If the income used in the assessment is not correct, either parent can provide an Estimate of Income to the Department of Human Services – Child Support in the following circumstances:
- the estimated income must be at least 15% lower than the income used in the assessment;
- estimates can only be lodged for future periods, ie an estimate cannot change past periods prior to the day on which the estimate is made;
- estimates start from the date the parent provides the estimate to Child Support, or from a nominated future start date;
- the parent wishing to provide an estimate must have lodged their most recent tax return, or provided DHS-Child Support with their adjusted taxable income for that period;
- an estimate can be lodged for the whole or a part of a financial year;
- an estimate cannot replace an income in an assessment that has been fixed by a court decision or through the Change of Assessment process.
When lodging an Estimate of Income, parents are also asked to provide the income they have earned up to the day on which they lodge their Estimate. It is important that this ‘year-to-date’ figure is accurate, as it will be used when the DHS-Child Support reconciles the estimate with the actual income that the person has earned.
If there is any change to their income during the estimate period, parents are obliged to update their estimate of income by notifying DHS-Child Support.
Estimates are reconciled with taxable income after the end of the financial year. If the actual income is higher than the estimated income, the assessment will be amended to use the higher income for the estimate period. Penalties can apply if a person significantly underestimates their income.
NB: It is important to ensure that estimates include all types of taxable income such as a drawdown on superannuation or any event that might attract capital gains tax.
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