Post separation income for Child Support parents 277-07100000
This document details how Child Support parents (either the payee or payer) can apply to have additional income earned after separation excluded from their child support assessment.
On this page:
PSI application and processing
Gathering evidence and process for decision making
Decision determined and parent notification process
New income information received after PSI application approved
PSI application and processing
Table 1
Step |
Action |
1 |
Application received + Read more ... If a parent's adjusted taxable income (ATI) used in the child support assessment includes additional income earned after separation, the parent can apply to have this income excluded. Parents must show the income to be excluded was earned in accordance with a pattern of earnings established after they separated and outside of the 'ordinary course of events'. Applications may be made:
Currently a parent cannot lodge an application using a Child Support online account. Use the PSI application and decision macro when discussing and processing applications to exclude income earned after separation. |
2 |
Application received over the phone + Read more ... When a parent makes a phone application for PSI to be excluded from their ATI, check the current income type used in the assessment. Where the relevant year of income type is provisional (not based on ATO assessed income), attempt to obtain a better income as per the income hierarchy. Use the PSI application and decision macro when discussing and processing applications to exclude income earned after separation. For more information, see Income processing for Child Support parents. If an application to exclude PSI from a child support assessment has been received, go to Step 3. |
3 |
Check application + Read more ... The application must include enough information to enable child support to make a decision. Record the application in the Post Separation Income window. See Post Separation Income (PSI) Cuba Process Help. The parent is still able to apply for PSI to be excluded from their ATI if the annual rate or ATI has been set by:
The PSI will only be excluded from the date the court order, child support agreement or COA decision ceases to have effect. Cuba does not allow a PSI reduction to be accepted until the court order, child support agreement or change to assessment has expired. Check the case to determine the expiry date. Is the expiry date within 28 days of the PSI application being received?
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4 |
Relationship requirements + Read more ... Ask the applicant the following questions: Question 1 - Did the applicant and other parent live together for at least 6 months? The applicant must provide, or confirm, if this information is already recorded by child support:
Question 2 - Have the applicant and other parent been separated for more than 3 years? The parent can only apply within 3 years of separation, and if their application is granted, post-separation income can only be excluded for a maximum of 3 years after separation. The 3 year period is not extended if there is a period of reconciliation of less than 6 months (during such a period of reconciliation, the assessment can be suspended). See Suspension of child support liability on reconciliation. If the parents reconcile for a period longer than 6 months, their child support assessment will end. If they separate again and make a new application for assessment, a new PSI application could be lodged in relation to the new separation date. However, all the relevant tests would apply in relation to the new separation date. Question 3 - Are the applicant and other parent still separated? The applicant and the other parent must still be separated at the time of the application. Confirm this by checking the case Involvement List in Cuba. Make sure the case between the applicant and other customer is still active. The References page has a link to more information about the 3 requirements in the Child Support Guide Chapter 2.5.2: Exclusion of additional income earned post-separation. Service Officers must be satisfied the applicant meets the 3 requirements listed above. Check the External Information window in Cuba to confirm the parents' relationship details:
If these checks do not match the information given by the applicant, contact the other parent. See Contact with Child Support customers. If the other parent cannot be contacted by phone, send a CAL letter requesting contact. See Letters Cuba Process Help. If the other parent disputes the information the applicant has given or the other parent cannot be contacted, request evidence from the applicant. This evidence could include documentation confirming the dates the parents lived together and separated. E.g., utility bills, rental tenancy documents. Give the applicant at least 7 days to provide their evidence. If the applicant does not provide evidence, make the decision using the information available. Is the Service Officer satisfied the applicant meets the 3 requirements?
