Income processing for incarcerated Child Support customers 277-07010040

Determine the income type used in the assessment. Contact with the incarcerated customer will be required where a more accurate income could be used and/or there is an administrative option available

ATO issued taxable income

If an ATO issued taxable income is used in the assessment, it is effective:

• from the start date of the child support period. Check whether it is likely the ATO income reflects their current capacity. If not, contact with the incarcerated customer will be required to discuss administrative options available
• after the start date of the child support period. Check whether there may be grounds to retrospectively apply the income under Section 11.Contact the incarcerated customer to discuss all of their administrative options

Manually derived income

If a manually derived income is used in the assessment, contact the incarcerated customer to obtain a tax lodgement commitment or income declaration and discuss other relevant administrative options.

Check ATO income Tax records to see whether a Return not Necessary (RNN) deemed income can be manually applied. See Deemed and Default income for Child Support customers.

Indexed income

Contact with the incarcerated customer will be required where the assessment uses one of the following indexed provisional incomes:

• Default income
• Deemed income, or
• Automatically derived income

Where the customer's ATO issued income for the last relevant year of income (LRYI) is not available, check whether there is more recent income information available to allow the determination of a more current provisional income. See 3.2.2 Amended tax assessments of the Child Support Guide.

Note: once an ATO issued income has been received the Registrar cannot make a new determination of the customer's income for that year. See 3.3 Provisional income - determination of ATI of the Child Support Guide.

Conduct preliminary searches to gather information that may assist in the determination of a more accurate income, see Derived and declared income for Child Support customers.

In anticipation of manually deriving a new income or making a Section 11 decision, check whether the customer’s incarceration history is recorded on the system. If not, complete an order form for prison data template located in the Resources page and email the form to Data Incarcerated Customers.

Note: To manually derive an income, the customer must generally have received an income for at least 10 months of the Last Relevant Year of Income (LRYI). A period of incarceration will count towards 10 months of income. See Derived and declared income for Child Support customers for further information.

Updates to a provisional income should occur immediately so not to delay making a more accurate assessment; however contact with the incarcerated customer is still to occur as there may be further administrative options available to them.

See Contact with Child Support customers.

Discuss with the customer:

• the period of imprisonment (to assist in determining administrative options for the customer)
• payments that may be received while in prison and administrative options, go to Step 4
• if they believe they are not required to lodge a Tax return. Refer to the ATO website to confirm whether they meet the non-lodgement conditions that apply to child support parents and to lodge a non-lodgement advice. All parents with a child support assessment must notify the ATO and Child Support if they do not need to lodge

Unable to contact customer by phone

If unable to contact the customer by phone send a MX1-1 (CAL) letter:

If unable to obtain an income declaration and the income used in the assessment does not reflect the customer's actual income attempt to manually derive an income, see Table 3 in Derived and declared income for Child Support customers.

A prisoner may receive payments for:

• work
• study
• participation in approved programs, or
• amenity allowance or gratuities (incidental payments for personal items or other minor expenses)

These payments must be considered when updating an incarcerated customer's income.

The following options may be applicable for an incarcerated customer:

• Income declaration see Table 2 in Derived and declared income for Child Support customers
• The customer was unable to provide their lower Adjusted Taxable Income (ATI) on time due to certain circumstances. They can request their ATI be applied from an earlier date. See Exceptions to the income date of effect rules in certain circumstances
• The customer's assessment is the fixed annual rate (FAR). They can make an application for the FAR not to apply. See Fixed annual rate not to apply applications
• The customer's assessment is the minimum annual rate, where the only payments received are those that are prescribed by Section 13 and therefore not considered to be income, the customer can apply for their assessment to be reduced to nil, see Minimum annual rate to nil - Reducing child support assessments
• The customer is incarcerated for an entire financial year, has no other source of income and did not receive any payments while in prison, their adjusted taxable income will be nil. Obtain an income declaration, see Table 2 in Derived and declared income for Child Support customers or manually derive an income, see Table 3 in Derived and declared income for Child Support customers
• The customer has been incarcerated for part of a year, has no other source of income during the period of incarceration their taxable income and did not receive any payments while in prison, will be nil for the incarceration period. When obtaining an income declaration or manually deriving an income, ensure it includes income earnt during the period the customer wasn’t incarcerated
• The customer has only recently become incarcerated, they may be eligible to make an application for a change of assessment, see Change of assessment in special circumstances or lodge an estimate of income, see Child support estimates (post 1 July 2010)

Example 1: Jane is incarcerated. Jane's current assessment is based on an income of 2/3 MTAWE. Jane received a salary of $26,000 for 6 months of the relevant financial year. Jane had no other source of income over the financial year and did not receive any payments while in prison. Jane can lodge an income declaration that reflects the salary of $26,000.

Example 2: John has been incarcerated since January 2007, with a role as the payer in a single child support case. The only income John has received since the incarceration is a small amenity allowance of less than $10 per fortnight. John's current assessment is based on an income of 2/3 MTAWE as more accurate income information is not available. As John is not earning an income John needs to:

• lodge an income declaration, see Table 2 in Derived and declared income for Child Support customers
• apply for the FAR not to apply then
• apply to reduce the minimum assessment to nil

See Fixed annual rate not to apply applications and Minimum annual rate to nil - Reducing child support assessments.

Note: John can request the ATI be applied from the start of the child support period.

A list of relevant Publications, Forms and Referrals is available to assist incarcerated customers manage their Child Support responsibilities while they are in prison, see Incarcerated customers, Publications and forms.