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.

3.4.1 Making an income estimate election

Context

When a parent’s (1.1.P.10) income has reduced by 15% or more from the ATI (1.1.A.20) used in their child support assessment (1.1.C.70), they can replace the existing ATI with an estimate of their current income.

The parent’s income estimate (1.1.I.20) is reconciled against their actual income after the financial year ends (3.4.4).

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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 (1.1.Y.10), the estimate is 85% or less than the person's ATI for the last relevant year of income (1.1.L.10), and an income amount order (1.1.I.10) is not in force on the start day of the estimate election or for any day in the remainder of the financial year.

The ATI must be based on:

  • the parent's ATI as advised by the ATO
  • the person's ATI as advised by the relevant overseas authority (1.1.O.30) (where the parent is a resident of a reciprocating jurisdiction (1.1.R.90)), or
  • a declaration by the parent of their ATI which the Registrar is satisfied is correct.

If the parent’s income had reduced by less than 15%, the parent can apply for a change of assessment (1.1.C.50) to reflect their current financial circumstances (Part 5).

When the Registrar is required to calculate a notional assessment (due to a child support agreement), a parent can vary their provisional notional assessment (1.1.P.140) by making an income estimate election, see 6.3.2 subheading 'Varying a provisional notional assessment'.

Act reference: CSA Act section 58C Determination of overseas income …, section 60(1)(b) Parent may elect to estimate …, section 60(6) No election if an income amount order is in force, section 63(2A) Effect of later election, section 162A Obtaining information in relation …

What income must be estimated?

The income components of a parent's ATI (3.1.1) for an income estimate, are the same income ATI components that apply when a parent's income is based on their tax assessment. However, a tax assessment uses ATI from the last relevant financial year, while an estimate of income is an estimate of income for the current financial year.

The components of estimated ATI are:

  • taxable income (1.1.T.20) for that year of income
  • reportable fringe benefits total (1.1.R.70) for that year of income
  • target foreign income (1.1.T.10) for that year of income
  • total net investment losses (1.1.T.50) for that year of income
  • tax free pensions or benefits (1.1.T.30) received in that year of income, and
  • reportable superannuation contributions (1.1.R.80) 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).

Act reference: CSA Act section 58C Determination of overseas income …, section 60(1)(b) Parent may elect to estimate …, section 60(6) No election if an income amount order is in force, section 63(2A) Effect of later election, section 162A Obtaining information in relation …

Effect of an income estimate

When the Registrar accepts a parent's estimate election, the assessment will be amended to take the income estimate into account. The parent’s income estimate becomes their ATI for the purposes of assessing the annual rate (1.1.A.70) of child support (1.1.C.60) payable in the application period (1.1.A.90).

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.

An estimate does not prevent a later income amount order (3.4.2), change of assessment decision (Part 5), court departure order or agreement (Part 9) from affecting the assessment for any part of the application period.

Act reference: CSA Act section 6 Interpretation—expressions used in Registration and Collection Act, section 160 Notification requirements, section 162A(2) Obtaining information in relation …

Refusing to accept an income estimate

The Registrar can refuse to accept an income estimate election if satisfied that the parent's ATI for that current year is likely to be higher than their estimated amount.

The Registrar can refuse to accept a part year income estimate (3.4.2) if satisfied that the actual:

  • year to date income amount will be higher than the estimated year to date income amount, or
  • partial year income amount is likely to be more than the parent's estimated partial income amount for the remaining period.

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 (1.1.P.20). 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.

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.

If the Registrar refuses to accept an estimate, the parent will be given written notice of the decision. The parent can object to the particulars of the assessment in relation to which the parent sought to make the income election (Part 10).

Act reference: CSA Act section 63AA Registrar may refuse to accept an income election, section 63AB Notice to be given if Registrar refuses to accept an income election

CSRC Act section 80(1) item 11 Decisions against which objections may be lodged—general

Revoking an income estimate

A parent may revoke an income election by giving notice to the Registrar. 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
  • 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.

Act reference: CSA Act section 62(1) Revocation of income election, section 63(3) Effect of later election

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