The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

2.4.4.40 Provisional income - determination of ATI

Introduction

If a parent's ATO-issued income (tax assessment) for the last relevant financial year is not available, the Registrar may determine an appropriate amount to be the parent's ATI for the year of income (section 58). This is referred to as provisional income in this page.

Once a parent’s tax assessment has been issued by the ATO, the Registrar cannot make a new determination of the parent's income for that relevant financial year (section 58(1)).

Note: For information about the rules before 1 July 2011, see 2.4.4.50.

Act references

CSA Act section 5A, section 58 to section 58D, section 162A

Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further Election Commitments and Other Measures) Act 2011

On this page

Frequently asked questions

Why are provisional incomes used by the Child Support Scheme?

A key objective of the Child Support Scheme is that both parent’s financially support their children based on their financial capacity. Provisional incomes may be used in an assessment to ensure a parent’s financial capacity is reflected in the child support assessment as accurately as possible when a parent has not yet lodged a tax return for a relevant financial year. Provisional incomes:

  • ensure child support assessments are accurate despite a parent not lodging a tax return
  • encourage timely lodgement of tax returns
  • recognise that due dates for tax lodgement due dates can be delayed if the parent lodges their tax return through a tax agent
  • minimise the risk of either parent being assessed with a debt or overpayment when a child support assessment is retrospectively updated when the parent lodges their tax return.

What happens to a provisional income when a parent lodges their tax return?

Rules around how tax assessments replace provisional incomes seek to minimise debts and overpayments and encourage timely lodgement of tax returns. More information about these rules is provided in 2.4.4.60.

Provisional income - income information is provided or available

If the Registrar or the ATO has been given information (orally, in writing) that specifies or allows the Registrar to work out the parent's ATI for the last relevant financial year, the Registrar may use that income information to determine the parent's provisional income (section 58). For example:

  • the parent may have informed the Registrar of their income for the year
  • the ATO may have full year payment summary information recorded for a parent
  • the Registrar may have information
    • about the Centrelink payments made to the parent for the year, or
    • from an overseas authority about the income earned by a parent who was resident in a reciprocating jurisdiction.

The Registrar must be satisfied that the amount specified or worked out is a reasonable approximation of the parent's ATI for the year (section 58(2)(c)). In making that decision, the Registrar will have regard to tax assessments for previous years or information available from the ATO or other sources about the year in question.

Example: An application for an assessment is accepted in July 2019, with the first child support period being 22 July 2019 to 21 September 2020. A parent, Solange, has not yet lodged their 2018-19 tax return. Solange advises that their ATI for 2018-19 is $49,000. As this information is consistent with Solange's previous tax assessments the Registrar is satisfied of the accuracy of the information. The Registrar uses the ATI of $49,000 to calculate the child support assessment.

Example: An application for an assessment is accepted in July 2019, with the first child support period being 22 July 2019 to 21 September 2020. A parent, Nicoline, has not yet lodged their 2018-19 tax return. Nicoline advises that their ATI for 2018-19 is $19,000. As there is no tax assessment available for Nicoline, the Registrar requests additional information in order to be satisfied with the accuracy of the information. Nicoline does not provide any additional information. As the Registrar is not satisfied with the accuracy of the information Nicoline's oral advice is not used to determine an ATI.

Example: The Registrar is required to make an assessment in July 2019 for a new child support period from 1 August 2019 as the assessment for the child support period 1 May 2018 to 31 July 2019 is about to end. The last relevant year of income for the new assessment is 2018-19 and a 2018-19 tax assessment has not yet issued for either Tarek or Francine. As the Registrar has income information from Centrelink for Tarek, that income will be used as Tarek's ATI in the assessment.

Provisional income - parent lodges a RNN advice with the ATO

Child support parents (payers and payees) meet their tax lodgement obligation by lodging a tax return, or lodging a RNN advice with the ATO. Under tax rules, a child support customer can lodge a RNN advice with the ATO if:

  • their taxable income was less than the amount specified by the ATO for that year (equal to or less the child support self-support amount that applied on 1 January of that relevant financial year), and
  • they were in receipt of a specified Australian Government pension, allowance or payment for the whole of the income year.

As a RNN advice is not a tax assessment of the parent’s income, the Registrar is required to determine that parent’s ATI for that relevant financial year.

If a parent lodges a RNN advice for the 2021-22 and prior financial years, the Registrar is required to make a determination of the parent’s ATI for the relevant financial year based on the most recent income information available.

Example: The Registrar is required to make an assessment for a new child support period from 1 August 2022. The last relevant year of income for the new assessment is 2021-22. Maryam, lodges a RNN advice with the ATO for 2021-22 (Maryam was eligible for JSP on each day of 2021-22, and had income less than $27,063). Unless Maryam contacts Services Australia to advise their ATI for 2021-22, the Registrar will need to determine an ATI based on the most recent income information. Services Australia have income information that Maryam received $16,000 in JSP for the 2021-22 year. The Registrar determines Maryam’s ATI to be $16,000.

If a parent lodges a RNN advice for the 2022-23 and subsequent financial years, the Registrar may determine the parent’s ATI (section 58(2A)) to be equal to the self-support amount that applied on 1 January of the financial year for which the RNN advice applied (section 58(2B)).