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5 |
Check Income + Read more ... An application to exclude PSI can only be considered if the parent has been earning additional income after separation. If the parent has not been earning additional income or they began earning the additional income before separation, the application must be refused. Example The parents separated in December 2016. An application for a child support assessment is made and accepted in January 2017. The LRYI used in the assessment is 2015-16. The parent began earning additional income in January 2017. This additional income will be included in the 2016-17 ATI. The parent must wait until Child Support is using the 2016-17 income in the assessment to lodge their application to exclude the additional income. Check the Client Income window to determine the income type used in the assessment. Ask the applicant the date they began earning the additional income. If the ATI used in the assessment does not include the additional income or the applicant began earning the additional income before separation, the application must be refused. See Table 3, Step 6. If the applicant has earned additional income after separation and this additional income is included in the ATI used in the current assessment, continue to next step. Note: the ATI which includes the additional income to be excluded does not have to be an ATO assessed income. However, Child Support must be satisfied of the accuracy of the income used in the assessment and be able to ascertain what part of that income is ‘additional income'. The ATI can be a parent supplied income or a derived income if Service Officers are satisfied the income is accurate and the ‘additional income' component can be ascertained. If a deemed or default income (2/3 Male Total Average Weekly Earnings (MTAWE), indexed default) is currently used in the assessment or the components of the ATI cannot be ascertained, PSI will not be able to be identified, therefore it cannot be excluded. If a new income is received after the application, see Table 4, Step 1. |
6 |
Determine additional income + Read more ... Ask the applicant the amount of additional income they wish to exclude from the ATI used in the assessment. If the income used in the assessment is an estimate, go to Step 7. A customer may earn additional income by:
Note: while total net investment losses are included in a parent's ATI, an increase in the total loss is not considered additional income for the purposes of PSI. Only an increase to the amount of income received due to the parent's investment income may be considered when deciding whether the parent has additional income for the purposed of a PSI application. Confirm the amount of additional income earned by comparing the parent's pre separation income to their PSI. Check ATO systems to determine the parent's taxable income prior to separation, see the External searches guide. Use the last full financial year prior to separation for comparison. Example If the parents separated in December 2015 compare the 2014-15 (pre separation) income to the income used in the assessment. If the earnings were consistent throughout the 2014-15 financial year; or during the 2015-16 financial year between July and December 2015 (prior to separation), a direct comparison could be made. Where the parent's income had varied throughout the 2014-15 financial year; or during the 2015-16 financial year between July and December 2015 (prior to separation), the 2014-15 income will provide an indication of the pre separation earnings, however further investigation will be required to determine the parent's income immediately prior to separation. If the parent's PSI is greater than their pre separation income due to the re-packaging of benefits such as a change to a previously reported superannuation amount, the parent ATI has not changed. See the example below for more details. This is only applicable where the parent's child support assessment is based on their 2009-10 ATI or greater. For WA ex-nuptial parents, reportable superannuation contributions and net financial investment losses with the exception of rental property losses will only be included in their ATI for CS Periods starting on or after 3 March 2011. E.g., a parent lodged an application advising their ATI has increased from $40,000 in the previous year to $50,000 currently. The parent advises they have changed their work situation to earn the extra $10,000 in order to support themselves after separating. The application is to exclude the additional $10,000 from their ATI for child support. During the application process, the Service Officer finds the parent previously had an arrangement with their employer to salary sacrifice $10,000 per annum into a superannuation fund in the parent's name. This reduced the parent's taxable income from $50,000 to $40,000. Since separation, the parent has ceased the salary-sacrifice arrangement with their employer opting to receive the money as part of their wages instead. As the parent's ATI has not changed, the PSI application must be refused. The additional income amount can also be calculated by looking at how much additional income the parent earned per pay period from the date the parent began earning the additional income to the end of the financial year in which the income was earned. E.g., Mary's child support assessment is based on the 2012-13 ATI of $30,000. Mary started a second job on 1 March 2013 and is earning an additional amount of $100 per week. From 1 March 2013 till 30 June 2013, Mary earned additional income of $1,600. The amount of $1,600 could be considered for exclusion from the 2012-13 income used in the assessment. Service Officers must be satisfied of the accuracy of the additional income amount the applicant has claimed.
