Estimation of taxable income

2013 Order in Council replaces the provisions for providing an estimation of taxable income for child support to reflect the new formula assessment.

The provisions for providing an estimation of taxable income will be replaced to reflect the new formula assessment.

A person can elect to provide an estimate of taxable income when calculating the adjusted taxable income amount if they expect their taxable income to reduce by 15% or more. An estimate may be for a full child support year or for part of the year. The Commissioner may refuse an estimate on a variety of grounds, including if the annualised estimated income is more than the original taxable income.

If the Commissioner accepts an estimate of taxable income for a period, the adjusted taxable income is recalculated for the period and the formula assessment is adjusted.

A person can give notice to revoke an estimate or can make a subsequent estimate.

Where estimates have been provided, there is an end of year reconciliation to determine if child support has been overpaid or underpaid in the estimation period. The Commissioner must take whatever steps are necessary to ensure that the correct amount of child support is assessed for the child support year.

A person will be liable to a penalty if their year to date income and their estimated taxable income for the elected period is less than 80% of their actual taxable income for the child support year. The penalty is set at 10% of the difference between the child support payable for the period under the estimated taxable income and the child support assessed for the same period through the end of year reconciliation.