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Conversation guidelines for child support estimates 277-07040030

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This document outlines conversation guides to help Service Officers discuss the estimate process with customers.

On this page:

Is an estimate the best option?

The estimate process

Conversation guide - Year to Date (YTD)

Completing income details in the estimate calculator

Conversation guide - Lump sum

Call finalisation- Summing up key points

Handling difficult questions - Accuracy

Handling difficult questions - Income components

Is an estimate the best option?

Table 1

Expand table

Item

Conversation guide

1

Purpose

This guide:

  • is to help the customer decide if an estimate is the best option in their circumstances
  • has examples of how to explain each point to the customer. Use these as a conversation guide only

Staff need to tailor their conversations to:

  • suit the needs of the customer, and
  • make sure the customer understands both the:
    • details they are being told, and
    • impacts associated with the estimate process

If the customer:

  • is not working, go to Item 2
  • has had a reduction in overtime or work hours, go to Item 3
  • has time off over Christmas/between contracts/seasonal work, go to Item 4
  • is in receipt of Centrelink benefits, go to Item 5
  • has had an inflated ATI used in assessment due to one off payment, go to Item 6
  • is starting self-employment, go to Item 7
  • has had a reduction in self-employment, go to Item 8
  • may require options other than an estimate, go to Item 9

2

Customer is not working

Check why the customer is not working. Is it because of:

  • a regular working pattern. E.g., the business closes each year for a set time
  • meat workers and seasonal workers
  • them losing their job
  • an illness or injury

Suggested questions to ask the customer:

  • 'What are your plans about getting more work?'
  • 'Is this a temporary shutdown period for your workplace?'
  • 'Will your overall income for the year be similar to what is currently being used in your assessment?'
  • 'Are you confident that you will find work fairly easily?'

Staff must make sure the customer understands the impact of annualising if they choose to estimate their income when the customer:

  • is not working due to a regular earning pattern, or
  • is confident they will find work quickly

Where the customer is not working, or has lost income due to work injury:

  • It may mean future job prospects are unclear and they cannot meet current child support assessment
  • An estimate in most cases is the best option

Staff must:

  • explain how the estimate process works, and how it may affect them. See Table 2
  • explore all options with the customer, e.g. Agreement, Change of Assessment (COA), post separation income (PSI)
  • ask the customer if they want to lodge an estimate
    • 'Now that you have all this information, would you like to lodge an estimate?'

3

Reduction in overtime or work hours

Reduction in overtime

  • ‘Does the loss of overtime mean that you will earn significantly less income this year?’
    • If yes, an estimate is possibly a good option
  • 'Do you think that overtime will be available to you again before 30 June?’ If yes:
    • Tell the customer they need to include an estimate of any income they get from overtime for the rest of the year in their estimate today
    • An estimate may not be the best option

Reduction in work hours

  • 'Is this a permanent or long term change to your working hours?’
    • If yes, an estimate is possibly a good option
  • 'Are you likely to increase your hours again in the short term?'
    • If yes, an estimate can still be accepted. Staff will need to include the increase in income if the customers knows when it will start

4

Time off over Christmas/between contracts/seasonal work

Ask the customer, 'Is this time off without pay something that happens to you every year or part of your regular earning pattern?'

If they reply:

  • Yes, explain:
    • 'As your pattern of earning hasn’t actually changed, it is unlikely that your income this year will be different from prior years. Therefore, you do not need to lodge an estimate of income. Just like you factor in other bills such as mortgage, rent, electricity and so on you will need to factor in your child support obligations during the time that you are not working'
  • No, explain:
    • 'When you estimate your income, we need to factor in any income and deductions between today’s date and the end of the financial year. As you know that you will be returning to work on XX date from your unpaid leave, we will need to factor the wage that you will be receiving when you return to work. If you have those details available now, I can see if an estimate would be an option for you'

5

In receipt of Centrelink benefits

If a new Child Support period starts using an old income:

  • an estimate is a good option if there are no short term prospects for future jobs
  • explore the opportunity for future employment

Ask the customer:

  • 'What are your chances of getting work in the near future? It may make a difference as to whether an estimate is the best option for your circumstances'

6

ATI used in assessment is inflated due to one off payment

An estimate may be a good option for customers:

  • with capital gains in last tax return
  • eligible termination payment in last tax return

Tell the customer:

  • 'You need to be aware that the other party may apply for a change of assessment in certain circumstances. If the last relevant year of income is inflated due to a one off payment, an application can be made to have this one-off payment taken into consideration. For example, a capital gain or eligible termination payment (ETP) or the YTD includes an ETP'

7

Starting self-employment
  • 'Do you have a contract?'
  • 'How will you be paying yourself?'
  • 'How have you worked out what your income will be? If your business goes really well, will you be taking any additional income as personal income? This will need to be considered'

Tell the customer:

  • 'You need to be aware that the other party may apply for a change of assessment in certain circumstances. For example:
    • becoming self-employed or establishing a business structure (sole trader, company, etc.) and (other party's name) feels the assessment doesn’t reflect your income, property & financial resources'

8

Reduction in self-employment
  • 'How have you worked out what your income will be?'
  • 'Do you think it is likely that your business will turn around in the near future?'

