Earning extra income after separation
If you earn extra money after separation you can apply for some of the extra income to be excluded from your child support assessment. You don’t need to go through a formal change of assessment process.
This means that some of the extra income you earn after separation, for example from second jobs or overtime, can be excluded from your child support assessment for up to three years after separation.
Having this extra money excluded from the assessment can help parents with many post-separation costs such as buying a new car, setting up a new home or purchasing items to support the children during care.
In order to have this extra income excluded you need to show you didn’t earn that income before separation and the income would not have been earned in the ordinary course of events.
Both parents can apply to have additional post-separation income excluded from the child support assessment.
However, remember:
- income can only be exempt for three years after separation
- excluded income can be no more than 30 per cent of your adjusted taxable income.
To apply for extra income to be excluded from your assessment call us on 131 272.
Example: Max
Max separates from his partner, Liz, in September 2008. He last lodged a tax return in August 2008, showing his income was $40,000. His child support period starts in November 2008, based on his income of $40,000. He also starts working a second job, which he would not have done if he and Liz had not separated.
Max lodges his next tax return in August 2009, and this starts a new child support period. He earned $8,000 in his second job, as well as his normal salary of $40,000, so his tax return shows an income of $48,000. Max applies to have the extra income that he wasn’t earning before separation excluded from his child support income. He is assessed on an income of $40,000.
Max lodges his next tax return in September 2010, and this starts a new child support period. His tax return shows an income of $49,000. Max applies to have the extra income that he wasn’t earning before separation, excluded from his child support income. He is assessed on an income of $40,000.
Max doesn’t lodge another tax return until October 2011. However, because extra income for separation costs can only be excluded for three years from separation, from September 2011, Max is assessed on the total income shown in his previous tax return, that is, on $49,000. If Max ceases to work a second job, and this reduces his income by more than 15 per cent, he can lodge an estimate of his current income and he will be assessed on this current income.