2.5.1 Income Estimates for a Year of Income

Context

When a parent's income changes, they may be able to replace their existing adjusted taxable income by giving the Registrar an income estimate for the year of income, or for part of the year.

Act references

CSA Act section 5, section 43, section 58B, section 58C, section 60 to section 64AH, section 146G to section 146L, section 160, section 161

CSRC Act section 80, section 89

CSA Regs section 23

Child Support and Family Assistance Legislation Amendment (Budget and Other Measures) Act 2010

On this page

The Child Support and Family Assistance Legislation Amendment (Budget and Other Measures) Act 2010 amended the provisions relating to estimates of income from 1 July 2010. This page describes the new provisions. The previous provisions are described in 2.5.6 and apply to estimates made before 1 July 2010, and later estimates for the same child support period for parents who made an estimate for a period beginning before 1 July 2010.

What is an income estimate?

An income estimate is an election that a parent can make to have their assessment or notional assessment based on their expected income for a year of income, or for part of a year of income (CSA Act section 60, section 62A).

Estimating adjusted taxable income for notional assessments

When the Registrar is required to calculate a notional assessment, as there is a child support agreement, a parent can vary their provisional notional assessment by making an income estimate election, see 2.7.4 heading 'Varying a provisional notional assessment'.

The rest of this page relates to estimating incomes in relation to assessments (not notional assessments).

When can a parent estimate their income?

An income estimate can be made if:

  • there is no income amount order in force on the start day of the election or in the remainder of the financial year (CSA Act section 60(6),section 63(2A)), and
  • in the case of a first election for a year of income - if the estimate is 85% or less than the person's adjusted taxable income for the last relevant year of income (2.4.4) (CSA Act 60(1)(b)). The adjusted taxable income is based on the parent's taxable income and must be:
    • as advised by the ATO, or
    • where the parent is a resident of a reciprocating jurisdiction, as advised by the relevant overseas authority (section 58C),
    • a declaration by the parent of their adjusted taxable income (2.4.4) which the Registrar is satisfied is correct (CSA Act section 60(1)(b)(ii)),
  • later income estimate elections for a year of income can be made at any time within that year of income, and the amount estimated may be higher or lower than the previous estimate (CSA Act section 62A).

Note: the components of a person's adjusted taxable income changed as of 1 July 2009 (see 2.4.4).

How does a parent estimate their income?

A parent makes an income estimate election by giving notice of it to the Registrar (CSA Act section 60(7)). The notice may be provided orally, by telephone or in person. A parent may also provide the notice by electronic means, using Child Support Online Services or by submitting the form available on humanservices.gov.au. A parent may also give notice in writing. The election is taken to be made on the date the election is received by the Registrar (CSA Regs section 23(2)).

The notice must specify the amount of the estimate election (CSA Act section 60(8)(a)). There are specific requirements for elections for a whole year of income (CSA Act section 60(8)(b)), for part of a year of income (CSA Act section 60(8)(c)), and for later elections (CSA Act section 62A(5)).

Income amount orders

An income amount order (section 5) means:

  • a departure order made by a court (4.3.2) or change of assessment decision under CSA Act Part 6A (2.6) that either:
    • varies the annual rate of child support payable in a child support case by setting that annual rate, or
    • varies the adjusted taxable income, or the child support income, of a parent by setting that adjusted taxable income or child support income,
  • provisions of a child support agreement that has been accepted by the Registrar that have effect, for the purposes of making or amending an assessment, as if they were such a departure order made by consent. That is, varying the annual rate of child support payable, the adjusted taxable income or the child support income of a parent by setting that annual rate, adjusted taxable income or child support income.

An agreement that provides for the payment of child support other than in the form of periodic amounts is not an income amount order.

An income amount order can relate to only one parent or to both parents. An income amount order relating to only one parent will not prevent the other parent from making an estimate (CSA Act section 60(6)).

An order, agreement or change of assessment decision that varies a parent's child support percentage, a parent's self-support amount, a parent's relevant dependent allowance or multi-case allowance, the cost percentage, or the costs of children is not an income amount order.

Example: Sebastian and Ina's child support assessment is based on a court order which sets Sebastian's adjusted taxable income amount at $56,000. This is an income amount order for Sebastian only. Ina can still make an income estimate election.

Example: Jack and Rochelle's child support assessment is based on a change of assessment decision which increases the annual rate payable by Jack by $5,000. As the change of assessment decision does not set the annual rate payable it is not an income amount order.

Example: Michelle and Owen, enter into a child support agreement for their child, Amanda. The agreement states that Michelle will pay Amanda's school fees and the costs of all school excursions and uniforms. It states that an annual amount of $8,000 is to be credited against Michelle's child support liability.

Michelle applies to the Registrar for acceptance of the agreement. The Registrar accepts the agreement and starts a new child support period reducing the annual amount that Michelle pays Owen by $8,000. The child support assessment is based on Michelle's adjusted taxable income for the last relevant year, namely $72,000. Three months later, Michelle's income has reduced. Michelle contacts DHS and advises that her current annual adjusted taxable income is $50,000. Michelle is able to make an income estimate election. The child support agreement is an agreement for the payment of child support by non-periodic payments to the other parent. The provisions of the agreement are not an income amount order.