9

Estimate invalid or not the best option – identify other options

Invalid estimate

In some circumstances, an estimate may not be a valid option for the customer. For information on validity rules, see Table 3 > Step 1 in Child Support Estimates.

  • ‘Unfortunately, you cannot lodge an estimate currently due to (provide reason). There may be other options that can assist you with your child support’

Estimate may not be best option

  • ‘Lodging an estimate may not be the best option for you today. There may be other options that can assist you with your child support’

Options will vary depending on the particular circumstances of the customer. Let the customer know about possible options. These may include:


The estimate process

Table 2

Expand table

Step

Action

1

Purpose

This process:

  • helps to explain the estimate process
  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and the impacts of an estimate

2

Assess the customer’s understanding of the estimate process

No prior estimate

'Do you know what we mean when we talk about an estimate of income? An estimate of income is an option that may be available to you if you have had a significant drop in income.'

Explaining the estimate process

3

Financial year estimate

Explain financial year estimates. Estimate will be in place from today or from 1 July (if lodging in advance) to the end of the financial year.

  • 'Estimates are aligned with financial years. If you lodge an estimate of your income today, that income will be used in your child support assessment from today to the end of the financial year. You will need to tell us what you think you will earn from today to the end of the financial year. If we accept your estimate, your child support payments will be based on what you have told us'

4

Year to date (YTD) income

YTD income required:

  • 'We will also need you to tell us the income that you have already earned this financial year, i.e. from 1 July to yesterday.’

See Table 3 for help explaining the importance of YTD income

5

Estimate lodged after 1 April and before 1 July

Estimate lodged after 1 April in the financial year:

  • 'If you lodge an estimate today, you will be able to lodge one for the remainder of this YY/YY financial year and/or lodge one in advance for the new financial year starting 1 July'

6

Annualising income

To decide if an estimate is the best option, the customer must understand:

  • annualising income, and
  • that if they get work at a higher rate of pay, or an additional income source they will be assessed on that amount to the end of the financial year

Suggested script:

  • 'When you estimate your income for any period other than a full financial year, we convert your estimated income into an annual income. This is used to calculate your child support assessment for the estimate period. For example, you lodge an estimate on 1 January to 30 June, and you estimate you would earn $20,000 for this 6 month period. This would mean that your income would be equivalent to $40,000 for the full year. The annual rate of child support for those 6 months is assessed on an income for you of $40,000. This is because child support assessments are based on annual incomes’

7

Customer’s responsibilities

The customer is responsible for keeping their income details up to date. If they do not, this can impact their rate.

  • 'The onus is on you to keep us informed of any change to your income, either up or down. We update your estimate using the information you provide to us'
  • ‘An estimate can be reviewed by Child Support if we are satisfied that the estimate is no longer accurate and you have not lodged a new estimate’

8

Income fluctuates

If the customer’s income fluctuates:

  • 'In some cases, this may mean that you pay on a higher rate than your current assessment if your annual income during the estimate period is higher than the income currently used in your assessment. An example would be where you work on contract and your income fluctuates during the year. When you regain work, your liability could be at a much higher rate than if you had not elected to lodge an estimate'

9

Estimate checked for accuracy
  • 'We will compare your estimate with your actual income when you lodge your tax return. If your actual income is higher than the income you estimated, your estimate will be reconciled. This can result in you:
    • owing additional child support, or
    • needing to pay back child support already received
  • ‘Penalty amounts may also apply’
  • ‘If you do not lodge your tax return, we may make a determination of what your actual income was likely to be during the estimate period, and use this to reconcile your estimate'

Conversation guide - Year to Date (YTD)

For initial estimates starting after 1 July

Table 3

Expand table

Step

Action

1

Purpose

This process:

  • helps to explain YTD income to the customer
  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and the impacts of their YTD income

2

Process

3

Define YTD income

Explain to the customer what YTD Adjusted Income (ATI) is.

Suggested scripts:

  • 'The Year to Date income is the total income from 1 July to the day before the start of your estimate. If we take an estimate today, you need to tell us about your income and deductions from 1 July to yesterday’
  • ‘If you go ahead with an estimate today, we will talk in more detail about all of the income components that need to be included’
  • What to include in the YTD? Discuss all the relevant income types that are used in Child Support assessment, see Table 4 on how to discuss each income type

4

Importance of accurate YTD information

Explain to the customer:

  • how YTD ATI works in the estimate process including reconciliation
  • they, or Child Support, may update the YTD ATI at any time

Suggested scripts:

  • 'It is critical that your year to date amount is right because it is used to check the accuracy of your estimate when we are notified of your taxable income after you lodge your tax return for the year. You can update your year to date amount at any time before we receive notification of your taxable income’
    • If the customer is a payer – ‘an incorrect YTD amount might mean you pay too much, or not enough. If you pay too much, you cannot get that money back. If you don't pay enough, you will have a debt’
    • If the customer is a payee – ‘an incorrect YTD amount might mean you receive too much, or not enough. If you receive too much, you will have a debt’
  • ‘We will subtract the year to date amount from your actual adjusted taxable income for the year. We then compare the resulting amount to the amount that you have estimated that you will earn for the remainder of the year'

5

Confirm customer understanding of YTD

Check the YTD details. If the customer does not provide periodic amounts, document where the details came from. For example, a pay slip or termination certificate.

