2.5.1.30 Updating income estimates & estimate reviews
Context
A parent is required to keep their estimate accurate, and notify the Registrar of any event that affects the accuracy of their income estimate. This obligation is outlined in the notice that is sent to a parent when an estimate is accepted (CSA Act section 160 and section 162A(2)) (6.2.3). The parent can then make a later income election (update their estimate) to reflect their changed circumstances (CSA Act section 62A(1)).
There are no restrictions on the number of times a parent can update their estimate during an assessment period.
The Registrar is also able to review an income estimate to determine its accuracy.
Act references
CSA Act section 60 to section 64AH, section 160, section 161, section 162A
On this page
- Later income estimate elections - updating an income estimate
- Events affecting the accuracy of an income estimate
- Registrar review and amendment of an assessment
- Refusing to accept a later income estimate
- Retrospective estimate reviews (income decrease)
- Information available
- Effect upon both parties of any change
Later income estimate elections - updating an income estimate
When a parent updates their estimate, and makes a later income estimate election, the parent must inform the Registrar of the:
- start day of the election, and
- the partial year income amount for the remaining period (CSA Act section 62A(5)) (2.5.1.20).
Start date
The start date of the later income estimate election must be either:
- the day on which the parent makes (updates) the new income estimate election (CSA Act section 62A(2)), or
- if the annualised amount of the later income estimate election is more than the amount of the earlier election, the date of the event that affected the parent's income (CSA Act section 62A(3)).
Example: Emily made an income estimate election on 24 February, as her hours at work had been reduced to part time. Emily contacts Services Australia on 13 April to advise that she is now unemployed. Emily's new election is less than her previous estimate so the start day of the later election is 13 April, the day the election was made.
Example: Ella made an income estimate election on 24 February, as her hours at work had been reduced to part time. Ella contacts Services Australia on 13 April to advise that she has been working full time since 5 April and her income has increased. Ella advises that her income for the remaining period (87 days from 5 April to 30 June) from her employment will be $11,000. Ella is not entitled to receive any pension or benefits, nor will she have any other income components.
The start day of the later income estimate election is 5 April, which is the date Ella’s income increased. Ella’s annualised partial year income amount for the remaining period (based on her later income estimate election) is: ($11,000 ÷ 87) x 365 = $46,149.
The Registrar will amend the assessment to take the later income estimate election into account (CSA Act section 63(3)). The new annual rate of child support payable takes effect from the start date of the new election (CSA Act section 63(2)).
If the previous estimate resulted in a minimum assessment then the minimum annual rate will continue for 28 days after the day on which the parent would cease to be assessed to pay the minimum rate (CSA Act section 66(4)(b)(ii)). See 2.4.12 for information about the minimum annual rate.
Example: Before the beginning of the year of income, Lincoln makes an income estimate election and is assessed to pay the minimum annual rate. Lincoln starts work on 1 March and makes a new income estimate election on that day. Child support is now payable at a rate higher than the minimum annual rate. The higher rate (based on Lincoln’s updated income estimate election) will be payable from 29 March, 28 days after the minimum annual rate would otherwise cease to be payable.
Events affecting the accuracy of an income estimate
The happening of an event can provide a trigger for reviewing an estimate to decide if the assessment should be amended. An event is also relevant in determining the start day of a later estimate (CSA Act section 62A(3)).
An event can include:
- an occurrence that was not expected when the income estimate election was made (for example, starting a new job or non-payment of an expected contract fee), or
- the first day on which the actual rate of income earned was different from the rate of estimated income (that is, the first day the estimated income became inaccurate).
Registrar review & amendment of an assessment
The Registrar can amend an assessment based on an income estimate if the Registrar:
- becomes aware of an event that has affected the accuracy of the estimate, or if the parent tells the Registrar that the event has occurred, but the parent does not make a later income estimate election (CSA Act section 63A), or
- has sent the parent a notice requesting information relevant to determining the accuracy of the estimate, under CSA Act section 161 or 162A(1) or (4) (CSA Act section 63B).
Most estimates are reviewed and the assessment amended under section 63A when the Registrar becomes aware that the estimate is no longer accurate.
Example: Danielle changes jobs and makes an income estimate election in January. On 15 May, Danielle gets a promotion which makes the income she estimated in January no longer accurate. On 15 June, Services Australia contacts Danielle to discuss the income change but Danielle chooses not to make a new income estimate election. The Registrar will amend the assessment from 15 May using Danielle's current income.
The Registrar will only review an income estimate under CSA Act section 63B if:
- every attempt has been made to contact the parent but they cannot, or will not, provide any information or make a new estimate
- all efforts to gather income information from third parties have been exhausted, and
- there is still not enough reliable information to proceed with an amendment under CSA Act section 63A.
If a parent complies with a notice issued under CSA Act section 161 or 162A(1) or (4), the Registrar can only amend the assessment to give effect to the review of the estimate from the date that the parent complied with the notice (CSA Act section 63B(2)).
Refusing to accept a later income estimate
The Registrar can refuse to accept a later income estimate election if satisfied that the parent's partial year income amount (2.5.1.20) 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(3)).
The Registrar will consider all the circumstances and may obtain further information, either from the parent or a third party (for example, an employer or an overseas authority), in making the decision as to whether to refuse to accept the income election (CSA Act section 63AA(4)). A history of underestimating alone is not enough for the Registrar to refuse to accept an estimate, however it may prompt the Registrar to investigate the circumstances further.
The Registrar will give a parent the opportunity to show that their estimate is accurate before deciding whether to refuse to accept an estimate.
The Registrar may refuse to accept an election to replace a previously advised year to date income amount with a new amount if satisfied that the new amount is more than the amount likely to be the parent's actual income for the period (CSA Act section 63AD).
If the Registrar refuses to accept the election of a new year to date income amount, written notice of the refusal must be provided to the parent (CSA Act section 63AD(4)). A parent may object to the decision to refuse the election (4.1.2) (CSRC Act section 80(1) item 11A).
Retrospective estimate reviews (income decrease)
A parent should advise the Registrar of a change in their income within 14 days of the event that led to the reduction in income (CSA Act section 160). The Registrar will review an estimate and amend the assessment in very limited circumstances where a parent does not advise of a reduction in income within 14 days of the event.
The Registrar will consider the following in order to determine whether it is appropriate to amend the assessment:
- the information available from the parent
- the effect upon both parties of any change, and
- the extent to which the change of income event affects the accuracy of the estimate.
Information available
The Registrar will consider the reasons for the delay in updating the income information. The reason for non-compliance with the notification requirements must be compelling before a review will be undertaken.
Example: If a parent was physically incapacitated around the time of the event then this could be a compelling reason why they did not contact the Registrar within 14 days of the event.
The Registrar will also consider the degree to which the decrease in income was not foreseeable by the parent when they made their estimate.
If the Registrar is satisfied that both of these conditions have been met, the Registrar will need to consider the remaining 2 factors before amending the assessment.
Effect upon both parties of any change
The Registrar will consider whether the effect on both parties to the assessment would be fair and reasonable if the assessment was amended to reduce the child support liability for the period between the event and the date of notification.