18.104.22.168 New Information about Adjusted Taxable Income
The Registrar may receive new information about a parent's adjusted taxable income. There are rules about whether this new information can be used to amend a parent's child support assessment.
CSA Act section 58, section 58AA, section 58A
CSA Regs regulation 11
The action to be taken by the Registrar when new information about taxable income becomes available will depend upon the dates where the income has been used. The scheme reforms legislative changes from 1 July 2008 introduced new rules for assessments after that date.
If the child support period commenced before 1 July 2008, the rules in operation at that time still apply for the period up to 30 June 2008, even if the information has become available after 1 July 2008.
For the remainder of the child support period that continues after 1 July 2008, or if the child support period commenced on or after 1 July 2008, the current rules are to be used.
The changes introduced by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further Election Commitments and Other Measures) Act 2011 apply to child support periods starting on or after 1 July 2011.
New information about adjusted taxable income
Where the Registrar has made a determination of a parent's adjusted taxable income for a particular year and subsequently ascertains the parent's actual taxable income for that year (when a tax assessment issues for the parent), the child support assessment must be amended immediately. The assessment must also be amended if the Registrar obtains other new information about a parent's adjusted taxable income and makes a later determination of the appropriate adjusted taxable income amount. The later determination of adjusted taxable income will be subject to the different rules pre- and post-1 July 2011, depending on which financial year the later determination relates to.
If more recent income information becomes available that would allow the Registrar to determine a more current indexed income for the parent, another adjusted taxable income will be determined and the assessment will be amended to use the more recent information.
The date of effect of the amendment to the child support assessment will be the beginning of the relevant child support period where:
- the parent lodged their tax return on time, or still has time to lodge, his or her tax return on time as required under the income tax legislation (for example, under a relevant tax agent lodgement program), or
- paragraph (a) does not apply and the adjusted taxable income subsequently ascertained or later determined by the Registrar is higher than the amount previously determined, or
- paragraphs (a) and (b) do not apply and the parent was genuinely unable to provide the Registrar with timely information due to the parent being unaware that an assessment had been made; ill-health; natural disaster; remote location; imprisonment; or other exceptional circumstances and the parent provided income information as soon as was practicable in the circumstances, or
- paragraphs (a) and (b) do not apply and the parent resided overseas, was not required to lodge a tax return and the parent provided information about his or her income to the Registrar within a reasonable time in the circumstances.
When making a decision about whether the circumstances prescribed by CSA Regs regulation 11 apply, the Registrar must consider all the relevant facts of the parent's particular circumstances and the extent to which they contributed to the parent's delay in providing information about their income to the Registrar.
For the purposes of regulation 11(1)(c), the Registrar will consider a person provided their income information to the Registrar as soon as was practicable if they provided that information within a reasonable period of time after the special or exceptional circumstances ceased to affect them. A decision about whether the parent provided their income information to the Registrar as soon as was practicable will require an examination of the parent's individual circumstances.
Otherwise, the amendment to the assessment will take effect from the day after the assessment was amended, for the remainder of the child support period.
Example 1: On 20 July 2008, Shannon advises their adjusted taxable income for 2007-08 is $40,000. That figure is used to calculate the child support assessment for the child support period 1 August 2008 to 31 October 2009.
0n 15 July 2009, Shannon's tax return for 2007-08, lodged late, issues and their adjusted taxable income is $43,000. As Shannon's income is higher, the child support assessment would be adjusted from 1 August 2008.
If Shannon's adjusted taxable income was $38,000 and the child support assessment is amended on 15 July 2009, the amended assessment would have effect from 16 July 2009. Under section 58A(3) of the CSA Act, the day after the assessment is amended is the date of effect, as Shannon's income is lower and the tax return was lodged late.
Example 2: Claire has not lodged her 2006-07 tax return when child support period commences 1 March 2008. The Registrar determines an adjusted taxable income for 2006-07 of $80,000 (from the taxable income in the year prior to the last relevant year of income) and uses that figure to calculate the child support assessment for the child support period 1 March 2008 to 30 May 2009.
On 1 November 2008, Claire's tax return for 2006-07 issues and her adjusted taxable income is $55,000, and the assessment is amended. As Claire's income is lower, the child support assessment would be amended using income as follows:
- from 1 March 2008 to 30 June 2008: $55,000 (pre-1 July 2008 legislation)
- from 1 July 2008 to 1 November 2008: $80,000
- from 2 November 2008: $55,000 (section 58A(3) applies as Claire's tax return was lodged late).
Example 3: The Registrar made an assessment for a child support period commencing 1 August 2013. As there was no ATO assessment available, the adjusted taxable income used in this assessment was $44,758, ⅔ of the 2013 annualised Male Average Weekly Earnings (MTAWE). On 26 September 2013, Amit's 2008-09 tax assessment issues, resulting in an adjusted taxable income of $45,000. The Registrar considers determining a 2012-13 adjusted taxable income based on the 2008-09 adjusted taxable income.
The Average Weekly Earnings (AWE) amount for the December quarter of the last relevant year of income (2012-13) is the November 2012 amount of $1080.30. The AWE amount for the December quarter of the tax year (2008-09) is the November 2008 amount of $911.30. The adjusted taxable income indexation factor is therefore $1080.30 ÷ $911.30 = 1.185.
Amit's 2012-13 adjusted taxable income is $45,000 × 1.185 = $53,325 or ⅔ MTAWE, which is the 2013 value of $44,758. As the indexed value is greater, Amit's adjusted taxable income is $53,325.
The Registrar amends the assessment from the beginning of the child support period, 1 August 2013, because the new adjusted taxable income determined by the Registrar of $53,325 is higher than the previous determination of adjusted taxable income, $44,758.
New information about incomes used before 1 July 2008
The CSA Act in operation before 1 July 2008 permitted the Registrar to identify a default income to be used in assessments if the parent's taxable income could not be ascertained. If the Registrar has based a parent's child support assessment on a default income, and the parent's taxable income and/or supplementary amounts is later ascertained, then the Registrar must immediately amend the child support assessment on the basis that the taxable and/or supplementary amounts is and always has been the taxable income. This is applicable to all assessments up to 30 June 2008.
The Registrar can ascertain a taxable income in this situation even if the ATO has not made an income tax assessment. It can act on information that provides a better basis for a default income.
However, the Registrar will not amend an assessment if a parent provides details of income and supplementary amounts and the Registrar has other evidence that suggests that the information provided is incorrect.
Example: Daniel's taxable income and supplementary amounts cannot be ascertained because Daniel hasn't lodged a tax return for the relevant year (2006-07). Daniel has been asked to provide details of taxable and supplementary incomes for the relevant year but he doesn't provide the details requested. The Registrar can make a child support assessment using an income amount considered appropriate and decides to use an amount of $32,000 based on Daniel's past income history. Daniel later lodges a tax return for the 2006-07 year and his taxable income is assessed to be $28,000 and there are no supplementary amounts. The Registrar must amend the child support assessment to reflect Daniel's actual taxable income of $28,000.