If the customer is:

  • a salary and wage earner - 'It is really important that your Year to date income amount is accurate. Can you tell me how you got to that figure?'
  • in business/self-employed - ask either:
    • 'Have you discussed this with your accountant?', or
    • 'How did you work this out?'

6

Ask for evidence of YTD

Determine the evidence required.

Verbal evidence

These are examples of how to ask for evidence, not when to make a request. This list is not exhaustive.

If the YTD is more than 10% higher than the expected YTD:

  • 'The figure you have provided seems higher than expected based on your last tax return, so just to ensure that you do not pay too much or too little child support, can I ask some questions?'
  • ’Did you earn extra income in this period from any source?'

Other questions to consider:

  • ‘Did you receive additional income from your employer? E.g. additional holiday pay, redundancy payout, overtime etc’
  • ‘Did you work a lot of overtime in this period that you did not work last year?’
  • ‘Did you receive income from another source that you did not have last year?’

Written evidence

Staff are to:

  • ask for written evidence if they are not satisfied that the income details are accurate. This can be evidence of any part of the estimate income, including the YTD income
  • encourage the customer to upload evidence using:
    • their Child Support online account, or
    • the Express Plus Child Support mobile app

Suggested scripts:

  • 'I need to verify that the figure you have provided is accurate. You have given your main Year to Date figure from your (last pay slip, termination certificate etc). Do you have a Child Support online account through myGov, or use the Express Plus Child Support mobile app?'
  • 'Could you please send that information to me using Child Support online or the mobile app? If you are using the mobile app, you can take a picture on your phone, then select upload document, and then the document type 'income evidence'
  • 'If we do not get this information, we may not be able to accept your estimate'

If the customer asks why.

If the provided YTD is more than 10% higher than the expected YTD:

  • 'The figure you have provided seems higher than expected, based on your last tax return. I need confirmation to make sure that you do not pay too much or too little child support'

Previous estimates inaccurate:

  • 'I can see that you have had estimates reconciled in the past and have owed additional child support. We need to make sure that this does not happen again'

7

Record keeping

Document the:

  • details discussed with the customer about providing evidence
  • type of evidence and the due date

Suggested script:

  • 'You need to keep evidence or a record of the year to date income information you have provided as we may request it from you at a later date.'

Completing income details in the estimate calculator

Table 4

Expand table

Item

Conversation guide

1

Introduction to Completing Income Details

Some suggested introductory statements are:

  • ‘I am now going to ask you some questions about your income. I will be asking you about several different types of income.’
  • ‘Not all of the income types I ask about will apply to you. We ask these questions of all parents estimating their income. We do this to ensure that we correctly calculate your child support’
  • ‘If all the relevant income types are not included, it could result in you:
    • (if speaking to a payer) paying too much or too little in child support, or
    • (if speaking to a payee) receiving too much or too little child support’

If this is an initial estimate starting after 1 July:

  • ‘I need to ask you about all the income you received in the period from 1 July 20YY until the day before the start date of your estimate DD Month 20YY’
  • ‘I may ask you to provide evidence of your income. Do you have (separation certificate, pay slips, termination of lease agreement) handy, or can you get it/them? We can allow you some time to obtain this information if you need’

Before asking about the Estimate period income details:

  • ‘I need to ask you about all the income you expect to receive in the period from your estimate start date DD Month 20YY until 30 June 20YY’

2

Gross salary and wages
  • ‘Please tell me the name of each employer in the period (state the YTD or estimate period dates)’
  • ‘For each employer, what is the gross amount of income you earn/will earn in the period?’
  • ‘The gross amount is the amount earned before any tax is deducted by your employer, Gross amounts are not the amounts received in hand or into your bank account. Gross amounts can normally be found by checking your pay slip’
  • ‘How often were you paid/will you be paid? Weekly, Fortnightly, Monthly?’

Note: After asking about all employers mentioned, check:

  • ‘Were there/will there be any other employers in that period?’

If the customer is unsure about what their gross income is from all employers, let them know:

  • ‘We can provide you with time to obtain details of what your gross income was/will be. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted’

3

Other types of taxable income
  • ‘Other than the salary and wage income that we just discussed, did you/will you receive any other types of taxable income in the period, (state the YTD or estimate period dates)? For example, did you/will you receive:
    • any taxable Employment Termination Payment (ETP)? For information on ETPs, see the Resources
    • a taxable lump sum superannuation withdrawal?
    • a net capital gain?
    • taxable income from a business? Provide the amount that the ATO will consider to be your taxable amount in your individual tax assessment
    • taxable income from worker’s compensation?
    • taxable income from insurance/income protection payments?
    • taxable income received from overseas?’ For information on keying overseas income, see Item 10
  • For each payment, ask:
    • ‘Who paid/will pay you the amount?’
    • ‘What date was/will the payment be made?’
    • ‘What was/will be the taxable amount of the payment?’

If the customer is unsure whether any part of their income was/will be taxable or not:

  • ‘If you are unsure about whether any part of your income was/will be taxable or not, you can request this information from:
    • the Australian Taxation Office (ATO)
    • a taxation accountant’
  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted’

4

Taxable pensions or benefits

‘In the period (state the YTD or estimate period dates), did you/will you receive any taxable pension or benefits from Centrelink or Department of Veterans’ Affairs (DVA), etc.?'