Example: The child support assessment for parents, Ethan and Janine, is based on a change of assessment decision. Ethan's relevant dependent child allowance was increased to take into account the special needs of Ethan's relevant dependent child. The change of assessment decision is not an income amount order.

Income estimate for a year of income

A parent may estimate their income for a year of income before that year starts, or on the first day of the year (CSA Act section 60(2)). A year of income (section 5) is the financial year, 1 July to 30 June.

The estimate must be the total of all income component amounts of the parent's adjusted taxable income for the year (section 60(2)).

The income components (2.4.4) of a parent's adjusted taxable income (CSA Act section 43(1)) are:

  • taxable income for the last relevant year of income,
  • reportable fringe benefits total for that year of income,
  • target foreign income for that year of income,
  • the parent's net financial investment loss for that year of income,
  • the total of the tax free pensions or benefits received in that year of income, and
  • the parent's reportable superannuation contributions.

Where a parent is resident in a reciprocating jurisdiction, the parent's adjusted taxable income will include their overseas income (section 58B).

For the purposes of child support, any assessable First Home Super Saver released amount (within the meaning of the Income Tax Assessment Act 1997) that may be included in the parent's assessable income will be disregarded when a parent elects to estimate their income (section 60(2)(a)).

Example: The child support assessment for parents, Anders and Olga, is for the period 1 May 2010 to 31 July 2011, based on their incomes for the last relevant year of income 2008/2009. On 1 July 2010, Anders contacts DHS advising that his income has fallen from the $60,000 used in the assessment.

Anders estimates that his taxable income for the year will be $24,000 which includes an $8,000 net investment loss for the year; they also have $6,000 as a reportable fringe benefit for the year. He does not have any other income components. Therefore his income estimate amount for the financial year 2010/2011 is $38,000.

As there is no income amount order in force and the income estimate is less than 85% of the adjusted taxable income used in the assessment, Anders is able to elect to use his income estimate of $38,000 to calculate the assessment for the year.

Income estimate for part of a year of income

If a parent has not made an estimate for the year of income and wishes to estimate their income during the financial year, after the first day of the financial year, they can make an income estimate for part of the year. If the parent has already made an income estimate election for the year of income, and wishes to make another estimate due to a change in their circumstances, they must make a later income estimate. The information in this section relates to the first estimate for a year of income which is for part of the year of income.

The parent must inform the Registrar of their estimated income for each income component amount for the remaining period (CSA Act section 60(3)(a)). The remaining period is from the start date of the income estimate election to the end of the year of income (CSA Act section 60(4)). The total of the parent's income component amounts for the remaining period is their partial year income amount (section 60(4)). They must also inform the Registrar of their year to date income, that is, the total of the income component amounts they have received from the beginning of the year of income to the day before the start day of the income estimate election (CSA Act section 60(3)(b)).

In order to calculate the amount to be used in the assessment, the partial year income amount must be divided by the number of days in the remaining period, to identify a daily income amount. That daily income amount is then multiplied by 365 to identify the annualised income which is the amount the parent is required to provide as their income estimate election (sections 60(3)(a) and 60(4)).

Example: Joanne has estimated her partial year income amount for the period 1 November 2010 to 30 June 2011 to be $26,500.
There are 242 days in the remaining period. The daily rate is $26,500 ÷ 242 =$109.50413.
The daily amount is multiplied by 365 to identify the annualised amount: $109.50413 × 365 = $39,969, which is the amount of the income estimate election.

The annualised partial year income amount is the amount which will be used as the parent's adjusted taxable income when the assessment is amended using the estimated income (CSA Act section 61).

Start date

The start date of the election for a part year estimate must be either:

  • the day on which the parent makes the election (CSA Act section 60(5)(a)), or
  • the first day of a child support period, so long as that day is not before the day the parent makes the election (CSA Act section 60(5)(b)).

Example: Sarah contacts DHS on 26 August to advise that she lost her job on 15 August. Sarah wants to estimate her income for the remainder of the year of income. The start date of her income estimate election is 26 August, the day she made her election.

Example: Justin received a new assessment for a child support period beginning 1 October 2010. Justin calls DHS on 26 September 2010 to advise that his current income is less than that used in the new assessment. As Justin expects to continue earning at his current income, he elects to make an income estimate for the new child support period. The start date of his election is the first day of the new child support period, 1 October 2010, as that day is not before the day on which Justin makes the election.

Remaining period

The remaining period starts on the start date for the election and ends on the last day of the year of income (CSA Act section 60(4)). A parent must estimate each income component amount for that remaining period.

Example: Ly has contacted DHS on 22 March stating that she is now working part time. Ly wants to make an income estimate election. The start date is 22 March. The remaining period is 22 March to 30 June.

Example: David received a new assessment for a child support period beginning 1 October 2010. David calls DHS on 26 September 2010 to advise that his current income is less than that used in the new assessment. David elects to make an income estimate for the new child support period. The start date of his election is 1 October 2010. The remaining period is 1 October 2010 to 30 June 2011.

Partial year income amount

The total of the income component amounts for the remaining period is the partial year income amount (CSA Act section 60(4)). The parent must inform the Registrar of their estimate of each income component amount for the remaining period.

