Disability Support Pension – get help with child support after tax time

Disability Support Pension – get help with child support after tax time

Wednesday, 8 November 2017

A child support account statement

Some people on the Disability Support Pension (DSP) may face incorrect child support debts this year if they mistakenly include their DSP income in their tax return, Victoria Legal Aid’s Child Support Legal Service has found.

‘Any debt can be significant when you’re on a fixed income like the DSP, and we’ve seen clients with unexpected and incorrect debt increases.

‘If you don’t address it, the debt can be automatically deducted from your payments and late payment penalties imposed.'

Child Support Legal Service Manager Kathleen Ng

Ms Ng said that many people on the DSP experience difficulty with mental health, making a sudden debt harder to deal with.

‘Clients who have approached us have been very distressed, and we expect there are people out there who haven’t got in touch,’ she said.

The DSP is not taxable income and does not need to be declared on a tax return.

When a recipient mistakenly includes their DSP income in their tax return, their income appears artificially high. They can then incur an unexpected and incorrect child support debt after the Australian Tax Office passes on their information to the Department of Human Services (DHS) Child Support.

‘It’s a relatively simple and innocent mistake which we are finding some of our clients have made on their tax returns,’ Ms Ng said.

‘It’s also usually quite easy to correct with the Australian Tax Office, but the child support consequences are more complicated to unwind.

‘Our child support lawyers help by explaining the process and working out how the debt arose. If the debt is incorrect, we can then contact DHS Child Support. We’ve been able to reduce the debt for some clients.’

Ms Ng said that DHS Child Support currently cannot use amended tax incomes to retrospectively reduce an incorrect high child support income.

‘People who have made this mistake have to formally apply to DHS Child Support for a waiver of the incorrect debt,’ she said. ‘It can take time to apply and receive a decision, and we can support DSP recipients through this.’

Victoria Legal Aid has flagged this problem with DHS Child Support.

Subject to legislation passing, a new law coming into effect next year will allow DHS Child Support to use amended tax incomes in child support assessments in a broader range of circumstances. In most cases, parents who make this type of mistake will be able to have their lower amended tax income applied retrospectively to their child support assessment.

Our clients' exper​ience

Read about the experience of some of our clients who have mistakenly included their DSP in their taxable income.

Find out more at Disability Support Pension and child support debts – our clients’ experience.

How we can help

If you have received an incorrect child support debt after lodging your tax return, please request an appointment with our Child Support Legal Service by completing an appointment request form or by calling Legal Help on 1300 792 387.

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