Income used in calculating child support payments

We consider each parent’s income equally when we make a child support assessment to determine how much of the child's costs they should meet.

Income from non-parent carers is not used.

We combine the parents’ income to work out the costs of raising their children. Each parent's share of the total income shows how much of the children's costs they should meet.

We take into account a broad range of income amounts from the last relevant year of income for both parents. The last relevant year of income is the financial year of income that ended before we make your assessment. We add up these amounts to work out your adjusted taxable income.

We may make a new assessment when you or the other parent lodges a tax return for the most recent financial year.

We use information about your last relevant year of income from the Australian Taxation Office (ATO) in your assessment. If the ATO doesn’t have your income details, we’ll work out an income for you. If we’ve done this, you should confirm your income details with us as soon as possible. You don’t need to wait until you lodge your tax return.

You can also tell us if we’ve worked out an income for the other parent and you don’t think it’s accurate. We’ll update it if necessary.

If your current income is less than your income from the last financial year, you should contact us to discuss your options.

It’s important you tell us about changes to your income as soon as they happen. We may not be able to backdate the change.

When a parent or child lives overseas, we use their income from the last completed financial year of the country in which they live. Read more about child support when a parent and child lives overseas.

Keep your child support income up to date

The best way to make sure your child support income is up to date is to lodge your tax return on time every year.

If you don’t need to lodge a tax return, tell us your income by:

You should tell us your income as soon as possible so that your assessment is accurate.

If you live overseas and have lodged a tax return in the country where you live, we won’t be automatically told about your tax lodgment. It’s important you tell us your income for the previous financial year at the start of each child support period. You’ll also be asked to provide evidence of your income. This only applies to Australian child support assessments. Read more about child support when parents or children live overseas.

Estimating your income for child support payments

Your last relevant year of income may not reflect your current income. If so, you may be eligible to provide an estimate of your income for the current financial year if:

  • you’ve lodged your tax return for the previous financial year and the ATO assessed your income for that year, or
  • you haven’t lodged your tax return for the previous financial year, but you declared your income to Child Support for that year, and
  • that income amount is used in your current child support assessment, and
  • your current adjusted taxable income is at least 15% lower than the income used in the child support assessment

If your circumstances change and your income goes up or down, you must lodge a new income estimate. You should provide a new income estimate as soon as your income changes. We can’t backdate your income estimate. We can only use it in your assessment from the day you provide it to us. Make sure your income estimate is accurate so you pay or receive the right amount of child support.

You can provide or update an estimate of income using your Child Support online account through myGov.

Your income estimate lasts until the end of the financial year. Your child support period may continue into the new financial year. If your estimate ends before your child support period, we’ll base your assessment on the income we used before you lodged your income estimate. You may need to lodge a new income estimate. You should do this before the end of the current financial year to make sure your assessment remains accurate.

After the end of the financial year, we’ll compare your estimated income against your actual income for that year. If the estimate isn’t accurate, you’ll have a debt or overpayment.

You may not be able to lodge an estimate if your child support assessment is based on:

  • a limited or binding child support agreement
  • a determination made under the change of assessment process
  • a court order, or
  • an assessment made overseas

Provisional income and child support

A provisional income is used in your child support assessment if your income for the most recent financial year hasn’t been assessed by the ATO.

We calculate provisional income in one of the following ways:

  • an amount you tell us is your adjusted taxable income for the relevant financial year, if we’re satisfied it’s a reasonable reflection of your income
  • if you can’t provide this information, we’ll work out your income using available income information for that year
  • if we don’t have enough information to calculate an amount for the previous financial year, but your income for the prior year was assessed by the ATO, we’ll index that year’s income in line with inflation
  • if the ATO hasn’t assessed your income for the past two financial years, we’ll index the most recently available ATO assessed income and:
  • if no ATO income is available for any year, we’ll use two thirds of the MTAWE

If you lodge your tax return late, we won’t be able to backdate an income that’s lower than the provisional income we’ve used unless there are exceptional circumstances. Read more about exceptional circumstances on the Department of Social Services’ website.

You may be able to apply for a Change of Assessment for the period that the higher income was used in your assessment. There are time limits for applying, so you should contact us as soon as possible.

Earning extra income after separation

You may be able to exclude some extra income earned after separation from your child support assessment. You don’t need to go through a formal change of assessment process.

You need to show your extra income was earned in a pattern of earnings that started after separating. You must also show the income wouldn’t have been earned in the ordinary course of events.

Income earned in the ordinary course of events can’t be excluded from your income assessment. Examples include regular pay increases or your usual pattern of overtime.

Income earned outside the ordinary course of events could include:

  • getting a new job on a higher salary
  • extending your operating hours if you own your own business, or
  • income from a second job

However:

  • income can only be excluded for 3 years after separation, and
  • no matter how much extra income you earned, no more than 30% of your adjusted taxable income can be excluded

Having this extra income excluded from the assessment can help you with post separation costs such as buying a new car or setting up a new home.

Both parents can apply to have additional post separation income excluded from the child support assessment. Complete the application for post separation income to be excluded.

Page last updated: 7 December 2016

This information was printed Saturday 10 December 2016 from humanservices.gov.au/customer/enablers/income-used-calculating-child-support-payments It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.