing their income information. It is likely the customer was prevented from providing their income information
• A customer who has been in Australia and has had a Child Support case for a longer period, who is employed in an Australian business and is able to manage their other government affairs, and has provided their income information to us in the past. It is unlikely the customer was prevented from providing their income information

Has the prescribed circumstance prevented the customer from providing their income information?

• Yes, go to Step 4
• No, the ATI cannot be applied under Section 11, go to Step 5

Determine if the customer provided their income information within a reasonable period of time once the prescribed circumstances no longer prevent them from doing so.

Generally a customer could be considered to have done something in a reasonable period of time if they have acted as soon as possible where their circumstances permit. If a person’s ability to do something is affected due to circumstances beyond their control (e.g., a natural disaster, unexpected actions of another person, etc.) and they then take suitable action relatively quickly after those circumstances no longer affect their ability to take that action, then they would usually be considered to have acted in a reasonable time.

What is reasonable in one instance, may not be in another – it depends on all of the particular circumstances of the case. However, where there are no untoward circumstances affecting a person’s ability to do something, a reasonable period would generally be no more than 28 days.

Example: For incarcerated customers this would usually be a reasonable period after the person was released from prison. Services Australia may also consider whether the customer has acted within a reasonable period after they became aware that an assessment had been made or gained access to the relevant income records, and was able to provide their income information. A person who has been incarcerated for several years may need more time if they need to gather information about multiple financial years. Confirm the period of the customer’s incarceration and date of release, then consider how long it took before they provided the information, and whether there was a reasonable basis for any delay.

A customer may have prescribed circumstances that do not always prevent them from providing their income information. E.g., they may be affected by a serious mental illness for life, which affects their ability to manage their affairs in a timely way, but they still manage to provide their income information when they are able to. In these situations, consider whether the customer provided their income information as soon as they were reasonably able to do so in the circumstances.

It is not enough for Services Australia to become aware of the customer’s income information from another source; the customer must take action to provide their income information to us. This may occur before or after Services Australia otherwise becomes aware of their income. E.g., if Services Australia learns of the customer’s income from Centrelink or the ATO while they are hospitalised, and the customer contacts shortly after their recovery to confirm their income (or they confirm their income information during a contact we initiate with them), this is sufficient to satisfy this criteria.

If the customer does not ever contact Services Australia about their income information (for the year(s) in question), they will not meet the criteria for Section 11 to apply and the usual date of effect rules should be used.

Has the customer provided their income within a reasonable time?

• Yes, go to Step 5
• No, the ATI cannot be applied under Section 11, go to Step 5

Document the decision, including:

• the reason(s) we are satisfied prescribed circumstances affected the customer’s ability to provide their income information sooner
• supporting evidence (if required)
• reasons for the Service Officer’s decision
• Service Officer’s decision
• legislative reference (Child Support (Assessment) Regulations 2018, Section 11)

See Documenting Child Support information. Contact a Service Support Officer if assistance is required with determining a prescribed circumstance.

If the decision is that the customer’s circumstances do not meet Section 11, go to Step 7, otherwise go to Step 6.

If the customer meets the criteria for Section 11 to apply, manual processing is required to give effect to this decision as the system will not automatically apply their ATI from the start of the relevant child support period.

If the notification date is enabled for the income type (e.g., ITD), manually enter the start date of the child support period into the Notification Date field.

For other income types, contact a Service Support Officer (SSO) to lodge a Cuba Service and Business Request form to make sure the ATI is used in the assessment from the start date of the child support period.

Note: EL2 approval must be obtained for the Cuba Service and Business Request due to ICT requirements.

When an income is applied as per Step 6, the appropriate letters will be issued automatically, see Notify Child Support customers of income changes.

Note: if a customer has requested their assessment be amended retrospectively pursuant to Section 11, the decision made and the reasons for it must be clearly explained to the customer and documented. This includes the decision that the customer’s circumstances do not meet Section 11.

There is no system letter that advises a customer that a decision has been made that Section 11 is not satisfied by the customer's circumstances. Prepare and send a unique letter stating the decision and the reasons for the decision incorporating the following suggested text:

For the customer whose income was being considered for prescribed circumstances:

We are writing to you about the adjusted taxable income used in your child support assessment.

You have asked us to consider your circumstances and apply your {Financial Year yyyy-yyyy} adjusted taxable income to your child support assessment from an earlier date.

After careful consideration, we have decided not to change the date the new adjusted taxable income was used in your assessment. This is because we can only change the start date of a new adjusted taxable income if:

• the income information wasn’t provided when the assessment was made because of prescribed circumstances, and
• the income information was then provided within a reasonable timeframe.

The best way to ensure the income used in your child support is correct is to lodge your tax return on time every year or provide your income details to us as soon as possible.

This means your adjusted taxable income is still the same and the amount of child support has not changed as a result of this decision.

Include the standard paragraph about objection rights. See Letters for Child Support customers.

Was the customer’s tax assessment amended to a lower figure after the customer’s tax return lodgement due date, and more than 28 days from the date of their previous tax assessment?

• Yes, go to Step 2
• No, the ATI based on the tax assessment should already have been applied retrospectively and an exception to the income date of effect rules is not relevant. Procedure ends here.

To determine whether errors in the customer’s previous tax assessment were due to circumstances beyond the customer’s knowledge or control, see Table 3.

Have you determined that errors in the customer’s previous tax assessment were due to circumstances beyond the customer’s knowledge or control?

• Yes, go to Step 4
• No, go to Step 3

To determine whether special circumstances affected the customer, see Table 4.

When it has been determined whether special circumstances affected the customer, go to Step 4.

