The new Child Support Scheme and changes to Family Assistance
Getting back on track after separation
From 1 July 2008, if you earn extra money to re-establish yourself after separation you can apply for that extra income not to be included in your child support assessment. This will be done in a simpler way than the formal change of assessment process.
This means that 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, if you didn't earn that income before separation.
Both parents are entitled to apply to have post-separation costs excluded from the child support assessment.
The limits to this provision are:
- income can only be exempt for three years after separation
- exempt income can be no more than 30 per cent of your adjusted taxable income
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.