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.

2.5.1.10 Making an income estimate election

Context

When a parent’s income is substantially less than the ATI (1.1.A.20) 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?

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 (1.1.L.10) (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 which the Registrar is satisfied is correct (CSA Act section 60(1)(b)(ii)), and
  • an income amount order (1.1.I.10) 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 (1.1.I.20) 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 (2.4.4.20) (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 (1.1.A.90). 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.

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).

Example: Jack contacts Services Australia on 26 July to advise that he lost his job on 15 July. Jack is currently assessed using an ATI of $75,000. Jack wants to estimate his income for the remainder of the year. The application period of the election is 26 July to 30 June. 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 Services Australia on 26 August to advise that she lost her job on 15 August. Donna is currently assessed using an ATI of $75,000. Donna wants to estimate her income for the remainder of the year. The application period of the election is 26 August to 30 June. 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 income 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), 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).

Example: Ben contacted Services Australia 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 Services Australia 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, the estimate is revoked and Ben is not required to make another estimate for that year.

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