Example: Megan contacts DHS on 26 August to advise that she lost her job on 15 August. Megan wants to estimate her income for the remainder of the year of income. The start date of her income estimate election is 26 August, the day she made her election. The remaining period is from 26 August to 30 June. Megan advises that she will receive Centrelink income benefits of $12,000 during the remaining period. Megan advises that she doesn't have any other income components. Megan's partial year income amount is $12,000.

Example: Frank, who is self-employed, contacts DHS on 26 August advising that his income has fallen due to the loss of a contract. Frank wants to estimate his income for the remainder of the year of income. The start date of his income estimate election is 26 August, the day he made the election. The remaining period is from 26 August to 30 June. Frank estimates that his taxable income for the remaining period will be $36,000; he expects to have $6,000 in reportable fringe benefits and reportable superannuation contributions of $9,200 for the remaining period. Frank doesn't have any other income components. Frank's partial year income amount is $51,200.

Year to date income amount

When making an income estimate election for a part of a year of income, the parent must inform the Registrar of their estimate of their year to date income amount. This is the total of the income component amounts for the period from the first day of the year of income to the day before the start day of the election (CSA Act section 60(3)(b)). The year to date income amount is used when the estimate's accuracy is determined by comparing the parent's actual income with their estimate after the end of the year of income. It is therefore very important that the year to date income amount is accurate.

Example: Sahand contacts DHS on 26 August to advise that he lost his job on 15 August. Sahand wants to estimate his income for the remainder of the year. Sahand advises that he was employed for 6 weeks and received payment of his leave entitlements, equal to 3 weeks' pay, on termination. Sahand advises he does not have any other income components. Sahand estimates his year to date income amount to be $9,000.

The parent must include all income relevant to the period from 1 July to the day before the start date, even if there was not a child support assessment for all of that period.

Example: Jessica contacts DHS on 12 November to make an application for a child support assessment. The assessment will commence on 12 November. Jessica advises that she is now earning less than she did in the last relevant year of income. Jessica makes an income estimate to be used in the assessment. In calculating the year to date income, it must include information for all income components from 1 July to 11 November.

A parent may elect to later advise the Registrar of a new year to date income, if the parent becomes aware that the year to date amount previously advised is incorrect (CSA Act section 63AC). If required, a parent may make multiple elections to provide a more accurate year to date income (CSA Act section 63AC(1)).

Example: Richard contacted DHS on 24 February and made an income estimate election. Richard estimated his year to date income amount for the period 1 July to 23 February to be $49,000. On 15 May, Richard contacts DHS to advise that he realised that he had not included an interest payment in his year to date income. Richard advises that he received an interest payment of $8,400 on 31 October. Richard elects to replace the year to date income amount with the new amount of $57,400.

The Registrar may refuse to accept an election to replace a previously advised year to date income amount with a new amount if satisfied that the new amount is more than the amount likely to be the parent's actual income for the period (CSA Act section 63AD). If the Registrar refuses to accept the election of a new year to date income amount, written notice of the refusal must be provided to the parent (CSA Act section 63AD(4)). A parent may object to the decision to refuse the election (see 4.1.2) (CSRC Act section 80(1) item 11A).

If the Registrar becomes aware that the year to date income amount is incorrect, the Registrar may determine a new year to date income amount to be used in the assessment (CSA Act section 63AE). That amount then replaces the previously advised year to date income amount. If the Registrar determines a new year to date income amount, written notice must be provided to the parent (CSA Act section 63AE(2)). A parent may object to the determination of the year to date income amount (see 4.1.2) (CSRC Act section 80(1) item 11B).

If one or more year to date income amount elections have been made, and/or one or more determinations of the year to date income amount have been made by the Registrar, then the year to date income amount used is the last year to date income amount election or determination made (CSA Act section 63AF(2)).

Example: Mariette contacted DHS on 24 February and made an income estimate election. Mariette estimated her year to date income amount to be $49,000. Mariette elected a new year to date income amount on 15 May of $57,400. The Registrar considered the amount that Mariette estimated her year to date income amount to be was more than what her year to date income amount was actually likely to be. On 20 August, the Registrar determined Mariette's year to date income amount to be $42,000. The determination made 20 August is therefore the applicable year to date income amount.

The year to date income amount is used when the estimate is reconciled. It is therefore important that the Registrar be notified if it is identified that the amount previously estimated is inaccurate.

A parent cannot elect to use a new year to date income amount if the estimate has been reconciled under CSA Act sections 64, 64A, 64AC or 64AD (CSA Act section 63AC(1)(c)).

Refusing to accept an income estimate

The Registrar can refuse to accept an income estimate election for a full year if satisfied that the parent's adjusted taxable income (including their overseas income for a parent resident in a reciprocating jurisdiction) for the year of income is likely to be higher than their estimated amount (CSA Act section 63AA(1)).

The Registrar can refuse to accept an income estimate election for part of a year of income if satisfied that:

  • the parent's partial year income amount is less than what the Registrar considers is likely to be the parent's actual adjusted taxable income for the remaining period in relation to the income election (CSA Act section 63AA(2)(a)), or
  • the total of the income component amounts for the year to date income amount is more than the amount that the Registrar considers is likely to be the total of the actual income component amounts (CSA Act section 63AA(2)(b)).

The Registrar can refuse to accept a later income estimate election made under CSA Act section 62A if satisfied that the parent's partial year income amount is less than what the Registrar considers is likely to be the parent's actual adjusted taxable income for the remaining period in relation to the income election (CSA Act section 63AA(3)).

