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Australian Defence Force personnel serving in war-like operations
If the paying parent is a member of the Australian Defence Force (ADF) and they serve in war-like operations, they receive a tax-free salary as well as additional allowances paid as compensation for serving in a war-like zone. As a result their taxable income will decrease and their net income will increase. These changes may affect your child support entitlement.
If the paying parent receives a tax-free salary and allowances, what is the effect on my current child support assessment?
CSA will not automatically make adjustments to an existing child support assessment if the paying parent begins serving in a war-like operation, because your child support assessment is based on their previous year's taxable income. Your child support entitlements will continue to be on this basis.
The paying parent may make an application for a reduction of child support based upon their lower taxable income, alternatively you may make an application for a change of assessment based upon the payer's increased net income.
See lodging an estimate and change of assessment.
While the paying parent is deployed overseas, they can advise CSA that their taxable income has been reduced and they wish to use an estimate of their reduced taxable income for the rest of the child support period. This would result in a reduction in the amount of child support payable.
If the paying parent chooses to make an estimate, you are entitled to apply for a change of assessment on the basis that the revised assessment does not accurately reflect the true amount of income available to the paying parent.
Although all cases are different, it is likely that such an application would be successful and child support would be increased to something similar to what they would pay based upon their current income, provided there were no other changes in circumstances.
You are entitled to make an application for an increase in child support on the basis that the paying parent is receiving additional allowances. Generally, an assessment will not be changed if the only change to the paying parent's circumstances is the receipt of those additional allowances. As with all applications for a change to the assessment, CSA needs to consider the circumstances of both parents to determine whether it would be fair for all parties involved to make a change.
How does it affect subsequent child support assessments?
When the paying parent lodges their next tax return, CSA will issue a new child support assessment using the taxable income shown on their tax statement. This new amount will cover their income for the period while they were serving overseas. That taxable income will not include the tax-free salary.
In calculating this new assessment CSA will not include tax-free defence allowances because they are not employer-provided reportable fringe benefits. Because their income during their deployment was tax-free, their assessment will decrease.
When this new liability is calculated, you can apply for a change of assessment to have the child support assessment increased on the basis that the revised assessment does not now accurately reflect the true amount of income available to the paying parent. This could be because of the tax-free nature of their income (if they are still serving overseas), or because they are now earning a much higher taxable income upon their return to Australia.
Although all cases are different, it is likely that such an application would be successful and child support would be increased to something similar to what they would be required to pay based upon their current income. As with all applications for a change to the assessment, CSA needs to consider the circumstances of both parents to determine whether it would be fair for all parties involved to make a change.
Please contact CSA for more information
This information is only a guide to what the outcomes might be because both parents' individual circumstances need to be taken into account. You should always discuss your situation with CSA.
For more information contact CSA. For specific information on the change of assessment process, call 131 141.