Example: The Registrar is required to make an assessment for a new child support period from 1 August 2023. The last relevant year of income for the new assessment is 2022-23. Timothy, lodges a RNN advice with the ATO for 2022-23 because they were eligible for JSP on each day of 2022-23, and their total income was $27,508 or less (equal to the 2023 self-support amount). Upon receiving the RNN advice from the ATO for 2022-23, the Registrar determines Timothy’s ATI for the last relevant year is $27,508 (the self-support amount which applied on 1 January 2023).

Provisional income – tax assessment available for the previous year of income

When a tax assessment is available for the year before the last relevant year of income, the ATI indexation factor (2.4.2) is used to calculate the ATI to be used in the assessment (section 58(3)).

The provisional income is calculated by multiplying the parent’s income for the previous year by the ATI indexation factor.

Example: The Registrar is required to make an assessment for a new child support period from 1 August 2022. The last relevant year of income for the new assessment is 2021-22 and a tax assessment is available for the previous year 2020-21 ($30,000). The AWE amount for:

  • 2021-22 is the 2021 amount $1,328.90
  • 2020-21 is the 2020 amount of $1,291.30
  • The ATI indexation factor is $1,328.90 ÷ $1,291.30 = 1.029.

The 2021-22 provisional income is $30,000 × 1.029 = $30,870.

Provisional income – tax assessment available for an earlier year

If there is no tax assessment for a parent for the last relevant year of income, or the previous year, but there is a tax assessment for an earlier year of income, the Registrar may determine that the parent's provisional income for the last relevant year of income is the greater of (section 58(4)):

  • the amount worked out by multiplying the parent's taxable income for the most recent income year by the ATI indexation factor
  • default income for the child support period (2.4.2).

When the most recent tax assessment has been located, the 'tax year' used in the ATI indexation factor calculation (as described above) is that year.

Example: The Registrar is required to make an assessment for a new child support period from 1 August 2019. The last relevant year of income for the new assessment is 2018-19. The AWE amount for 2018-19 is the 2018 amount of $1,225.00.

  • Julia's most recent tax assessment is for the 2014-15 year (Julia’s taxable income was $30,000). The AWE amount for 2014-15 is the 2014 amount of $1,128.90. The ATI indexation factor is $1,225.00 ÷ $1,128.90 = 1.085.
  • Arvid's most recent tax assessment is for the 2016-17 year (Arvid’s taxable income was $60,000). The AWE amount for 2016-17 is the 2016 amount of $1,164.60. The ATI indexation factor is $1,225.00 ÷ $1,164.60 = 1.052.

The Registrar must compare the indexed ATI with the default income for the child support period. The default income must be at least two-thirds of the annualised MTAWE figure. For a child support period starting in 2019, the default income amount is $50,076.

Julia's 2018-19 ATI is determined to be $50,076, which is the greater of:

  • $30,000 × 1.085 = $32,550
  • $50,076 (default income).

Arvid's 2018-19 ATI is determined to be $63,120, which is the greater of:

  • $60,000 × 1.052 = $63,120
  • $50,076 (default income).

Provisional income – no tax assessment available

If the Registrar is not able to determine a provisional income for a parent (or if the Registrar has decided not to make a determination) based on:

  • income information provided or available
  • a tax assessment for a previous year which can be indexed by the ATI indexation factor
  • a tax assessment for an earlier year which can be indexed by the ATI indexation factor

then the Registrar may determine that the parent's ATI is a default income (2.4.2) of at least two-thirds of the annualised MTAWE figure (section 58(5)). This default income is intended to cover circumstances such as where a parent has never lodged a tax return, or where the Registrar is unable to ascertain a person's TFN.

Example: An application for an assessment is accepted in July 2019, with the first child support period being 22 July 2019 to 21 September 2020. Parent Magda is not able to be contacted, nor is any taxable income information able to be located for Magda. The Registrar determines that Magda's ATI is $50,076 which is the default income for child support periods commencing in 2019.

If the default income is higher than their actual income, the parent may choose to lodge their tax return so their assessment can be amended to reflect their actual income for the year. The new assessment can only take effect with retrospective effect in a limited range of situations, as described below.

Determination of overseas income where parent is a resident of a reciprocating jurisdiction

If the Registrar has sufficient information and documents, the Registrar may use that information to determine an amount of overseas income for the purpose of working out the ATI of a resident of a reciprocating jurisdiction (section 58C). For example, the Registrar may have received evidence of income in a reciprocating jurisdiction in which the parent resides, or recently resided. This may include information from the most recent financial year in that jurisdiction.

If the Registrar does not have sufficient information to determine a parent's overseas income, despite requesting income information from the parent or an overseas authority, the Registrar may determine that the parent's overseas income is an amount that the Registrar considers appropriate of default income (two-thirds annualised MTAWE figure) (2.4.2) for the child support period (section 58D).

If the Registrar does not have sufficient information or documents to determine an amount of overseas income for the last relevant year of income, but a determination has been made for a previous year of income, the Registrar will generally determine that the parent's ATI for the last relevant year of income is the greater of the following amounts:

  • the amount worked out by multiplying the parent's ATI for the most recent income year by the ATI indexation factor, or
  • the default income amount for the child support period (2.4.2).

If the Registrar does not have sufficient information to determine an overseas income and is unable to serve a notice on either the parent or the relevant overseas authority, then the Registrar is unable to determine an overseas income for that parent for inclusion in their taxable income.

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