The Registrar will consider all the circumstances and may obtain further information, either from the parent or a third party (e.g. an employer or an overseas authority) (CSA Act section 63AA(4)). A history of underestimating alone is not enough for the Registrar to refuse to accept an estimate however it may prompt the Registrar to investigate the circumstances further.

The Registrar will give a parent the opportunity to show that their estimate is accurate before deciding whether to refuse to accept an estimate.

Example: Jack contacts DHS on 26 July to advise that he lost his job on 15 July. Jack is currently assessed on $75,000, the income from the last relevant year of income. Jack wants to estimate his income for the remainder of the year of income. The start date of the election is 26 July. Jack advises that his income for the remaining period will be $10,000, made up of some interest income and income from some casual employment. Jack states that he is currently unemployed and not entitled to receive any pension or benefits, due to the income of his partner. Jack advises he does not have any other income components.

The Registrar considers Jack's income history and previous estimate records. It is noted that Jack has a seasonal pattern to his employment; that Jack frequently ceases employment in July/August and then becomes employed again several months later. Jack has been employed by the same employer for a number of years. Jack is asked to provide documentation from the employer to confirm that future employment is unlikely, and that the previous pattern of employment is no longer relevant.

Jack does not provide the requested documentation. The Registrar refuses to accept the income estimate election as it is considered likely that the partial year income amount provided by Jack is less than the actual amount Jack is likely to receive in the remaining period (CSA Act section 63AA(2)(a)).

Example: Donna contacts DHS on 26 August to advise that she lost her job on 15 August. Donna is currently assessed on $75,000, the income from the last relevant year of income. Donna wants to estimate her income for the remainder of the year of income. The start date of the election is 26 August. Donna advises that her income for the remaining period will be $10,000, made up of some interest income and income from some casual employment. Donna is not entitled to receive any pension or benefits, due to the income of her partner. Donna advises that she does not have any other income components. Donna advises that she received a redundancy package from her previous employer, where she had worked for 5 years. Donna advises that her year to date income is $90,000. Donna is asked to provide documentation regarding the year to date income in order to be satisfied that the year to date amount is accurate.

Donna does not provide the requested documentation. The Registrar refuses to accept the income estimate election as it is considered likely that the year to date income amount provided by Donna is more than the actual amount Donna received in the year to date period (CSA Act section 63AA(2)(b)).

If the Registrar refuses to accept an estimate, the parent will be given written notice of the decision (CSA Act section 63AB). The parent can object to the particulars of the assessment in relation to which the parent sought to make the income election (4.1.2) (CSA Act section 63AB(2)).

Effect of an income estimate

If the Registrar accepts a parent's estimate election, their income estimate amount becomes their adjusted taxable income amount for the purposes of assessing the annual rate of child support payable in the application period (CSA Act section 61(1A)). The Registrar will amend the assessment to take the income estimate into account (CSA Act section 61(3)).

The amended assessment notice is sent to both parents. A notice is sent to the parent who made the estimate, requiring them to inform the Registrar of any event that affects the accuracy of their income estimate election (CSA Act section 160, section 162A(2)).

An estimate does not prevent a later income amount order (CSA Act section 61(2)), change of assessment decision, court departure order or agreement (CSA Act section 61(5)) from affecting the assessment for the application period.

Application period

The application period (section 5) is the period where the income estimate election is used in the assessment. The application period starts on the first day of the year of income, if the income election was made on or before that day (CSA Act section 61(1A)(a)(i)). If the income estimate election is for part of the year of income then the application period starts on the start day for the election (CSA Act section 61(1A)(a)(ii)).

The application period ends on the last day of the year of income (CSA Act section 61(1A)(b)(i)). If the parent revokes the estimate and makes another income estimate election, the application period for the first estimate ends the day before the start day of the later election (CSA Act section 61(1A)(a)(ii)). The application period for the later election is from the start date of that election to the end of the year of income (CSA Act section 63(2)).

Example: Jeremy contacted DHS on 24 February and made an income estimate election. The application period for that estimate is from 24 February to 30 June. When Jeremy makes another income estimate election on 13 April the application period for the first estimate is now from 24 February to 12 April. The application period for the later estimate is 13 April to 30 June.

Revoking an estimate

A parent may revoke an income election by giving notice to the Registrar (CSA Act section 62(1)). If the application period for that estimate has not yet started the estimate is revoked, taken never to have been made. The assessment will be amended to revert to the income that was used before the income estimate election was made (CSA Act section 63(3)).

Example: Ben contacted DHS on 26 May to advise that he was now unemployed. Ben made an income estimate election for that year of income, from 26 May to 30 June and also for the next year, from 1 July to 30 June. On 28 June Ben contacts DHS to advise that he'll be starting work on 2 July. Ben revokes the estimate for the year 1 July to 30 June. As the application period for that election has not started, Ben is not required to make another estimate for that year.

Example: Sam received a new assessment for a child support period beginning 1 October 2010. Sam called DHS on 20 September 2010 and made an income estimate election for the period from 1 October 2010 to 30 June 2011. On 28 September Sam called DHS and revoked the estimate. As the application period for that election has not started Sam is not required to make another estimate.

If the application period for the income estimate election has started the parent must make a new election, a later income estimate under CSA Act section 62A(1) (CSA Act section 62(1)).

