Your income

Your income is used to calculate the cost of your children. Each parent’s income is considered in the same way and combined to work out the costs of the children. Each parent’s share of the total income shows how much of the children’s costs they should meet.

Click on one of these topics for more information:

What income do we use for child support?

It’s important for all parents to lodge a tax return on time, as this is the best way to ensure your child support income is correct.

You need to lodge a tax return each year so we are able to work out your income. If you do not lodge a tax return and we can’t work out your income from other information, we will use a provisional income to assess your child support. We do this by indexing your most recent Australian Tax Office (ATO) assessed income in line with wages growth.

A broad range of income amounts are taken into account to work out your child support payments, for both parents. We add up these amounts to get your adjusted taxable income, which is based on your last completed financial year of income.

If we use a provisional income, and you later lodge your tax return, we may not be able to back-date any changes to your assessment if your ATO income is lower.

Example: Jamie

Jamie and Lyn’s child support period starts on 13 November 2010. Jamie’s adjusted taxable income will be based on his 2009–2010 taxable income.

Your adjusted taxable income comprises the following amounts.

Taxable income

This is the income shown on your tax return. While the formula uses taxable income, the impact of tax on your disposable income is taken into account when we work out the costs of raising your children.

Note: Some income support payments are taxable, some are not.

Gross reportable fringe benefits total

This is the value of gross reportable fringe benefits for the income year, which is reported on your payment summary. Or ask your employer to tell you the expected amount for the year.

A fringe benefit is a benefit provided to you because of your employment. Examples include using a work car privately, low or no interest loans for employees, or a living away from home allowance.

Target foreign income

This is any foreign income you receive that is not taxable income or a fringe benefit.

Total net investment losses

There is an investment loss if the deductions for financial investments are more than the gross income from those investments for the year. There is a rental property loss if the deductions for the rental property are more than the gross income from the property for the year. The excess amounts are added together and this is the total net investment loss.

Only rental property losses are included for financial years prior to 2009/10.

Some tax-free pensions or benefits

This includes disability support pensions, wife pensions and carer payments. It also includes the following payments from the Department of Veterans’ Affairs:

  • invalidity service pension
  • partner service pension
  • income support supplement
  • Defence Force income support allowance

Reportable superannuation contributions

A reportable superannuation contribution is any salary sacrificed super contributions or extra contributions an employer makes to your super fund on your behalf. This includes any personal contributions made to a super fund that can be claimed as an income tax deduction on your tax return.

Reportable superannuation contributions are not included in adjusted taxable income for financial years prior to 2009/10.

Child Support Income

Your child support assessment is based on your child support income. To get your child support income we take your adjusted taxable income then deduct a self-support amount, then deduct a relevant dependent child amount and/or a multi-case allowance amount (if applicable).

Are both parents’ incomes treated the same?

Yes. Both parents have the same self-support amount set aside, and both parents’ child support incomes are combined to work out the costs of raising the children.

The costs of children are divided between the parents according to each parent’s share of the total combined income. This is called the income percentage.

Example: Joseph and Ellie

Ellie and Joseph have separated and have a child support assessment, for a child support period starting on 13 November 2010. Joseph's taxable income for 2009–10 was $22,000. He also received $28,000 in foreign income. Added together gives his adjusted taxable income of $50,000. The self-support amount of $19,618 is deducted from his income, leaving $30,382—which is his child support income.

Ellie's taxable income for 2009–10 was $25,000. She also had a $2,000 total net investment loss and $3,000 was shown on her payment summary for gross reportable fringe benefits. Added together gives her an adjusted taxable income of $30,000. The self-support amount of $19,618 is deducted from her income, leaving $10,382—which is her child support income.

Added together, Joseph and Ellie's combined child support income is $40,764. Their income percentages show the portion of the costs of the children each parent should meet. For Joseph, this is $30,382 divided by $40,764—he needs to meet 74.53 per cent of costs. For Ellie, this is $10,382 divided by $40,764—she needs to meet 25.47 per cent of costs.

Figures, used in this example, such as the self-support amount, are indexed annually.

Show me the latest figures.

If your income details change

It’s important that you tell us about changes to your income as soon as it happens, because we may not be able to backdate the change. Learn more about income changes.

Is your new partner’s income taken into account?

No. Your or the other parent’s new partner’s income is not taken into account when working out child support payments because the biological parents have a responsibility to support their children financially. This only relates for the basic application of the formula.