Child Support customers impacted by the Douglas decision 277-24061449

The Douglas decision, handed down on 4 December 2020 changed the tax treatment of invalidity benefits received by veterans under the Military Superannuation and Benefits Act 1991 and the Defence Force Retirement and Death Benefits Act 1973.

The Decision has tax implications for:

• Defence Force Retirement and Death Benefits Scheme (DFRDB)
• Military Superannuation and Benefits Scheme (MSB), and
• Disability Superannuation Benefit (DSB) payments

There are changes to the tax treatment of benefits (from income stream benefits to lump sums) and a greater proportion of payments becoming tax-free.

The Decision may cause retrospective changes to taxable income for veterans from the 2007–08 financial year and into the future. This may impact Child Support assessments and family assistance entitlements.

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.

Services Australia will work with parents to acknowledge and give effect to special circumstances where it has been confirmed a lower Amended Tax Assessment was caused by the Douglas decision.

Parents are required to provide information from the Commonwealth Superannuation Corporation (CSC) and/or the Australian Taxation Office (ATO).

As a result of applying the veteran’s lower amended tax assessments, due to the Douglas decision to a child support assessment, the agency will seek to:

• repay any child support debts (where the paying parent is the non-veteran), or
• overpayments (where the paying parent is the veteran)

An AoG payment is used to ensure no parent is worse off due to the decision. This applies to both private and agency collect periods.