csa may determine that a parent's income is greater or lower than the amount upon which they have been assessed.
A parent who receives a low taxable income from a family business may have access to additional financial resources, or alternatively, he or she may have an additional earning capacity.
In determining the parent's financial resources, CSA may consider the following factors:
- past or current ability to maintain a particular lifestyle and acquire assets;
- identification of additional benefits obtained from the business;
- whether or not the business has been structured to minimise a parent's income including the degree of control which the parent has over the business or the person who is entitled to the profits of the business, or whether income splitting is occurring; and
- the person who does the work of the business.
CSA may determine that a parent's income is greater or lower than the amount upon which they have been assessed. Alternatively, CSA may decide that the parent's financial resources give the parent a greater capacity to contribute to the financial support of the child than is indicated by the assessment.
From 1 July 2006, CSA can only determine that a parent's earning capacity is greater than is reflected in his or her income used in the child support formula if it is satisfied with all of the following three matters:
1. The parent is either:
- not working despite ample opportunity to do so (section 117(7B)(a)(i)); or
- has reduced his or her weekly hours of work to below full-time work (section 117(7B)(a)(ii)); or
- has changed his or her occupation, industry or working pattern (section 117(7B)(a)(iii));
2. The parent's decision about his or her work arrangements is not justified by either:
- his or her caring responsibilities (section 117(7B)(b)(i)); or
- his or her state of health (section 117(7B)(b)(ii));
3. The parent has failed to show that the decision about his or her work arrangements was not substantially motivated by the effect this would have on the child support assessment (section 117(7B)(c).
CSA must be satisfied that all three compulsory criteria are satisfied before it can change an assessment to take into account a parent's earning capacity, rather than his or her actual income.
If the parent's circumstances satisfy only one or two of the criteria, CSA cannot make a decision based on the parent's earning capacity.
CSA must also be satisfied it would be possible for the parent to increase his or her income by changing his or her work arrangements. That is, work must be available for the parent in his or her area and the parent must have the necessary qualifications and experience to perform that work.
Disclaimer : This article provides basic information only and is not a substitute for a professional or legal advice. It is prudent to obtain legal advice from a family lawyer.