  • ‘What dates did you/will you receive these payments for?’
  • ‘What was/is the taxable amount of these payments?’

Taxable Centrelink payments

  • Taxable payments are included for child support purposes
  • Taxable payments from Centrelink include, but are not limited to:
    • JobSeeker Payment
    • Parenting Payment (Single or Partnered), and
    • Disaster Recovery Allowance (DRA) – but not Disaster Recovery Payment (AGDRP or NZDRP)
  • Family Tax Benefit payments are not taxable and are not included for Child Support purposes
  • To check which Centrelink payments are taxable, see:

If the customer is unsure which Centrelink payment they receive, check in Customer First. Seek Technical Support if needed.

Taxable DVA payments

Note: there are also some specified tax-free payments from Centrelink and DVA which are included for child support purposes. Item 5 sets out these payments.

5

Tax-free pensions or benefits - to be included for Child Support purposes
  • 'Did you receive any tax-free pension or benefits from Centrelink or DVA in the period from 1 July to yesterday/start date of estimate?’
  • ‘What dates did you receive these payments for?’
  • ‘Only some specified types of tax-free payments are included for Child Support purposes’

Tax-free Centrelink pensions or benefits which are included for Child Support purposes

  • Disability support pension under Part 2.3 of the Social Security Act 1991 (including any youth disability supplement if applicable)
  • Carer payment under Part 2.5 of the Social Security Act 1991

If the customer is unsure which Centrelink payment they receive, check in Customer First. Seek Technical Support if needed.

Tax-free Department of Veteran Affairs (DVA) pensions or benefits which are included for Child Support purposes

  • Invalidity service pension under Division 4 of Part III of the Veterans’ Entitlements Act 1986
  • Partner service pension under Division 5 of Part III of the Veterans’ Entitlements Act 1986
  • Income support supplement under Part IIIA of the Veterans’ Entitlements Act 1986.

For full details, see Child Support Guide 1.1.T.30 Tax-free pension or benefit

If the customer does not know if their DVA payment is one of these, ask:

  • ‘Do you have any letters or other documents from DVA that state the type of payment you received/will receive?’
  • ‘Are you able to contact DVA to check the exact type of payment you received/will receive?’

Note: If the customer is not able to confirm the exact type of payment they have received/will receive, see Direct requests for information from Department of Veterans Affairs' (DVA).

6

Rental income
  • 'Do you have a rental property? In the period (state) YTD/estimate period dates), did you have/will you have a profit or loss from the property?'

If the customer has a:

  • profit - 'We will include this profit in your income'
  • loss - 'Although you can claim rental property losses to reduce your taxable income, the benefit of the reduction you get for tax doesn’t apply to child support. Your taxable income will remain the same however the loss is added back for child support purposes’
  • ‘If you need more information, or are not sure which amount to include, speak to a taxation accountant or the ATO (Australian taxation Office)'
  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted'

7

Other net financial investment income

‘Other than rental property incomes just discussed:

  • In the period (state YTD/estimate period dates), Did you/will you have an income or a loss from investments e.g. shares, managed funds, forestry schemes?
  • We need to include any profit or loss from investments for child support

If the customer has a:

  • profit - 'We will include this profit in your income
  • loss - 'Although you can claim losses to reduce your taxable income, the benefit of the reduction you get for tax doesn’t apply to child support. Your taxable income will remain the same however the loss is added back for child support purposes
  • ‘If you require more information, or are not sure which amount to include, speak to a taxation accountant or the ATO (Australian taxation Office)
  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted’

8

Reportable fringe benefits
  • 'In the period (state YTD/estimate period dates), did you/will you receive any reportable fringe benefits?' If yes:
    • 'I need you to tell me the grossed-up value. This is not the amount you actually sacrifice or which comes off your pay’
    • ‘The grossed up amount is the amount that your employer records or will record on your payment summary for the ATO’

Note: more information is available in the Child Support Guide 1.1.T.30, and 3.1

If the customer wants more details:

  • 'The grossed-up taxable value of a benefit received is the gross salary that an individual would have to earn to purchase the benefit from their after-tax income’
  • ‘If you require more information, or are not sure which amount to include, speak to your employer/payroll area, a taxation accountant or the ATO’
  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted’

9

Reportable Superannuation
  • ‘In the period (state YTD/estimate period dates), did you/will you make extra superannuation contributions under a salary sacrifice arrangement?'

If customer needs more clarification:

  • 'This is not your normal superannuation but any amount over and above that comes off the top of your salary. The employer will generally record this as a separate amount on your payment summary’
  • If you require more information, or are not sure which amount to include, speak to your employer/payroll area, a taxation accountant or the ATO (Australian taxation Office)
  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted

10

Overseas Income and Target Foreign Income
  • 'In the period (state the YTD or estimate period dates), did you/will you receive any income from overseas? If yes, explain that: ‘For child support purposes, we may need to include:
    • income earned while working in an overseas country
    • pensions received from an overseas government, and/or
    • monetary gifts and allowances received from overseas
    • other income from an overseas source
  • ‘Did you/will you receive any of these types of payments? If so:
    • How much, how often?
    • What currency is that income in?
    • We need to convert that income to Australian dollars

Note:

  • Taxable overseas income from work or pensions as a resident of a reciprocating jurisdiction, should be included in the main part of the estimate calculator
  • Other overseas income, that meets the definition of Target Foreign Income set out in Section 5B of the Child Support (Assessment) Act, should be added in the Target Foreign Income field of the calculator

Service Officers must use the International Income Converter, to convert all overseas income to AUD before keying it in the calculator.

