18.104.22.168 Determination of adjusted taxable income - before 01/07/2011
Changes to the rules to be used to identify an appropriate income for child support periods commencing after 1 July 2011 were introduced by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further Election Commitments and Other Measures) Act 2011. This section explains the rules applying before 1 July 2011. For the current rules, see 22.214.171.124.
CSA Act section 58 to section 58C, section 162A
Child Support (Assessment) Regulations 1989 regulation 7A
A decision to determine an adjusted taxable income for a child support period commencing before 1 July 2011 must be in accordance with the requirements of the then CSA Act section 58.
If an ATO issued income is not available, the Registrar may determine an appropriate amount to be the parent's adjusted taxable income for a year of income (CSA Act sections 58(1) and 58(2)). However, once an ATO issued income has been issued, the Registrar cannot make a new determination of the parent's income for that year.
Determination where parent fails to comply with requirement
The Registrar may make a determination if (CSA Act section 58(2)):
- a parent has not lodged a tax return for the year of income
- the Registrar or the ATO are unable to readily ascertain the parent's adjusted taxable income on the basis of existing documents or information
- the Registrar or the ATO have required the parent to give a return or information or to produce a document for the purposes of ascertaining the adjusted taxable income, and
- the parent has refused or failed to comply with the requirement.
Determination where income information provided or available
If a parent has not lodged a tax return for the relevant year of income and the Registrar or the ATO have been given information (either orally or in writing) or a document that specifies or allows the Registrar to work out the parent's adjusted taxable income, the Registrar may use that income information to determine the parent's adjusted taxable income (CSA Act section 58(4)). For example, the ATO may have full year payment summary information recorded for a parent.
Example: An application for an assessment is accepted in July 2008, with the first child support period being 22 July 2008 to 21 September 2009. A parent, Ranjit, has not yet lodged their 2007-08 tax return. Ranjit advises that their adjusted taxable income for 2007-08 is $40,000. Where satisfied of the accuracy of the information, the Registrar uses that figure to calculate the child support assessment.
If the parent has also failed to lodge a tax return for the previous year of income, the amount determined for the parent's adjusted taxable income in the above circumstances must be at least two-thirds of the annualised Male Total Average Weekly Earnings (MTAWE) figure for the relevant September quarter (CSA Act section 58(3)). The figure to be used in assessments for child support periods beginning in each calendar year is published before the beginning of the calendar year (2.4.2).
Determination where ATO income available for the year before the last relevant year of income
If a parent has not lodged a tax return for the relevant year of income but has lodged a tax return for the previous year of income, the Registrar may determine the adjusted taxable income based on the tax return, for the previous year multiplied by an inflation factor (CSA Act section 58(3A), Child Support (Assessment) Regulations 1989 section 7A).
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 adjusted taxable income of a resident of a reciprocating jurisdiction (CSA Act 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 under section 162A of the CSA Act, income information from the parent or an overseas authority, the Registrar may determine an appropriate adjusted taxable income, which must be at least two-thirds of the annualised MTAWE figure for the relevant September quarter (CSA Act section 58D). If the Registrar does not have sufficient information to determine an overseas income and is unable to serve a notice on the parent or the relevant central authority then the Registrar is unable to determine an overseas income for that parent for inclusion in their taxable income.