2.5.1.10 Making an income estimate election

Context

When a parent’s income is substantially less than the ATI used in their child support assessment, they can replace the existing ATI with an estimate of their current income.

Act references

CSA Act section 5, section 58B, section 58C, section 60 to section 64AH, section 161, section 162A

CSRC Act section 80

On this page

• When can a parent estimate their income?
• What income must be estimated?
• Effect of an income estimate
• Application period
• Refusing to accept an income estimate
• Revoking an income estimate
• Income amount orders

When can a parent estimate their income?

A parent can elect to estimate their income if:

• in the case of a first election for a year of income, the estimate is 85% or less than the person's ATI for the last relevant year of income (2.4.4) (CSA Act 60(1)(b)). The ATI must be:
  • based on the person’s ATI as advised by the ATO
  • where the parent is a resident of a reciprocating jurisdiction, based on the person’s ATI as advised by the relevant overseas authority (CSA Act section 58C, section 162A), or
  • a declaration by the parent of their ATI (2.4.4) which the Registrar is satisfied is correct (CSA Act section 60(1)(b)(ii)), and
• an income amount order is not in force on the start day of the election or for any day in the remainder of the financial year (CSA Act section 60(6), section 63(2A)).

If the parent’s income had reduced by less than 15%, the parent can apply for a change of assessment to reflect their current financial circumstances (2.6).

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

What income must be estimated?

The income components of a parent's estimated ATI (2.4.4) (CSA Act section 60) are:

• taxable income for that year of income
• reportable fringe benefits total for that year of income
• target foreign income for that year of income
• net investment losses for that year of income
• the total of specified tax free pensions or benefits received in that year of income, and
• reportable superannuation contributions in that year of income.

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

Effect of an income estimate

If the Registrar accepts a parent's estimate election, the parent’s income estimate becomes their ATI 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)).

Notice of the amended assessment is sent to both parents. A notice is also 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 any part of the application period.

Application period

The application period (CSA Act section 5) is the period where the income estimate election is used in the assessment. If the income estimate election is for:

• a full year, the application period starts on 1 July of that year of income (CSA Act section 61(1A)(a)(i)).
• 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 30 June 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)(b)(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)).

Refusing to accept an income estimate

The Registrar can refuse to accept an income estimate election if satisfied that the parent's ATI (including their overseas income for a parent resident in a reciprocating jurisdiction) 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 ATI for the remaining period in relation to the income election (CSA Act section 63AA), 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).

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), CSRC Act section 80(1) item 11).

Revoking an income 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 income estimate:

• has not yet started, the estimate is revoked and 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)).
• has already commenced, the parent must make a new election (update their income estimate).

Income amount orders

An income amount order (CSA Act 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
  • sets the annual rate of child support payable in a child support case, or
  • sets the ATI, or the child support income, of a parent, or
• 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, setting the annual rate of child support payable, the ATI, or the child support income of a parent.

An agreement that provides for the payment of child support other than in the form of periodic amounts is not an income amount order (2.7).

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 the children, 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 income estimate election (CSA Act section 60(6)).

If a child support agreement is suspended because the payee is no longer an eligible carer of the child (CSA Act section 86), an income amount order is no longer considered to be in force during the period of suspension. A parent is not prevented from making an income estimate in relation to a formula assessment that may take effect during the suspension period (CSA Act section 60(6)).