For help:

11

Requesting evidence

Ask the customer to provide evidence to support their estimate of income if unable to confirm their information in real time and they have:

  • a history of inaccurate (reconciled) estimates
  • other components showing in their ATI for the relevant year but not in their estimate
  • one or all of their child support cases are private collect
  • any other reason to believe the estimate may be inaccurate

Encourage the customer to upload evidence using:

  • their Child Support online account, or
  • the Express Plus Child Support mobile app

Suggested scripts:

Previous estimates inaccurate or cases are private collect:

  • 'I can see that you have had estimates reconciled in the past and have owed additional child support. We need to make sure that this does not happen again'. Can you please provide a copy of your (last pay slip, termination certificate)’.
  • ‘Because your case is a private arrangement it’s important we get your estimate as accurate as possible. Can you please provide a copy of your (last pay slip, termination certificate)’

Other components in ATI, but not in estimate:

  • 'I need to confirm the information you have provided. Are you able to send me (your last pay slip, contract of sale for the property, novated lease termination). Do you have a Child Support online account through myGov, or use the Express Plus Child Support mobile app?'

For all written evidence requests:

'Could you please send that information to me using Child Support online or the mobile app? If you are using the mobile app, you can take a picture on your phone, then select upload document, and then the document type 'income evidence’

'If we do not get this information, we may not be able to accept your estimate'

‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY (allow 14 days from the date of call). If we do not receive the information by that date, your estimate may not be accepted

If the customer asks why:

  • ‘I’m not able to confirm the information you have told me using the searches I have available. I need to make sure your estimate is as accurate as possible to make sure you do not pay too much or too little child support'

12

Allowable Deductions
  • ‘We also need to know what your allowable deductions will be for the period (StateYTD/estimate period dates).’
  • ‘Allowable deductions are amounts that you can claim as deductions in your tax return. They are amounts that reduce your taxable income.’
  • ‘Some examples of allowable deductions may be work related uniform costs, work related travel costs and the cost of managing your tax affairs.’
  • ‘Allowable deductions must be those recognised by the ATO as allowable.’

If the customer is unsure of any allowable deductions, they can seek information from the ATO or a taxation accountant.

  • ‘We can provide you with time to obtain this information. You need to return the information by DD/MM/YYYY. If we do not receive the information by that date, your estimate may not be accepted’

13

Payments not part of ATI so not included in estimates

Child support income estimates must include all the income types that make up Adjusted Taxable Income (ATI).

Any payments that do not fall within the definition of ATI must not be included in either the YTD or Estimate period.

Payments that are not part of ATI, and therefore not part of an estimate include, but are not limited to:

  • National Disability Insurance Scheme (NDIS) amounts
  • National Redress Scheme payments
  • Territories Stolen Generations Redress Scheme payments
  • First Home Super Saver (FHSS) Scheme withdrawal amounts
  • Family Tax Benefit Part A or B
  • Carer Allowance. Note: Carer Allowance is not part of ATI, but Carer Payment is a specified tax-free payment so it is part of ATI
  • Mobility Allowance
  • Bereavement Allowance
  • Pharmaceutical Allowance
  • Rent Assistance
  • Language, Literacy and Numeracy Supplement
  • Remote Area Allowance
  • Disaster Recovery Payment (AGDRP or NZDRP). Note:
    • Disaster Recover Payment (AGDRP or NZDRP) is not taxable and is not part of ATI
    • Disaster Recovery Allowance (DRA) is taxable and therefore is part of ATI
  • Child Care Subsidy
  • Child Support payments

If the customer includes a payment in their estimate that is not part of ATI, tell the customer:

  • ‘Thanks for letting us know about all your types of income. That payment is not one that is used to calculate child support, so will not be included in your estimate’

14

FAR/MAR message or assessment

The Fixed Annual Rate (FAR) addresses situations where the parent has minimised their taxable income in a way that doesn’t represent their true capacity for child support purposes.

  • 'The estimate of income you have provided has resulted in a fixed annual rate of assessment. This amount is $XXX.XX. A fixed annual rate applies here because you have advised that you will earn a low annualised income for the estimate period and you did not receive income support payments in the last financial year. You can make an application for this rate not to apply if you think that it is unfair as you are on a genuinely low income. Would you like to apply?'

If yes, see Fixed annual rate not to apply applications.


