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.

2.4.4.20 Adjusted taxable income

Introduction

A parent's (1.1.P.10) ATI (1.1.A.20) is a component used to calculate child support income (1.1.C.120).

Act references

CSA Act section 5, section 5B, section 43, section 44, section 58, section 58B section 65B, section 66A

CSA Regs section 13

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ATI

A parent's ATI is the total of the following components:

  • taxable income (1.1.T.20) - including overseas income if the parent is a resident of a reciprocating jurisdiction (1.5.1)
  • reportable fringe benefits (1.1.R.70) total
  • target foreign income (1.1.T.10)
  • the parent's total net investment loss (1.1.T.50)
  • the total of the specified tax free pensions or benefits (1.1.T.30), and
  • the parent's reportable superannuation contributions (1.1.R.80).

Which year of income is used?

  • ATI based on a tax assessment – the last relevant year of income (1.1.L.10)
  • ATI based on a provisional income (2.4.4.40) (1.1.P.130) – the last relevant year of income
  • ATI based on an income estimate (1.1.I.20) (2.5.1) – the current financial year.

Where the parent is resident in a reciprocating jurisdiction (1.1.R.10), the Registrar can use information about the parent's income in that jurisdiction to determine the parent's overseas income.

Example: Lawson who lives in New Zealand has a new CSP (1.1.C.150) commencing on 1 May 2020. The New Zealand financial year runs from 1 April to 31 March. As Lawson is a New Zealand resident, New Zealand Inland Revenue Child Support advises the Registrar of Lawson's taxable income for the 2019-20 New Zealand financial year. This information can be used to determine Lawson's overseas income for the last relevant year of income.

If an application for post separation income (1.1.P.90) (2.5.2) to be excluded from a parent's ATI has been accepted then the parent's ATI will be the amount determined by the Registrar.

Act reference: CSA Act section 43 Working out parent's adjusted taxable income, section 44 Post-separation costs, section 58B Inclusion of overseas income in working out a parent's adjusted taxable income

Policy reference: CS Guide 1.5.1 Australia's international maintenance arrangements

Amounts not included in ATI

The following amounts are not considered when calculating a parent's ATI:

National Disability Insurance Scheme (NDIS) amounts

An NDIS amount (as defined under the National Disability Insurance Scheme Act 2013) is for the purpose of reasonable and necessary supports funded under a participant's plan.

An NDIS amount is exempt from income tax. Accordingly, the amounts are not taxable income (1.1.T.20) and are not included in ATI.

When the Registrar is considering a parent's application for the MAR (1.1.M.20) to be reduced to nil (CSA Act section 66A) (2.4.12), or the FAR (1.1.F.10) to not be used (CSA Act section 65B) (2.4.11), any income earned, derived or received by the parent must be considered, except certain prescribed payments within CSA Regs section 13. An NDIS amount is a prescribed payment under section 13 of the CSA Regs, and therefore, NDIS amounts are excluded from the definition of 'income' for these child support (1.1.C.60) decisions.

Act reference: National Disability Insurance Scheme Act 2013

Income Tax Assessment Act 1997 section 52-180 National Disability Insurance Scheme amounts are exempt

CSA Regs section 13 Prescribed payments

CSA Act section 65B Application for section 65A not to apply, section 66A Registrar may reduce an assessment to nil in certain cases

National Redress Scheme payments

Payments of redress include a redress payment made to a person under section 48 or section 60 of the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 (National Redress Act) and may include a counselling and psychological services payment under section 51 of the National Redress Act.

Payments received under the National Redress Scheme are non-assessable for income tax purposes (Taxation Determination TD 2018/16). Accordingly, the amounts are not taxable income and are not included in ATI.

When the Registrar is considering a parent's application for the MAR to be reduced to nil (CSA Act section 66A) (2.4.12), or the FAR to not be used (CSA Act section 65B) (2.4.11), any income earned, derived or received by the parent must be considered, except certain prescribed payments within CSA Regs section 13. A redress payment under the National Redress Scheme is a prescribed payment under section 13 of the CSA Regs, and therefore, redress payments under the National Redress Scheme are excluded from the definition of 'income' for these child support decisions.

Act reference: National Redress Scheme for Institutional Child Sexual Abuse Act 2018

CSA Regs section 13 Prescribed payments

CSA Act section 65B Application for section 65A not to apply, section 66A Registrar may reduce an assessment to nil in certain cases

Territories Stolen Generations Redress Scheme payments

Payments of redress under the scheme known as the Territories Stolen Generations Redress Scheme are exempt from income tax. Accordingly, Territories Stolen Generations Redress Scheme payments are not 'taxable income' and are not part of a person's ATI for general child support purposes.

Act reference: Income Tax Assessment Act 1997 Part 2-15 section 53-30 Territories Stolen Generations Redress Scheme payments are exempt

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