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 section 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. The Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018 amended the rules from 23 May 2018 for child support periods that commenced before 1 July 2008, to align with the rules used for child support periods that commenced on or after 1 July 2008.
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. Where new information about the parent's income is as a result of an amended tax assessment issued by the ATO, different rules apply. For information about when a child support assessment can be amended to take into account an amended tax assessment, see 22.214.171.124 Amended tax assessments.
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 (CSA Act section 58A). 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 (CSA Act section 58A). 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 (CSA Act section 58A(2)):
- 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 (e.g. under a relevant tax agent lodgement program)
- 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
- 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; serious ill health or injury; 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.
If the Registrar is satisfied that one or more of the above apply, the date of effect can be applied retrospectively.
When making a decision about whether the circumstances prescribed by CSA Regs section 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 section 11(1)(c) of the CSA Regs, 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 2018, Shannon advises their adjusted taxable income for 2017-18 is $40,000. That figure is used to calculate the child support assessment for the child support period 1 August 2018 to 31 October 2019.
0n 15 July 2019, Shannon's tax return for 2017-18, 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 2018.
If Shannon's adjusted taxable income was $38,000 and the child support assessment is amended on 15 July 2019, the amended assessment would have effect from 16 July 2019. 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: The Registrar made an assessment for a child support period commencing 1 August 2019. As there was no ATO assessment available, the adjusted taxable income used in this assessment was $50,076, two-thirds of the 2019 annualised Male Average Weekly Earnings (MTAWE). On 26 September 2019, Amit's 2014-15 tax assessment issues, resulting in an adjusted taxable income of $52,000. The Registrar considers determining a 2018-19 adjusted taxable income based on the 2014-15 adjusted taxable income.
The Average Weekly Earnings (AWE) amount for the December quarter of the last relevant year of income (2018-19) is the November 2018 amount of $1,225.00. The AWE amount for the December quarter of the tax year (2014-15) is the November 2014 amount of $1,128.90. The adjusted taxable income indexation factor is therefore $1,225.00 ÷ $1,128.90 = 1.085.
Amit's 2018-19 adjusted taxable income is $52,000 × 1.085 = $56,420 or two-thirds MTAWE, which is the 2019 value of $50,076. As the indexed value is greater, Amit's adjusted taxable income is $56,420.
The Registrar amends the assessment from the beginning of the child support period, 1 August 2019, because the new adjusted taxable income determined by the Registrar of $56,420 is higher than the previous determination of adjusted taxable income, $50,076.
Example 3: The Registrar made an assessment for Graham for a child support period commencing 8 August 2018. Graham's 2017-18 tax assessment was not available due to his serious ill health, so his most recent tax assessment available (2016-17)was inflated to determine an adjusted taxable income of $55,000 for the purpose of the assessment.
On 5 February 2019, Graham's tax return for 2017-18 was lodged as his health had improved by this time, and his adjusted taxable income was $43,000. Graham advises the Registrar that the late lodgement was due to his serious ill health. The Registrar, after considering all the relevant facts in Graham's case, determines, as per section 11(1)(c) of the CSA Regs, that Graham has provided his income information within a reasonable period of time in the circumstances.
Graham's new adjusted taxable income $43,000 is lower than the $55,000 used for the assessment. The Registrar amends the assessment to use the new adjusted taxable income from the beginning of the child support period, 8 August 2018, as the date of effect can be applied retrospectively in these circumstances.
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.
Prior to 23 May 2018, 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.
However, from 23 May 2018 the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act amends the CSA Act to align the rules for periods before 1 July 2008 to the current rules for periods on and after 1 July 2008. Therefore, if the Registrar has based a parent's child support assessment on a default income, and the parent's taxable income and/or supplementary amount is subsequently ascertained and:
- the new amount is lower than the previous income amount, the Registrar would not amend the child support assessment
- the parent's the new amount is higher than the previous income amount, the Registrar must amend the child support assessment.
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 does not amend the child support assessment as Daniel's actual taxable income of $28,000 is lower than the default income used by the Registrar.