Later income estimate elections

If a parent revokes an income estimate election after the application period for that election has started they must make a new election under CSA Act section 62A(1) (section 62(1)).

The start date of the election for a later part year estimate must be either:

  • the day on which the parent makes the election (CSA Act section 62A(2)), or
  • if the annualised amount of the later estimate election is more than the amount of the earlier election, the date of the event that occurred to change the parent's income (CSA Act section 62A(3)).

Example: Emily made an income estimate election on 24 February, as her hours at work had been reduced to part time. Emily contacts DHS on 13 April to advise that she is now unemployed. Emily's new election is less than her previous estimate. The start day of the later election is 13 April, the day the election was made.

Example: Alberto made an income estimate election on 24 February, as he was then working part time. Alberto contacts DHS on 13 April to advise that he has been working full time since 5 April. Alberto's later election is more than his previous estimate. The start day of the later election is 5 April, the date of the event that changed Alberto's income.

When making a later income estimate election, the parent must inform the Registrar of the start day of the election, the partial year income amount, which is the total of each income component amount for the remaining period, and the amount of their income estimate election (CSA Act section 62A(5)).

Example: Ella made an income estimate election on 24 February, as her hours at work had been reduced to part time. Ella contacts DHS on 13 April to advise that she has been working full time since 5 April and her income has increased. Ella advises that her income for the remaining period will be $11,000, from her employment. Ella is not entitled to receive any pension or benefits, nor will she have any of the other income components.

The start day of the election is 5 April. Ella has estimated her partial year income amount for the period 5 April to 30 June to be $11,000.

There are 87 days in the remaining period. The daily rate is $11,000 ÷ 87 =$126.43678.
The daily amount is multiplied by 365 to calculate the annualised amount: $126.43678 × 365 = $46,149. This is the amount of the income election.

The Registrar will then amend the assessment to take the later election into account (CSA Act section 63(3)). The new annual rate of child support payable takes effect from the start day of the election, the first day of the application period for the later estimate (CSA Act section 63(2)).

However, if the previous estimate resulted in a minimum assessment then the minimum annual rate will continue for 28 days after the day on which the person would cease to be assessed to pay the minimum rate (CSA Act section 66(4)(b)(ii)). See 2.4.12 for information about the minimum annual rate of child support.

Example: Before the beginning of the year of income, Lincoln makes an income estimate election and is assessed to pay child support at the minimum annual rate for the year of income. Lincoln starts work on 1 March and makes a new estimate election on that day. Child support is now payable at a rate higher than the minimum annual rate. The higher rate will be payable from 29 March, 28 days after the minimum rate would otherwise cease to be payable.

Reviewing an estimate, amending the assessment

The Registrar can review an income estimate to decide if the income estimate is still accurate and, if not, amend the assessment to use a more accurate amount as the parent's income (CSA Act section 63A, section 63B).

A parent is required to tell the Registrar of any event that affects the accuracy of their income estimate. This obligation is outlined in the notice that is sent to a parent when an estimate is accepted (CSA Act section 160, section 162A(2)) (see 6.2.3). The parent can then make a later income election to reflect their changed circumstances (CSA Act section 62A(1)).

The Registrar can amend an assessment if the Registrar otherwise becomes aware that the income estimate is no longer accurate.

The Registrar can amend an assessment based on an estimate if:

  • the Registrar becomes aware of an event that has affected the accuracy of the estimate, or if the parent tells the Registrar that the event has occurred, but the parent does not make a later election (CSA Act section 63A), or
  • the Registrar has sent the parent a notice requesting information relevant to determining the accuracy of the estimate, under CSA Act sections 161 or 162A(1) or (4) (CSA Act section 63B).

Most estimates are reviewed and the assessment amended under section 63A when the Registrar becomes aware that the estimate may no longer be accurate.

Example: Danielle changes jobs and lodges an estimate in January. On 15 May Danielle gets a promotion which makes the income she estimated in January no longer accurate. On 15 June, DHS contacts Danielle to discuss the income change. Danielle chooses not to make a new election. The Registrar will amend the assessment from 15 May using Danielle's current income.

The Registrar will only review an estimate under CSA Act section 63B if:

  • every attempt has been made to contact the parent but they cannot, or will not, provide any information, or make a new estimate,
  • all efforts to gather income information from third parties has been exhausted, and
  • there is still not enough reliable information to proceed with an amendment under CSA Act section 63A.

If a parent complies with a notice issued under CSA Act sections 161 or 162A(1) or (4), the Registrar can only amend the assessment to give effect to the review of the estimate from the date that the parent complied with the notice (CSA Act section 63B(2)).

Retrospective estimate reviews (income decrease)

A parent should advise the Registrar of a change in their income within 14 days of the event that led to the reduction in income (CSA Act section 160 and 162A).

The Registrar will review an estimate and amend the assessment in very limited circumstances where a parent does not advise of a reduction in income within 14 days of the event.

The Registrar will consider the following in order to determine whether it is appropriate to amend the assessment:

  • the information available from the parent who lodged the estimate or from other persons,
  • the effect upon both parties of any change, and
  • the extent to which a review and amendment of the assessment would affect the accuracy of the estimate.

Information available

The Registrar will consider the reasons for the delay in updating the income information. The reason for non-compliance with the notification requirements must be compelling before a review will be undertaken.

