2.4.4.30 Changes to Adjusted Taxable Income

Introduction

The Registrar may receive information that a parent' adjusted taxable income has been changed. There are rules about whether this information can be used to amend a parent's child support assessment.

Act references

CSA Act section 56, section 57

CSA Regs regulation 7

Amended tax assessments

If the ATO issues an amended assessment of a parent's taxable income for the last relevant year of income before the Registrar makes the child support assessment, the Registrar will use the taxable income shown in the amended tax assessment.

Once the Registrar has made a child support assessment, any subsequent changes to the parent's taxable income are disregarded except where the ATO amends the parent's tax assessment because of fraud or tax evasion or under a provision of the Income Tax Assessment Act that is prescribed by the Regulations.

Where a parent's tax assessment is nil and the parent does not have any additional components of adjusted taxable income (reportable fringe benefits, target foreign income, net investment loss, reportable superannuation contribution, or a tax free benefit or pension), the child support assessment may be amended by the Registrar to take account of a subsequent amended tax assessment.

Example 1: The ATO issues a tax assessment for M. M's taxable income is assessed as $38,000. Before the Registrar makes a child support assessment, the ATO amends M's taxable income to $45,000. M lodges an objection to the amendment with the ATO. The Registrar makes a child support assessment and uses the last taxable income assessed, $45,000. One month later the ATO allows M's objection and reduces M's taxable income to $38,000. The child support assessment remains based on the higher taxable income of $45,000, and M can apply for a change of assessment in order to alter this.

Example 2: The ATO issues a tax assessment for F. F's taxable income is assessed as $38,000. The Registrar makes a child support assessment based on the $38,000 income. The ATO then amends F's taxable income to $68,000. The Registrar confirms with the ATO that the amendment was due to tax evasion and amends F's child support assessment from the start of the child support period to reflect the amended taxable income.

Note: If the ATO issues an amended tax assessment for a parent and the Registrar does not use this income in the child support assessment, it will still be referenced as the parent's adjusted taxable income when determining whether an income estimate can be made.

Act reference: CSA Act section 56(2) Taxable income is as assessed under Income Tax Assessment Act, section 57(7) Taxable income for child support purposes where taxable income determined to be nil under Income Tax Assessment Act

CSA Regs regulation 7 Taxable income - prescribed provisions and circumstances

Policy reference: CS Guide 2.5.1 Income Estimates for a Year of Income, 2.6 Change of Assessment in Special Circumstances

Changes to other components of a parent's adjusted taxable income

If there is a change to the components of a parent's adjusted taxable income, which was not the result of an amendment of the parent's tax assessment the Registrar will amend the child support assessment to reflect the amended adjusted taxable income. Where a component of a parent's adjusted taxable income is amended as a result of an amendment to the parent's tax assessment the Registrar will not amend the child support assessment.

Example: A parent has income from salary/wages as well as a rental loss from an investment property. Their original tax assessment issues and they realise they incorrectly recorded their rental deductions. An amended tax assessment issues with the corrected information.

  Taxable income Rental loss Total adjusted taxable income
Original assessment $50,000 $10,000 $60,000
Amended assessment $55,000 $5,000 $60,000

The Registrar would not make any amendment to the child support assessment as the change was the result of an amendment to the parent's tax assessment.

Example: A parent has income from salary/wages as well as from target foreign income. Their original tax assessment issues and they realise they did not declare their foreign income. The ATO amends their tax record with the corrected information.

  Taxable income Other component Total adjusted taxable income
Original assessment $50,000 $0 $50,000
Amended assessment $50,000 $7,000 $57,000

The Registrar would amend the parent's child support assessment to be based on an adjusted taxable income of $57,000 as the change was only to the other component amounts.

Example: A parent has income from salary/wages as well as from investments. Their original tax assessment issues and they realise they incorrectly recorded their taxable income and investment losses.

  Taxable income Investment loss Total adjusted taxable income
Original assessment $50,000 $15,000 $65,000
Amended assessment $45,000 $25,000 $70,000

The Registrar would not amend the child support assessment as changes to the taxable income and other component amounts were the result of an amendment to the parent's tax assessment. Therefore the original adjusted taxable income of $65,000 will still be used in the child support assessment.

Last reviewed: 4 January 2016