Document the recommendation in the income window of the applicable amended taxable income, including:

• the reason(s) for being satisfied about circumstances being beyond the customer’s knowledge or control or about special circumstances affecting the customer’s ability to obtain their amended tax assessment sooner
• supporting evidence (if required)
• reasons for the Service Officer’s recommendation
• Service Officer’s recommendation
• legislative reference (Child Support (Assessment) Regulations 2018, Section 11 )

See Documenting Child Support information. Contact a Service Support Officer if assistance is required with determining a prescribed circumstance.

Is the recommendation that the requirements for amending a child support assessment retrospectively in certain circumstances are met?

• Yes, go to Step 5
• No, go to Step 6

Check the recommendation to make sure the decision proposed by the Service Officer is correct.

Document authorisation as a separate notepad in the income window of the applicable amended taxable income.

If a customer meets the criteria for circumstances beyond a customer’s knowledge or control or special circumstances to apply, a mySupport form is required to give effect to this decision as the system will not automatically apply their amended tax assessment retrospectively. EL2 approval is needed before lodging the mySupport request.

• Search for webform Cuba Service and Business Request form in mySupport
• Include the following details:
• amended taxable income to be applied retrospectively
• prescribed circumstance reason
• financial year
• amended income amount
• date the amended income should apply from
• Add attachment – EL2 approval email
• Document the SD lodgement acknowledgement email with details as a separate notepad in the Income window on the applicable income record

Staff Facing Products (SFP) – Cuba and Pluto will apply the income retrospectively and set the SD to resolved. The referring officer can then notify the customer.

Go to Step 6.

Decision to amend the income

When an income is applied as per Step 5 or 6 the appropriate letters will be issued automatically, see Notify Child Support customers of income changes.

Note: if a customer has requested their amended tax assessment be applied retrospectively, the decision and reasons must be explained to the customer and documented.

Decision not to amend the income

There is no system letter that advises a customer of the decision if it is not satisfied there are special circumstances. Send a unique letter about the decision and the reasons, including the standard paragraph about objection rights. This letter only goes to the customer whose amended tax assessment was being considered for retrospective application. See Child Support letters for pre-approved text.

Amending a child support assessment retrospectively to take account of an amended income can be considered if it is satisfied that the error(s) in the preceding tax assessment were due to circumstances beyond the customer’s knowledge and control and the customer took prompt action to seek an amended tax assessment.

Errors in a tax assessment might be considered to be due to circumstances beyond the customer’s knowledge or control where:

• the customer’s tax agent makes an error in preparing the customer’s return and the customer only learns about this later, or
• the customer’s employer makes an error in their payment summary and the customer lodges their return in good faith and only later learns of the mistake

Note: this list is not exhaustive and other circumstances might be considered beyond the customer’s knowledge or control. Each case must be considered on its individual merits.

If satisfied that the errors in the previous tax assessment were due to circumstances beyond the customer’s knowledge or control, go to Step 2.

While a customer’s tax assessment may be wrong due to circumstances beyond their knowledge or control, it is still the customer’s responsibility to take prompt action to correct their assessment. A customer will be considered to have taken prompt action if they sought the amendment within 28 days of becoming aware of the error in their previous tax assessment.

A customer can become aware of an error in a number of ways, including:

• advice from their employer of errors in their end of year payment summary
• advice from their agent that an error had been made in the preparation of their tax return
• advice from the ATO that a keying or scanning (or other type of) error had been made in processing their tax return
• by noting their income is incorrect upon receipt of their new child support assessment
• advice from Services Australia that their taxable income appears to contain an error and the customer confirms this advice with the ATO, or
• any way which brings to their attention that an error exists

If satisfied that the errors in the previous tax assessment were due to circumstances beyond the customer’s knowledge or control and the customer took action to seek an amended tax assessment within 28 days of becoming aware of that error, the amended income should be applied to the child support assessment retrospectively.

See Step 4 in Table 2.

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.

As with prescribed circumstances for Section 11, the important factor is that the circumstances are unusual or out of the ordinary compared to those of other child support customers.

If a customer advises they have been impacted by the Federal Court decision, Commissioner of Taxation vs Douglas (the Douglas decision), or provide information to indicate they are a veteran and have had their incomes amended because of the Douglas decision, the enquiry must be referred to the Solutions Gateway Team from managing.

See Step 2 in Table 1 to determine whether special circumstances affected the customer.

If one or more special circumstances are determined to have affected the customer, go to Step 2.

If the customer was affected by one or more special circumstances after the preceding tax assessment issued, consider whether those circumstances prevented the customer from seeking an amended tax assessment within 28 days.

It is important to consider when the special circumstances occurred (they must have occurred at/after the time the previous tax assessment was issued), as well as the extent to which they affected the customer.

These principles are the same as for prescribed circumstances. See Step 3 in Table 1 considerations and examples.

If one or more special circumstances are determined to have prevented the customer from seeking their amended tax assessment earlier, go to Step 3.

If a customer satisfies the criteria for circumstances involving an error beyond their knowledge or control, they must also have applied for their amended tax assessment within 28 days of their previous tax assessment having issued. If they have not met this 28 day test, consider whether any other special circumstances apply.

For special circumstances, the customer must seek their amended tax assessment within a reasonable period of time once the special circumstances no longer prevent them from doing so.

These principles of taking timely action are the same as for prescribed circumstances. See the Prescribed circumstances (Section 11) in Table 1 for considerations and examples.

If satisfied the customer was prevented from seeking an amended tax assessment promptly because of special circumstances but did so within a reasonable period after those special circumstances ceased to affect them, the amended income should be applied to the child support assessment retrospectively.

See Step 4 in Table 2.