Deemed and Default income for Child Support customers 277-07010030

From 1 July 2023 a RNN Deemed income is manually loaded when a customer has:

• notified the ATO that they are not required to lodge a tax return (non-lodgement advice), and
• have a lodgement status of Return not necessary recorded on their ATO Income Tax records

The date of effect will be recorded when the income is loaded and saved in Cuba.

Cuba automatically calculates the RNN deemed income amount, which is equal to the Child Support basic values self-support amount (1/3 MTAWE). Unlike most basic values used in an assessment the self-support amount for a RNN Deemed income is linked to the last for the relevant year of income, rather than to the start date of the child support period (CSP). For example, an RNN income 2022/2023 will be based on the 2023 basic values.

For example, if a child support period began on 1 February 2024, the last relevant year of income used in the CSP is 2022/2023. Even though all other basic values will be determined by the start of the CSP (e.g. the values used for the 2024 calendar year), since the last relevant year of income ended in 2023, the RNN deemed income will be used based on the 2023 basic values.

Note: record a RNN deemed income whether it will be used in the assessment or not. The system will recognise this income as reliable for the purposes of the COI (client of interest) indicator, and deem for child support purposes that the customer has met ATO lodgement compliance.

When a customer has:

• not lodged an income tax return, or supplied an income tax declaration (ITD), for the Last Relevant Year of Income (LRYI)
• lodged an income tax return for the year prior to the last relevant year

Cuba automatically calculates a deemed income by applying an indexation factor to the taxable income of the year prior to the LRYI, see Child Support (Assessment) Act 1989 subsection 58(3) and section 58AA.

Note: if a derived income is recorded in Cuba, a deemed income will not be calculated.

An income cannot be deemed manually. Cuba will automatically perform the indexation of an income.

A deemed income is also known as a provisional income.

There are two types of default incomes:

• Indexed default, and
• 2/3 MTAWE

Indexed default

An indexed default income is calculated by indexing the most recent Australian Taxation Office (ATO) assessed income by the ATI indexation factor.

Note: an indexed default is only created where the ATO income is from earlier than the financial year immediately prior to the Last Relevant Year of Income (LRYI). An ATO income for the immediately prior year would result in Cuba calculating a deemed income.

2/3 MTAWE (Male Total Average Weekly Earning)

An amount that is at least 2/3 of the annualised Male Total Average Weekly Earnings (MTAWE) figure for the relevant June quarter.

Note: due to a change in the frequency of the average weekly earnings series from quarterly to biannual, the annualised MTAWE figure will be based on the relevant June quarter from 2013. Prior to 2013 the annualised MTAWE figure was based on the relevant September quarter, see the Child Support Guide 2.4.2: Formula tables and values.