Conversation guide - Lump sum

Table 5

Expand table

Item

Conversation guide

1

Purpose

This process:

  • helps to explain the benefits of including residual lump sum amounts
  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and the impacts of Lump Sums in estimate periods which are cut short

2

Defining residual lump sum impacts

Residual lump sum impacts the customer only when they are:

  • lodging an amended estimate and
  • there is a lump sum in any previous estimate

Staff need to explain how a lump sum advised in a previous estimate period/s has been applied:

  • There may be more than one lump sum to discuss
  • The lump sum/s may be identified by the:
    • single day date set in the calculator, or
    • income type. For example, ETP
    • A short dated specific period amount, i.e. periodic payment that doesn’t go to the end of financial year. Although these specific period amounts are not one off lump sums, our system treats the in a similar way. See Table 4 > Step 3 in Child support estimates

Suggested scripts:

  • 'When you lodged your previous estimate, you advised a lump sum amount of $XXX.XX. We spread that amount in your assessment evenly across all the days up to 30 June.
  • As you are now lodging a new estimate to reflect your current circumstances there is a portion of the lump sum amount/s that has not been applied to your assessment

If staff need help, contact a Service Support Officer.

3

Include remaining amounts of a lump sum in subsequent estimates

Explain the importance of including remaining amounts of the lump sum in subsequent estimates. Penalties may apply, as well as additional child support payable.

  • 'What we need to do to get your new estimate accurate is to include the remaining amount in your estimate that you are lodging today. If we do not include it today, it will be picked up when we reconcile your estimate’
  • ‘This is likely to result in you having a debt and possible penalties at that time'
  • Tell the customer amount to be included.
  • To apply the correct amount, use the Lump Sum calculator
  • 'The amount that we will include in the estimate today is $XXX.XX’

Note: the agency cannot insist that a customer include an apportioned lump sum amount in their new estimate. It is their decision. However, the agency must explain the risks of a debt or overpayment if the apportioned amount is not included


Call finalisation- Summing up key points

Table 6

Expand table

Step

Action

1

Purpose

This process:

  • helps to explain the benefits of including residual lump sum amounts
  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and the impacts of the estimate process

2

Confirm agreed actions

Customer has agreed to:

  • provide income information to make the estimate valid:
    • 'You have agreed to call me back with your (year to date; additional income information; details on your rental property etc) by (provide the day and date 14 days later e.g. Wednesday, 21st November), however the sooner you provide this information the sooner we will be able to action your estimate. If you don’t call back with this information, I will not have enough detail to accept your estimate'
  • clarify the income information – the estimating parent (if paying parent) may pay too much/too little child support, or (if receiving parent) may receive too much/too little child support:
    • 'You have agreed to call me back to confirm your (year to date; additional income information; details on your rental property etc) by (provide the day and date 14 days later e.g. Wednesday, 21st November), however the sooner you provide this information the sooner we will be able to action your estimate. If you don’t call back with this information, your estimate may not be accurate which could result in you paying/receiving too much or too little child support'
  • to provide evidence required to accept the estimate:
    • 'You have agreed to send me your (pay slip; separation certificate, letter from accountant etc.) to support your (year to date; income; investment loss etc.) by (provide the day and date 14 days later e.g. Wednesday, 21st November), however the sooner you provide this information the sooner we will be able to action your estimate. If I don’t receive the information, I may not be able to accept your estimate'

3

Rights and obligations

It is the customer’s responsibility to keep their details current.

  • 'Here are the things you need to remember:
    • Keep us informed – if your incomes changes – if it goes up or down give us a call and let us know
    • From 1 July next year, your assessment will be based on the last relevant year of income (LRYI). If your circumstances have not changed you may need to lodge a new estimate
    • Please check your year to date income. If you realise that you have forgotten to tell us about any other income or deductions you can tell us at any time up to the point that we receive your taxable income from the ATO
    • You will need to keep your evidence of your year to date income in case we need to verify it at a later date
    • From what you have told me today, your expected adjusted taxable income will be approximately (advise the figure from the calculator). If you think it will be different, please make sure that you check the details you have provided and call us if there are any changes

4

Letters and Child Support online

Tell the customer about any letters they may get:

  • 'Please read your letters carefully as they will have the details you have provided today and also the important information that I have just advised.'

Child Support online and mobile app access

'Do you have access to Child Support online or the Express Plus Child Support mobile apps?'

Yes:

  • 'Remember if your circumstances change, you can use your Child Support online or the Express Plus Child Support mobile app? to update your estimate at any time'

No:

  • 'Do you use the internet? You can access your Child Support information online. or by using the Child Support mobile app. You will need a myGov account to access your Child Support account information online. A Child Support account online will allow you to connect and update your information with Services Australia at a time convenient to you. For example, if your income circumstances change, you can update your estimate'

Handling difficult questions - Accuracy

Table 7

Expand table

Item

Action

1

Purpose

This process:

  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and any impacts

If the customer has questions about:

  • history of underestimating, go to Item 2
  • backdating when income changes, go to Item 3
  • incorrect Year to Date (YTD), go to Item 4
  • gross income, go to Item 5
  • wanting to over-estimate income, go to Item 6
  • time off over Christmas/between contracts/seasonal, go to Item 7
  • estimate letters, go to Item 8

2

History of underestimating

Question: Why have you asked for evidence?

Response: 'I can see that you have had estimates reconciled in the past and have owed additional child support. We need to make sure that this does not happen again.'

If we think that your actual income will be higher than your estimate, we may refuse to accept your estimate. Evidence can help us to make the best decision.’

3

Backdating when income changes

Question: What do you mean if my income drops you will not backdate my estimate?