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7 |
Estimates + Read more ... Where a parent has lodged an estimate of their income, they can make an application to exclude PSI if they are currently earning additional income. This is because the additional income is already being used in the assessment. An applicant can lodge an estimate after Child Support has already accepted an application to exclude PSI. For their estimate to be accepted, it must be at least 15% less than the already-reduced ATI being used in their assessment. Once their estimate has been accepted, the parent may then apply again for post-separation income to be excluded, but their new ATI (provided in their estimate) must be more than they were earning prior to separation. This means it is unlikely that an application would be successful in these circumstances. For an estimate based scenario, see Examples in the Resources page. Service Officers must be satisfied of the accuracy of the additional income amount the applicant has claimed. When unable to confirm the additional income amount through system checks like ATO, for examples of evidence the applicant can provide, see Table 2, Step 1. If satisfied of the accuracy of the additional income amount, go to Step 8. |
8 |
Can the additional income be excluded? + Read more ... Only income earned in accordance with a pattern of earnings established after separation and outside of the 'ordinary course of events' can be excluded from an applicant's ATI. Ask the applicant how they earned the additional income. The applicant must show their additional income earned after separation would not have been earned during the course of the relationship. Ask the applicant what their pattern of work before separation was, e.g.:
Determine whether this pattern of earnings differs to their pattern of earnings after separation. Income that could be considered as being earned outside of the 'ordinary course of events' includes:
Income that is not considered to be earned outside of the 'ordinary course of events' includes:
If it appears the additional income has been earned in accordance with a pattern of earnings established after separation and 'outside the ordinary course of events', see Table 2, Step 2. If not satisfied the additional income has been earned in accordance with a pattern of earnings established after separation and 'outside the ordinary course of events', the application must be refused. See Table 3. Step 6. If Service Officers require evidence or further information to determine whether the income was earned in accordance with a pattern of earnings established after separation and 'outside the ordinary course of events', see Table 2, Step 1. |
Gathering evidence and process for decision making
Table 2
Step |
Action |
1 |
Gather evidence + Read more ... Service Officers must be satisfied about the following:
This can mean seeking evidence from the applicant and/or performing searches to substantiate their claims. The need for evidence and additional information to verify the applicant's claims is decided on a case by case basis. It is not mandatory the applicant supply evidence and additional information. A decision must be based on the information available. Advise the customer the application may be refused, if evidence or additional information is requested from them but is not received within the timeframe. The timeframe will vary depending on the type of evidence the applicant needs to provide. Evidence the parent could provide may include:
The following searches may be completed to verify the applicant's claims:
If unable to contact the parent by phone to request additional information send a MX1-1 Request for Client to Contact CSA letter using the pre-approved text. Correct text is 'Post separation income more information required letter text' in the Letters Cuba Process Help options for Request to Contact CS letter. A parent's application to exclude PSI can be pended if Service Officers are waiting for more information or evidence before making a decision. Satisfied by the additional information provided by the customer or obtained by the Service Officer? Use the PSI application and decision macro when discussing and processing applications to exclude income earned after separation.
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2 |
Parent contact + Read more ... If the parent's application is likely to be accepted, contact the other party to discuss the following:
Do not breach the applicant's privacy. Service Officers may discuss facts that are critical to the decision because the principles of procedural fairness require that parents have a right to know the basis of any decision that affects them. Disclosing such facts is therefore permitted because it is necessary for the purposes of the Act. However, facts such as an employer's name or work location should not be revealed. Has the other party provided different information to the applicant?
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3 |
Make decision + Read more ... Analyse the information supplied in the application and gathered by investigations. An application must be accepted if:
Does the application meet the above requirements?
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Decision determined and parent notification process
Table 3
Step |
Action |
1 |
Accept application + Read more ... Date of Effect An accepted application will usually take effect from the date the PSI application was made. In special circumstances, the application to exclude additional income earned after separation can apply from the start of the CS Period in which the application was lodged. An accepted application to exclude PSI cannot be revoked. However, the parties can lodge a child support agreement which would override the PSI decision. Where an application for additional income earned after separation has been accepted, the reduced ATI is only applied to the child support case between the parents who separated, not any other case. Use the PSI application and decision macro when discussing and processing applications to exclude income earned after separation. Paste the completed PSI application and decision document in a notepad in the Post Separation Income window. Court Order, Agreement or COA in place This is a manual workaround as Cuba does not have functionality to accept a PSI application when there is a court order, agreement or COA in place. If accepting an application and there is a court order, agreement or COA decision in place:
To process an accepted application, see Post Separation Income (PSI) Cuba Process Help. |
2 |
30% cap + Read more ... The post separation additional income amount excluded must not be more than 30% of the parent's ATI. If the total amount of additional income earned is more than 30% of the ATI used in the assessment, only exclude 30% of the ATI. Example 1 John’s additional income earned in 2013-14 has been calculated at $15,000. John's 2013-14 ATI was $40,000. 30% of $40,000 = $12,000. This is the maximum amount of additional income that could be excluded from the assessment. This means that while John earned additional income of $15,000, only $12,000 will be excluded from John's ATI. Example 2 Mary's additional income earned in 2014-15 has been calculated at $1,600. Mary's 2014-15 ATI was $20,000. 30% of $20,000 = $6,000. This is the maximum amount of additional income that could be excluded. Therefore, the full amount of Mary's additional income, that is $1,600, can be excluded from her ATI. Seek Service Support Officer (SSO) support if help is needed in determining the maximum amount of additional income to exclude. ATI can reduce to less than the pre separation income In some cases the applicant’s ATI can reduce to less than the pre separation income amount. If the requirements for excluding the additional income are met and the amount of the additional (post separation) income determined, the whole amount will be excluded (up to 30% of the ATI) even if this would reduce the ATI to an amount less than the pre-separation ATI. Example 3 Abdul’s additional income earned in 2017-18 has been calculated at $16,000. Abdul’s 2017-18 ATI was $60,000. 30% of $60,000 = $18,000. This is the maximum amount of income that can be excluded. Therefore, the full amount of Abdul’s additional income, that is $16,000, can be excluded from the assessment. Abdul’s ATI prior to separation was $50,000. The full amount of Abdul’s additional income can be excluded, reducing Abdul’s 2017-18 ATI to $44,000, which is less than Abdul’s pre separation ATI. |
3 |
Date of effect - special circumstance + Read more ... Where special circumstances apply to the date of effect, consider the particulars of the case. Child Support will be satisfied that special circumstances exist where a parent was prevented from applying earlier, but once they were able to apply they did so within 28 days. For details and examples on circumstances in which a parent will be considered to have been prevented from applying earlier see, the Child Support Guide 2.5.2: Exclusion of additional income earned post separation. |
4 |
Notify parents + Read more ... When Child Support has made a decision on an application for additional income to be excluded, the parent must be contacted and advised of the outcome and further options. Has the application been accepted?
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5 |
Application accepted - contact applicant + Read more ... Contact the applicant to advise of the decision to accept their application. Discuss the following:
Accepting the application will generate letter PSI 1-1 'Application to exclude post separation income accepted' for both parents. |
6 |
Application refused - contact applicant + Read more ... Contact the applicant and discuss the following. See Contact with Child Support customers:
Use the PSI application and decision macro when discussing and processing applications to exclude income earned after separation. If the reason for refusal is, the parents separated more than three years ago:
If the reason for refusal is:
Select You have not provided sufficient evidence to support the application as the rejection reason in the Post Separation Income window in Cuba. Delete the letter that generates as this will state the incorrect refusal reason. Issue a UQ4.00 Application to exclude Post-Separation income refused - Applicant. To process a refused application, see Post Separation Income (PSI) Cuba Process Help. |
New income information received after PSI application approved
Table 4
Step |
Action |
1 |
New income information received after PSI application approved + Read more ... If a parent:
they do not need to make a new application to have the new ATI reduced by the approved PSI amount, but this will need to be processed manually. The new ATI will not automatically be reduced by the approved PSI amount in Cuba. When PSI has been excluded from an ATI that is updated or replaced with a different ATI prior to the PSI end date, a Post Separation Income Upd Req intray generates and routes to the owning officer. If an ATI has been replaced because of the new income information, select the appropriate option below:
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2 |
New income equivalent to previous ATI + Read more ... If the new ATI is the same amount as the previous ATI used in the assessment, the actual PSI amount will not change. The PSI exclusion will need to be re-loaded into Cuba. A provisional income should not be replaced by another provisional income of the same amount. Example A PSI application was lodged and accepted. The parent's PSI application was based on their pre separation income of $40,000 (2007-08 taxable) increasing to $50,000 after separation (ITD) 2008-09. The approved PSI amount excluded was $10,000. The parent lodges their 2008-09 tax return, produces an ATI of $50,000. The PSI amount of $10,000 can continue to be applied. Re-apply PSI Re-apply the PSI amount as per the original application and apply to Cuba. See Post Separation Income (PSI) Cuba Process Help. Contact parent Contact the parent and advise:
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3 |
New income lower than previous ATI + Read more ... Depending on the amount of the income reduction, if the new ATI is lower than the current ATI used in the assessment:
New income less than previous ATI and less than pre-separation ATI Example A PSI application was lodged and accepted. The parent’s PSI application was based on their pre separation income of $40,000 (2007-08 taxable) increasing to $50,000 after separation (ITD 2008-09). The approved PSI amount excluded was $10,000. The parent lodges their 2008-09 tax return, which produces an ATI of $32,000. The PSI amount of $10,000 cannot be excluded from the updated ATI as it is lower than the pre separation ATI of $40,000. Contact parent Contact the parent and advise:
See Table 3, Step 6. |
4 |
New income less than previous ATI, but more than pre-separation ATI + Read more ... If the income decreases, but not less than the pre separation ATI, the parent may still be eligible to have an amount of PSI excluded from their income. The amount may have decreased from the original approved amount. Example A PSI application was lodged and accepted. The parent’s PSI application was based on their pre separation income of $30,000 (2007-08 taxable) increasing to $50,000 after separation (ITD 2008-09). The approved PSI amount excluded was $14,000. The parent lodges their 2008-09 return, which produces an ATI of $45,000. The PSI amount of $14,000 can no longer be excluded in full because it would reduce the new ATI by more than 30%. Only $13,500 can now be excluded. Recalculate PSI Calculate the new PSI ensuring the applicant's ATI is not reduced by more than 30%. For help calculating the PSI amount, see Table 1, Step 2. Apply the decision to Cuba, see Post Separation Income (PSI) Cuba Process Help. Contact parent Contact the parent and discuss:
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5 |
New income lodged late - split periods + Read more ... If a parent lodges a tax return out of time, or a new ATI is determined after the parent could lodge their tax return on time, the PSI amount to be excluded may change. The application of the PSI amount to be excluded is split into 2 periods. See below: Example - 30% rule applied to split periods If a parent lodges their tax return on time, a lower income will be applied to the entire period (as per Step 2 and Step 3). If a parent lodges their tax return out of time, the lower income will only apply from the date of lodgement, except where special circumstances apply. See Income Processing for Child Support customers. A PSI application was lodged and accepted. The parent’s PSI application was based on their pre separation income of $20,000 (2014-15 taxable) increasing to $50,000 after separation (ITD 2015-16). The CS Period started on 3 August 2016. The approved PSI amount excluded was $30,000, which was limited by the 30% rule to $15,000. The parent lodges their 2015-16 taxable income out of time, on 9 March 2017, which comes in at $45,000. This has the following effect: 3 August 2016 to 8 March 2017:
9 March 2017 to end of the child support period:
Conduct investigation and recalculate PSI In the above example, the parent’s ATO assessed income is less than their ITD. If this occurs, investigate the parent’s income to determine why the incomes differ. E.g., the parent may have miscalculated relevant deductions. Re-calculate the new PSI for split periods, to make sure the applicant's ATI is not reduced by more than 30%. For help calculating the PSI amount, see Table 1, Step 3. Apply the decision to Cuba - See Post Separation Income (PSI) Cuba Process Help. Contact parent Contact the parent and advise:
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6 |
New income higher than previous income + Read more ... If the new ATI is higher than the current ATI used in the assessment, the PSI amount to be excluded may increase. Example: A PSI application was lodged and accepted. The parent’s PSI application was based on their pre separation income of $30,000 (2013-14 taxable) increasing to $40,000 after separation (ITD 2014-15). The parent had additional income of $14,000 but, due to the 30% cap, the approved PSI amount excluded was $12,000. The parent lodges their 2014-15 return, which produces an ATI of $50,000. As the ATI has increased, the full PSI amount of $14,000 can now be excluded without exceeding the cap. Conduct investigation and recalculate PSI Investigate the parent’s income to determine why the incomes differ. This may be due to miscalculation of relevant deductions. As the new ATI is higher than the ITD, the ITD will be replaced by the new ATI from the beginning of the CSP. Calculate the new PSI for the whole CS Period, ensuring the applicant's ATI is not reduced by more than 30%. For help calculating the PSI amount, see Table 1, Step 3. Apply the decision to Cuba. Contact parent Contact the parent and advise:
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7 |
Pre-separation income replaced with a higher income + Read more ... Example A PSI application was lodged and accepted. The parent's PSI application was based on their pre separation income of $40,000 (ITD 2014-15) increasing to $50,000 after separation (ITD 2015-16). The approved PSI amount excluded was $10,000. The parent advised they changed their work situation to earn the additional $10,000 in order to support themselves after separation. The parent lodges their 2014-15 return, which produces an ATI of $60,000. This means the PSI application should never have been accepted because the pre separation income was higher than the PSI. Approved PSI application can be retrospectively refused if:
Apply decision The decision to exclude the PSI amount must be refused in Cuba. See Post Separation Income (PSI) Cuba Process Help. Contact parent Contact the parent to advise:
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8 |
Document decision and notify parent + Read more ... Document the parent contact and re-calculation of the PSI in the Post Separation Income window in Cuba including:
Notify parent When a new income information is received, the parent must have been contacted to be advised of any change to the assessment and/or excluded PSI amount. When the change has been processed and accepted in Cuba, the letter PSI 1-1 'Application to exclude PSI accepted' will generate. |