An order or agreement can set a parent's adjusted taxable income

A court can make a departure order that modifies one or more of the components of the administrative formula that CSA uses to calculate the rate of child support (section 118(1)).

Parents can also modify the formula for their case by making a child support agreement.

4.4.3(a) Formula components
In order to preserve some of the flexibility of the administrative formula, it may be appropriate to vary or set other components of the formula rather than set a fixed annual rate. Orders and agreements like this allow CSA to amend the child support assessment to take into account new information, while continuing to give effect to the order or agreement. Some examples of clauses for agreements and orders that only change one element of the formula follow.

4.4.3(b) Varying a parent's adjusted taxable income

An order or agreement can set a parent's adjusted taxable income. This type of clause may be appropriate if the administrative assessment does not accurately reflect current income or resources.

It affects the income that CSA uses to work out the rate of child support, but allows other changes such as a change to the parents' self-support amount if the parents' circumstances change; or if care changes, such as one of the children moves from one household to live with the other parent.

The adjusted taxable income can either be set at a fixed amount, or increased (or decreased) by a fixed amount. Fixing the amount may be appropriate, for example, where there are indications of child support avoidance.

Varying the amount may be appropriate, for example, where a parent has access to resources other than those included in their adjusted taxable income, or needs to use resources to meet necessary high expenditure. This allows for the additional resources or demand on resources to be recognised while retaining the flexibility to recognise legitimate changes in normally assessed income.

Note that, because both parents' incomes are treated in the same way from 1 July 2008, the same types of clauses can apply to either parent.

Note: that by setting the adjusted taxable income, a parent cannot lodge estimates because this constitutes an income amount order (see below). Varying the adjusted taxable income without setting it, for example, by increasing it by $10,000, does not constitute an income amount order.

Departure order

• That pursuant to section 117 of the Child Support (Assessment) Act 1989, there be a departure from the administrative assessment of child support payable for the child(ren) [child(ren)'s names] as follows.

• For the period from [start date] to [end date] [Parent A's name]'s adjusted taxable income be fixed at an annual rate of $x.

OR

• For the period from [start date] to [end date] [Parent A's name]'s adjusted taxable income be increased/decreased by $x.

Child support agreement

[Parent A's name] and [Parent B's name] agree that [Parent A's name]'s adjusted taxable income will be fixed at an annual rate of$x when calculating child support payable for the child(ren) [child(ren)'s names] for the period from [start date] to [end date].

OR

[Parent A's name] and [Parent B's name] agree that [Parent A's name]'s adjusted taxable income will be increased/decreased by$x when calculating child support payable for the child(ren) [child(ren)'s names] for the period from [start date] to [end date].

Tips and problems

Income amount orders and estimates

The usual formula provisions in the Assessment Act allow a parent to elect to have their child support based on an estimate of their income, if their income has changed (section 60). Estimates are normally available whenever a parent's income has decreased by 15% (section 60(3)).

They are prospective and relate to the remaining part of a particular child support period (section 61). Once a parent has lodged an estimate of their income, they may make a new estimate at two-monthly intervals (section 62) and must advise CSA of any change that affects the accuracy of the estimate (section 63A).

However, a parent with an income amount order (section 5) cannot lodge an estimate (section 60(2) - see below for definition) while the income amount order is in force. From 1 January 2008, where an income amount order ceases, an estimate can be made for the remaining part of the child support period.

A determination under Part 6A, a court departure order or an agreement is an income amount order, if it:

• sets the annual rate of child support payable; or
• sets the adjusted taxable income or child support income of either parent, or makes provision for the calculation of one of those amounts.

An order or agreement that varies these elements by adjusting rather than setting them, or that varies other elements of the formula (including the parents' cost percentages or child support percentages, the costs of the child, or either parent's self-support amount) is not an income amount order.

An income amount order can relate to either parent or to both of them. An income amount order relating to only one parent will not prevent the other parent from making an estimate (section 60(2)).

Where a parent cannot lodge an estimate because an income amount order is in place, they may be able to apply to CSA to depart from the assessment if the use of income produces an unjust and inequitable result. Child Support (Assessment) Act 1989