Example: If a parent was physically incapacitated around the time of the event then this could be a compelling reason why they did not contact the Registrar within 14 days of the event.

The Registrar will also consider the degree to which the decrease in income was not foreseeable by the parent when they made their estimate.

If the Registrar is satisfied that these 2 conditions have been met, the Registrar will need to consider the remaining 2 factors before amending the assessment.

Effect upon both parties of any change

The Registrar will consider if the effect on both parties to the assessment would be fair and reasonable if the assessment was amended to reduce the child support liability for the period between the event and the date of notification.

Accuracy of the assessment

A parent is required to keep their estimate accurate. However, not every change or event will cause the assessment to change greatly. For the purpose of a retrospective decrease, the Registrar will consider the effect on the existing child support assessment before amending the assessment.

Events

The happening of an event can provide a trigger for reviewing an estimate to decide if the assessment should be amended. An event is also relevant in determining the start day of a later estimate (CSA Act section 62A(3)).

An event can include:

  • an occurrence that was not expected when the income estimate was made (e.g. starting a new job or non-payment of an expected contract fee), or
  • the first day on which the actual rate of income earned was different from the rate of estimated income (i.e. the first day the estimated income became inaccurate).

Reconciling an income estimate

After the end of the year of income, the Registrar will compare the parent's estimated income with their actual income for the year. If the actual income is less than or equal to the estimated income, the records will be noted to show that no further action is required. If the parent's actual income is more than their estimated income, the assessment will be amended using their actual income, using the provisions of Division 7A of Part 5 of the Act. Exactly how and when this is done will depend upon the kind of estimate made, the number of estimates made and when the actual income becomes known.

If, after an estimate is reconciled, a higher amended taxable income issues, the child support assessment will be re-reconciled for that period using the higher amended taxable income.

Income estimate for a year of income, actual income known, single income election

When a parent made an election for the year of income and made no later income estimate for that year that estimate election will be reconciled when their actual adjusted taxable income for the year of income is known. If the actual income is more than the estimated income, then the parent's actual income will be their adjusted taxable income for the year (CSA Act section 64(2)). The assessment will be amended to use the actual income (CSA Act section 64AA).

Example: Simon makes an estimate on 27 May 2011 for the year 1 July 2011 to 30 June 2012. Simon estimated his adjusted taxable income for the year would be $32,000. Simon's 2011-2012 tax assessment issues on 2 August 2012; his actual adjusted taxable income is $39,000. The assessment is amended for the year using the actual income of $39,000.

Income estimate for a part of a year of income, actual income known, single income election

When a parent made an election for part of the year of income and made no later income estimate for that year that estimate election will be reconciled when their actual adjusted taxable income for the year of income is known. If the actual income for the remaining period is more than the estimated partial year income amount, then the parent's actual income will be their adjusted taxable income for the application period (CSA Act section 64(3)). The amount to be used in the assessment is worked out by first subtracting the year to date income amount from the actual adjusted taxable income amount for the year. That amount is then divided by the number of days in the application period and multiplied by 365 to calculate an annualised amount (CSA Act section 64(4)). The assessment will be amended to use this amount based on the actual adjusted income (CSA Act section 64AA).

Example: Toni estimated her partial year income for the remaining period 1 November 2011 to 30 June 2012 to be $26,500, an annualised amount of $39,969. Toni estimated her year to date income to be $22,000. Toni's 2011/2012 tax assessment issues on 2 September 2012; her actual adjusted taxable income for 2011/2012 is $56,500.

The actual partial year income amount is $56,500 − $22,000 = $34,500.

There are 242 days in the remaining period. The daily rate is $34,500 ÷ 242 = $142.56198.
The annualised amount is $142.56198 × 365 = $52,035.

The assessment for the application period, 1 November to 30 June, is amended using the annualised income of $52,035.

More than one income estimate, first estimate for a year of income, actual income known

When a parent made an election for the year of income and later made one or more other income estimates for part of that year, all estimate elections will be reconciled when their actual adjusted taxable income for the year of income is known. If the actual income is more than the estimated ATI amount for the year then the assessment will be amended (CSA Act section 64A(2)).

The estimated ATI amount for the year (CSA Act section 64A(3)) is the total of the income expected in each application period for each income estimate election for the year of income. The income expected for the application period of the first estimate, the full year of income estimate, is identified by dividing that estimate by 365, giving a daily income amount. That daily figure is then multiplied by the number of days in the application period (to the day before the start date of the next estimate) to identify the amount of income expected for that application period.

If one or more later estimates have been revoked, the estimated income amount for each relevant application period is calculated by multiplying the daily rate for the estimate by the number of days remaining in the application period for that revoked estimate.

The partial year income amount for the last estimate is added to the figures for all of the earlier estimates (CSA section 64A(3)).

Example: Matthew makes an estimate on 27 May 2011 for the year 1 July 2011 to 30 June 2012. Matthew estimated his adjusted taxable income for the year would be $32,000. Matthew makes a later estimate; his partial year income amount for the period 1 November 2011 to 30 June 2012 (243 days) is estimated to be $26,500. On 1 April, Matthew makes another estimate; his partial year income amount for the period 1 April 2012 to 30 June 2012 is estimated to be $12,900.