  • This question is usually in response to Rights and Obligations. Staff can include an explanation while discussing the Rights and Obligations to help the customer understand
  • If the customer insists on a reference that supports the decision, see Child Support Guide 3.4 Estimated income

Response: 'When you estimate your income you are taking responsibility for the income we use in your assessment. This means that you need to keep us informed of any changes to your income when they happen. If you do not tell us when your income drops, in most cases, we can’t give effect to your estimate from an earlier date.

There are very clear incentives in the scheme that encourage and support customers to contact us as soon as possible when their circumstances change. This is because the child support scheme must strike a balance between giving you the opportunity to have your assessment based on your capacity to pay and to minimise the potential for the children to be unfavourably affected.

Estimates are very good examples of this.

If paying parent:

  • If your income goes down and there is a delay in advising us, it would not be practical to then expect the other party to have a reduction in child support or to pay money back because the money would have already been spent on the children’s needs. To require the parent to then pay that money back would potentially place the children in a position of undue hardship

If receiving parent:

  • If your income goes down and there is a delay in advising us, it would not be fair to other party to have an unexpected increase in child support for a previous period

Question: If my income increases, will you backdate my estimate?

Response:

If paying parent:

  • 'If your income increases, it is equally important to tell us straight away to avoid owing additional child support because we will calculate your assessment from the date your income increased. When your income goes up there is arguably a greater need to advise us to ensure that your children receive the right amount of child support and avoid any additional child support to be paid at a later date'

If receiving parent:

  • ‘If your income increases, it is equally important to tell us straight away to avoid having to pay back child support because we will calculate your assessment from the date your income increased. When your income goes up there is arguably a greater need to advise us to ensure that your children receive the right amount of child support and avoid any overpayment of child support to be paid at a later date’

4

Incorrect Year to Date (YTD)

Question: What happens if I overstate my YTD?

Response: 'It is important that your year to date income is accurate so that that you don’t pay too much or too little child support. If you overstate your year to date income, we may refuse to accept your estimate.

If you realise at a later time that your year to date income is not accurate you can change it any time prior to reconciliation, you may however also be asked for evidence to support any change. In some circumstances we may change your year to date if it is later found to be inaccurate. You should keep records of the year to date income amount that you have provided as we may need to verify this amount at a later date.'

5

Gross income

Question: Why does Child Support use my gross income and not my net income?

Response: 'Child Support law requires us to use your taxable income as assessed under the Tax Assessment Act. Your taxable income is the amount that you will be paying tax on after you have deducted any allowable deductions. It is your gross income minus any allowable deductions.

We then add other income components to this amount to make up the adjusted taxable income (ATI) that is used to start calculating your child support assessment.

However, the amount of child support payable is then worked out based on the costs of children. These costs have been based on the amounts parents spend based on their available income after tax.

So, although we start by asking you about your gross income, the formula then also takes into account that parents pay tax on that income.’

6

Customer wants to over-estimate income

Question: Can I over-estimate my income?

Response: 'I understand why you want to over-estimate your income just to cover yourself, however it is important to understand that at the end of the financial year when we reconcile your estimate, we will not replace your estimate with the lower amount of your actual ATI. This means that if you have paid more child support than you otherwise would have needed to throughout the year, you will not be entitled to any refund.

To ensure you pay the correct amount through the year, you can call us at any time to update your estimate of income if your circumstances change throughout the financial year.'

7

Time off over Christmas/between contracts/seasonal

Question: Can I estimate my income for time off over Christmas (or) between contracts (or) between seasons?

Response: Clarify with the customer:

  • 'Is this time off without pay something that happens to you every year or part of your regular earning pattern?'
    • Yes - 'As your pattern of earning hasn’t actually changed, it is unlikely that your income this year will be different from prior years. Therefore, it is not necessary for you to lodge an estimate of income. Just like you factor in other bills such as mortgage, rent, electricity and so on you will need to factor in your child support obligations during the time that you are not working'
    • No - 'When you estimate your income we need to factor in any income and deductions between today’s date and the end of the financial year. As you know that you will be returning to work on XX date from your unpaid leave, we will need to factor the wage that you will be receiving when you return to work. If you have those details available now, I can see if an estimate would be an option for you'

8

Estimate letters

Question: What information is provided in the estimate letters?

Response: 'In the letter we send to you, we will include details about your income such as your employer’s name, deduction amounts and details of income from other sources. It is important that you check this information and call us if there are any discrepancies. The letter will also include your year to date income amount.

We will also send you a new assessment notice including how much child support you will now have to pay or receive. The other parent will also get a new assessment notice and a letter advising them of your estimated income however they won’t know specifics of how we arrived at the calculation – for example, we won’t send out your employer’s name to him/her.

The letter will also advise the other parent of their right to object to our decision to accept your estimate if they think the amount is not accurate or that we have made an error, so please hold on to all of your paperwork.'


Handling difficult questions - Income components

Table 8

Expand table

Item

Conversation guide

1

Purpose

This process:

  • has examples of how to explain each point to the customer
  • is a conversation guide only. Staff need to tailor their conversations to:
    • suit the needs of the customer, and
    • make sure the customer understands the details they are being told, and any impacts

For customer questions about:

  • Adjusted taxable income (ATI), go to Item 2
  • Tax-free pensions and benefits, go to Item 3
  • Reportable fringe benefit (RFBT), go to Item 4
  • Reportable superannuation, go to Item 5
  • Rental Loss amounts, go to Item 6
  • Dividends, go to Item 7

2

Adjusted taxable income (ATI)

Question: What is adjusted taxable income?

