Income processing for Child Support customers 277-07010000

Item

Description

1

Income Types

The following incomes may be used in a child support assessment:

• Taxable income - Australian Tax Office (ATO) issued
• Provisional incomes, including:
• Derived income – customer supplied Income Tax Declaration (ITD)
• Derived income - manual (calculated by Child Support)
• Derived income - automatic (supplied by CLK/DVA)
• Return Not Necessary (RNN) Deemed income – manual (confirmed by Child Support)
• Deemed income
• Default - indexed default
• Default - 2/3 Male Total Average Weekly Earnings (MTAWE)

All provisional incomes should be considered in priority as listed above where there is no ATO issued income for the last relevant year of income. The priority of incomes to use in an assessment is the same for both domestic and international customers. See Income processing for Child Support customers (International Parents).

Note: an income should not be replaced by a less accurate income.

For details on Estimates see Child Support estimates (Post 1 July 2010), Child Support estimates review (Post 1 July 2010) and Child Support Estimates - Reconcile (from 1 July 2011).

2

Income Definitions

Adjusted taxable income (ATI): A customer's adjusted taxable income is made up of taxable income plus all of the following for the last relevant year of income:

• reportable fringe benefits
• target foreign income
• total net investment loss
• reportable superannuation contributions
• specified tax-free pensions or payments

Child support income (CSI): A customer's CSI is their:

• adjusted taxable income less
• the self-support amount less
• any relevant dependent child amount less
• any multi-case allowance

Last Relevant Year of Income (LRYI): The last relevant year of income is the last financial year of income that ended before the start of the child support period.

Provisional income: Any income that is not an ATO issued taxable income or amended ATO taxable income (including overseas taxable incomes) and include derived, deemed and default incomes. Letters refer to a derived, deemed or default income as a provisional income. Note: an ITD is a type of derived income and is listed as a provisional income on customer letters.

Reasonable approximation of income: An income amount that, based on the information available regarding the customer's employment situation and other sources of income, is likely to accurately reflect the customer's ATI.

Item

Description

1

Income processing example

A customer has not yet lodged their tax return, but has provided an ITD specifying their ATI for the LRYI. The Service Officer may be satisfied the ITD is a reasonable approximation of their ATI because the amount of the ITD was similar to the customer's last ATO assessed income and the customer's circumstances have not changed. If the customer does not have an ATO assessed income history, or the Service Officer is aware their employment circumstances have substantially changed, the Service Officer may request evidence from the customer, for example a payment summary or a payslip with a year to date amount. If still not satisfied the ITD provided by the customer is a reasonable approximation of their ATI, the Service Officer may decide it is not appropriate to use the amount specified in the customer's ITD to calculate the child support assessment. The Service Officer may then consider whether there is information available that would allow a manually derived ATI to be determined.

2

Return not Necessary (RNN) deemed income example

A customer notifies they are not required to lodge their tax return for the LRYI. The Service Officer is to check ATO systems to make sure the customer has a ‘return not necessary’ status recorded for the financial year.

If the customer does not have the RNN status on the ATO systems:

• refer the customer to the ATO website for further information.
• an RNN deemed income can be manually keyed by the service officer

When keyed Cuba automatically determines the RNN Deemed income amount based on the relevant self-support amount (1/3 MTAWE). For example, if the assessment was using the 2022/2023 LRYI then the 2023 Basic Value table is used to determine the RNN Deemed income of $27,508.

Item

Description

1

Transitional Arrangements (1 July 2011)

New rules apply to child support periods starting on or after 1 July 2011.

Assessment letters for child support periods starting on or after 1 July 2011 that generate before 1 July 2011 will use the existing (pre July) income rules.

If Child Support later receives more recent income information these incomes may be re-assessed using the new rules from the beginning of the child support period, subject to the usual date of effect rules.