Matthew's 2011-2012 tax assessment issues on 2 August 2012; his actual adjusted taxable income is $46,000.

The estimated ATI amount is:

The application period for the first estimate is 1 July to 31 October, 123 days.

The application period for the second revoked estimate is 1 November to 31 March, 152 days.

The application period for the third estimate is 1 April to 30 June, 91 days.

$32,000 ÷ 365 = 87.67123 × 123 = $10,784
$26,500 ÷ 243 = 109.0535 × 152 = $16,576
Partial year income amount = $12,900

Estimated ATI amount = $40,260

The assessment is amended by identifying the difference between the person's estimated ATI amount and their actual income for the year of income. That number is then divided by 365 to calculate the additional daily rate. For each estimate, multiply the additional daily rate by the number of days in the application period for the estimate to calculate the underestimated amount for the estimate (CSA Act section 64A(4)). The underestimated amount is added to the estimated ATI amount for each application period, or to the partial year income amount for the last estimate. The total for each estimate is then divided by the number of days in the application period for the estimate to calculate the reconciled daily rate. That number is then multiplied by 365 to calculate the annualised income to be used to reconcile each estimate (section 64A(4)).

Example: Alison has made 3 estimates for the 2011/2012 year of income (see previous example).

Alison's actual adjusted taxable income is $46,000.
Estimated ATI income = $40,260.

Additional daily rate:
Actual ATI - estimated ATI = $46,000 − $40,260 = $5,740
$5,740 ÷ 365 = $15.72603

Annualised incomes used to amend the assessment:
Estimate 1:
123 days × $15.72603 = $1,934 + $10,784 = $12,718 ÷ 123 = $103.39837 × 365 = $37,740

Estimate 2:
152 days × $15.72603 = $2,390 + $16,576 = $18,966 ÷ 152 = $124.77632 × 365 = $45,543

Estimate 3:
91 days × $15.72603 = $1,431 + $12,900 = $14,331 ÷ 91 = $157.48351 × 365 = $57,481

More than one income estimate, all for part of a year of income, actual income known

When a parent makes an election for part of the year of income and later makes one or more other income estimates for part of that year, all estimate elections will be reconciled when the parent's actual adjusted taxable income for the year of income is known. If the difference between the parent's actual income and their applicable year to date income amount is more than the amount that the parent estimated their ATI amount for the year to be, then the assessment will be amended (CSA Act section 64A(2)).

The estimated ATI amount for the year (CSA Act section 64A(3)) is the total of the income expected in each application period for each income estimate election for the year of income. The amount relevant to any estimates that were revoked is calculated by identifying the daily rate for the estimate and multiplying that by the number of days in the application period to identify the amount expected for the application period. The partial year income amount for the last estimate is added to the estimated ATI amounts for each earlier estimate (section 64A(3)).

Example: Nikau made an income estimate election on 24 February, estimating his year to date income to be $34,600, his partial year income amount (for 127 days) to be $9,200, an annualised amount of $26,441.

Nikau contacts DHS on 13 April to advise that he has been working full time since 5 April. Nikau estimates his partial year income for the period 5 April to 30 June to be $11,000, an annualised amount of $46,149.

Nikau's tax assessment issues on 21 August; his actual adjusted taxable income is $46,000.

$46,000 (actual ATI) − $34,600 (year to date income) = $11,400. This is the 'actual ATI amount' for all application periods.

Estimated ATI amount:
The application period for the first revoked estimate is 24 February to 4 April, 40 days:
$9,200 ÷ 127 = $72.44094 × 40 = $2,898

The application period for the second estimate is 5 April to 30 June, 87 days:
Partial year income amount = $11,000

Estimated ATI amount = $13,898

As the estimated ATI is more than the actual ATI amount for the application periods, the assessment will not be amended.

The assessment is amended if the actual ATI amount (actual adjusted taxable income for the whole year minus the year to date income) is more than the estimated ATI amount (CSA Act section 64A(2), section 64AA).

The amount by which the actual ATI amount exceeds the estimated ATI amount is divided by the total number of days in the application periods for all estimate elections for the year to identify the additional daily rate.

For each estimate election, multiply the additional daily rate by the number of days in the relevant application period for the estimate election to calculate the underestimated amount for the estimate election.

The underestimated amount is added to the estimated ATI amount for each application period, or to the partial year income amount for the last estimate. The total for each estimate is then divided by the number of days in the application period for the estimate, to identify the reconciled daily rate.

That number is then multiplied by 365 to calculate the annualised income to be used to reconcile each estimate (CSA Act section 64A(4)).

Example:

Mary has made 2 estimates for the year of income
Estimated ATI amount = $13,898
(see previous example).

If Mary's actual adjusted taxable income was $54,000.
Year to date income = $34,600
Actual ATI amount = $19,400.

Additional daily rate:
Actual ATI amount − Estimated ATI amount = $19,400 − $13,898 = $5,502

$5,502 ÷ 127 = $43.32283

Annualised incomes used to amend the assessment:
Estimate 1:
40 days × $43.32283 = $1,733 + $2,898= $4631 ÷ 40 = $115.775 × 365 = $42,258

Estimate 2:
87 days × $43.32283 = $3,769 + $11,000 = $14,769 ÷ 87 = $169.75862 × 365 = $61,962

If the Registrar has amended the assessment after reviewing an estimate under CSA Act section 63A, 63B or 63C, the estimate will be reconciled only if the Registrar determines it appropriate to do so (CSA Act section 64(1)(e)).