Response: 'Your Adjusted Taxable Income (ATI) is used to calculate your assessments. It is the total of your:

  • taxable income for the last relevant year of income (excluding First Home Super Saver (FHSS) scheme withdrawals)
  • reportable fringe benefits total for that year of income
  • target foreign income for that year of income
  • net financial investment loss for that year of income, which includes any net rental property loss
  • the total of the tax-free pensions or benefits received in that year of income
  • reportable superannuation contributions

At the end of the financial year, your estimated income should match your tax return plus any other income that is included for child support purposes, i.e. your adjusted taxable income. What this means is that the amount you have estimated today should add up to your actual adjusted taxable income for the whole year minus the year to date amount that you have provided. Based on your information, we are expecting the adjusted taxable income to come in at $XXX. Does that sound right?'

Response for subsequent estimates:

'At this stage, based on your year to date income plus the amount of $xxx) that you estimated you earned between day/mth and day/mth and the amount you have estimated today until the 30 June, we are expecting your adjusted taxable income at the end of the financial year to be $XXX. Does that sound right?'

For lump sum payments, see Table 4.

3

Tax-free pensions and benefits

Question: Why are tax-free pensions and benefits included for Child Support purposes?

Possible responses:

  • 'Including these income payments recognises that, although many parents who receive these payments may not be able to work in paid employment, some do have a capacity to contribute to the costs of their children. These resources are therefore considered in the total calculation’
  • ‘If your only source of income is a Centrelink or DVA payment, you will normally only be assessed to pay the minimum rate of Child support’
  • ‘We do not include many other related payments such as family tax benefit, carer allowance, mobility allowance, bereavement payment, pharmaceutical allowance, rent assistance, language, literacy and numeracy supplement or remote area allowance. This mirrors the extent to which these payments are treated as income in the family assistance law'

4

Reportable Fringe Benefit (RFB) total

Question: Can you explain what RFB total is?

Response: ‘A fringe benefit is a benefit that is provided to an employee or an associate of the employee (such as a family member) as part of the employment arrangement. For example, provision of a car, house or equipment for private purposes.

Employers are required to report on an employee's payment summary all fringe benefits with a total taxable value of more than $2,000 a year. The total taxable value as determined by the employer is multiplied by a figure pre-determined by the ATO. This grossed up taxable value is known as the 'reportable fringe benefits' amount. If you have a RFB, this amount will appear on your payment summary.

Child Support uses this grossed up amount of the reportable fringe benefits. If it is the same as your last year tax return then I have the information here and I can use that. If it isn’t then you will need to speak with your payroll department. I can record your estimate now and you can call me back by dd/mm with the information. If you don’t call back then I won’t be able to accept the estimate.

For a detailed explanation:

5

Reportable superannuation

Question: What is included in reportable superannuation?

Response: 'Reportable superannuation contributions include:

  • any amount that you are salary sacrificing
  • amounts above the compulsory contributions paid by your employer
  • any extra pre-tax contributions that you choose to make

Did you set up additional contributions to be paid into your superannuation fund? If you aren’t sure, you should check with your payroll department.'

6

Rental loss amounts

Question: Can you explain a Rental property loss?

Response: 'The ATO allows taxpayers to legitimately reduce their taxable income by claiming their rental property losses as a tax deduction. However, for child support purposes we add this loss back on to a parent’s taxable income.

Although you can claim rental property losses to reduce your taxable income, the benefit of the reduction you get for tax doesn’t apply to child support. Your taxable income will remain the same. It is only the loss that is added back for child support purposes.'

In order to calculate your rental property losses, you need to know the total gross income you receive from the rental property less any expenses you have relating to the rental property such as interest, repairs, agent fees etc. You may need to speak with an accountant for assistance in calculating this.'

Question: What happens if I overstate my Rental Loss?

Response: This response is only for customers where their taxable income is greater than or equal to zero:

  • 'It is important that we get this figure right as it may result in you paying too little or too much child support. While rental losses are a legitimate way of reducing your taxable income, rental losses do not reduce your income for child support purposes (i.e. they are added back in). This means that even if your taxable income is reduced by an overstated rental loss amount, your income for child support will be unaffected as the rental loss amount will be added back in full.'

Question: Can you explain how adjusted taxable income is calculated where there is a rental loss and my taxable income is zero?

Response: This response is only for customers where their taxable income is zero but their losses exceed all other income:

  • 'For child support purposes, rental losses are added back to your taxable income. As the (year to date) or (estimated taxable income) you have provided is zero and you have also advised that you expect to have a rental loss during the estimated period, we will add the amount of the rental loss back to the zero income. This means your (year to date or estimate) for child support purposes is $(amount of the rental loss).'

7

Dividends

Question: What happens if I overstate my Dividend?

Response: 'Your estimate of income should be as accurate as possible. Overstating any component of your income may result in an inaccurate assessment of the child support you pay/receive.'