The Registrar cannot reconcile an estimate if an income amount order is in force for any part of the application period of the estimate (CSA Act section 64(5)). The estimate may be reviewed and the assessment amended under CSA Act section 63A, 63B or 63C, if required.

Reconciliation using a parent's determined ATI

The Registrar may determine an income to be used to reconcile an income estimate when the actual adjusted taxable income is not known 12 months after the end of the year of income for the estimate election (CSA Act section 64AB). If the Registrar makes a determination of the income to be used (the parent's determined ATI) to reconcile an estimate, notice of the determination must be provided to the parent (CSA Act section 64AB(2)). The parent can object to the particulars of the assessment to which the determination relates (CSA Act section 64AB(3)).

The estimate or estimates will be reconciled using the approaches described above, using section 64AC if only one estimate was made, or CSA Act section 64AD if more than one estimate was made.

If the parent's actual adjusted taxable income becomes known after the Registrar has reconciled the estimate/s for the year of income using a determined ATI, and the actual income is higher than the determined ATI, then the estimate/s will be reconciled using the actual income (CSA Act section 64(1)(d), section 64A(1)(d)).

If the Registrar has amended the assessment as a result of reviewing the estimate under CSA Act section 63A, 63B or 63C then the Registrar may decide not to reconcile the estimate (CSA Act section 64(1)(e), section 64A(1)(e), section 64AC(1)(d), section 64AD(1)(d)).

Estimate penalties

A parent will be required to pay an estimate penalty when the Registrar reconciles their estimate and their actual income for a year of income less any applicable year to date income amount is 110%, or more, of their estimated ATI for the year (CSA Act section 64AF).

The penalty is 10% of the difference between the liability that would have applied if the original estimate or estimates was used to calculate the assessment, and the assessment/s amended under CSA Act section 64AA following reconciliation (CSA Act section 64AG(1)). An estimate penalty is a debt due to the Commonwealth (CSA Act section 64AG(2)).

Remission of estimate penalties

The Registrar can remit an estimate penalty, either in whole or in part, (CSA Act section 64AH(1)) where:

The Registrar can decide to remit estimate penalties whether or not they have been paid. The Registrar will use this discretion in a way that will further the objectives of the child support scheme, according to the particular circumstances of each case.

There is no particular process for a parent to request remittance of estimate penalties. The Registrar can remit estimate penalties without a request to do so, if there is sufficient information available to make a decision.

Amendment of a tax law, ruling or determination

When making an estimate, a parent cannot be expected to know that a change to the tax legislation or a change to a ruling or determination will increase their adjusted taxable income.

Example: If an expense that was deductible in previous years is no longer deductible, a parent's taxable income may be higher than their estimate by the amount of the deduction.

This does not apply where a parent's taxable income is amended for other reasons (e.g. taxpayer error).

Fair & reasonable to remit the penalties in the circumstances

What is fair and reasonable depends on the circumstances of each case. Those circumstances do not need to be special, exceptional or unusual. The Registrar will remit estimate penalties if the Registrar considers the parent did not intentionally misuse the estimate provisions.

The Registrar may consider remitting if the person inadvertently underestimated or had some good reason for not correctly managing their income estimate during the year, such that it would not be fair to penalise them for the estimate being inaccurate.

The Registrar will consider whether a parent was or should have been aware of the conditions and implications of using an estimate.

A parent should use reasonable care and all information available to estimate their income. If their circumstances change, they should advise the Registrar of the change in circumstances and make a new estimate.

The Registrar will not remit an estimate penalty unless a parent has a reasonable explanation for failing to make a new estimate when their circumstances changed.

Example: Darryl made his first estimate when his hours of work were reduced due to a fall in business for the company. Darryl made a second estimate when he lost his job because the company stopped trading. Darryl was not sure if he would receive a termination payment, and did not include such a payment in his second estimate. Darryl did in fact receive a termination payment of $9,000 on 30 May. As his ongoing circumstances had not changed Darryl did not contact the Registrar about the payment.

Darryl's actual income was higher than his estimated income so the estimate was reconciled, the assessment amended and an estimate penalty imposed. Darryl contacted DHS and requested the estimate penalty be remitted. The Registrar considered the facts of the case and decided it would be fair and reasonable to remit the penalty, as Darryl had not intentionally misused the estimate provisions.

The Registrar will remove any penalty that has been imposed incorrectly (e.g. through error or miscalculation, or by a subsequent variation which decreases the liability).

If the Registrar makes a decision to remit only part of the penalty, or to not remit any part of the penalty, the Registrar must give written notice of the decision to the parent who is liable to pay the penalty (CSA Act section 64AH(2)). The notice must also include, or be accompanied by, a statement that the parent can object to the decision (CSA Act paragraph 64AH(3)(a), and CSRC Act section 80) and apply to the AAT for a review of the objection decision if aggrieved (see 4.1) (CSA Act paragraph 64AH(3)(b), CSRC Act section 89).

WA ex-nuptial cases

The information on this page applies to WA ex-nuptial cases from a later date than for other cases.

See 1.4.3 for details of the date from which various provisions had effect for WA ex-nuptial cases.

Last reviewed: 13 August 2018