Donate Child Support Calculator
Skip navigation

Increase in Salary - declare?

Hi all.



I have just received a significant pay increase and was wondering if I declare to CSA immediately, or wait until lodging tax return for 2008-2009 ( my current tax return will be lodged as old wage based for 2007-2008 ) CSA have always used my tax returns for basing my child support on ( as annual pay increases are about $2k-3k ).



I was wondering which is the correct way to go.

If I am to declare immediatley, would it be wrong to with-hold until lodging next years tax return ( the ex deserves some of her own medicine methinks )



Thanks
Danzig,
          the salary increase should not be used to calculate your CS until it is also included in your tax assessment. CS is most often based upon annual tax assessments and automatically changed when new tax information is available each year. However a word of warning, a late tax return has distinct drawbacks, so lodge on time but not necessarily as soon as is possible.

Does that answer your question?

Oh and welcome.

P.S. there is a calculator available on the Home Page (if this does not cater for the complexity of your situation then let me know as there is another calculator under development that I can tell you how to access).

Nothing requires you to notify your change of income

It is all done on the Tax return unless a change of assessment is lodged. You might as well reap some reward for the payrise or promotion. At the other end and unless you lodge an estimate. If your income drops you will still keep paying C$ at the old rate until the next assessment, usually after the next tax reurn is lodged.

For example, at presnt you can only lodge an initial estimate if your income drops by more than 15%. Perhaps regularovertime you have been working is no longer available, and your income drops by %14%, technically you are not entitled to lodge an estimate and therefore keep paying C$ based on income at the previous rate.

For me - Shared Parenting is a Reality - Maybe it can be for you too!
Thank you for the replies.



Mike - I have used the calculator to great effect recently- good work.

Can my ex order a Change of Assesment if she knows I have been given a payrise?



I am currently paying approx $800 a month in child support, which due to the new calculations drops to $600 next month. The extra $200 a month will allow me to save for flights to see my children more regularly. It is a bonus if I do not have to worry about paying extra until next tax year ( 2008-2009 ) as it will allow me to get back on top.



Cheers
Danzig,
         she could raise a COA under reason 8, however I'm doubt that it would be considered as being just and equitable for you to be singled out. However, how long have you been separated? Could you benefit from the new post separation re-establishment rules, roughly speaking an increase in an earning pattern can be considered as being excluded for the first three years of separation?

Here's part of what the guide says :-

The Guide said
What are the requirements for excluding additional income?

Parents may apply to have additional income (earned, derived or received after separation) excluded from their adjusted taxable income for child support purposes.

The requirements for excluding this additional income are:

    * the parents must have lived together on a genuine domestic basis for at least six months (section 44(1)(a));
    * the last separation of the parents occurred before the application for administrative assessment was made (section 44(1)(b)(ii));
    * the last separation of the parents occurred within the last three years (section 44(1)(b)(i));
    * at the time of the application, the parents remain separated (section 44(1)©);
    * the income must have been earned, derived or received in accordance with a pattern of earnings that was established after separation with the other parent (section 44(1)(d)(i)); and
    * the income must be of a kind it is reasonable to expect would not have been earned, derived, or received by the parent in the ordinary course of events (section 44(1)(d)(ii)).

Additional income

Parents may earn additional income from a variety of sources, including for example, from overtime, a second job, a career change to a higher paying job, or from investment income. For a self employed person, additional income may be earned, derived or received through extending the opening hours of their business, increasing production or developing new markets or new products (to a greater extent than before separation).

The ordinary course of events

Not all additional income that is earned, derived or received after separation will qualify for exclusion from a parent's adjusted taxable income. The new pattern of earnings must have been established after separation and would not have been reasonable to expect in the ordinary course of events.

Income that parents would have been reasonably expected to earn in the ordinary course of events can not be excluded from their adjusted taxable income. For example, it is within the ordinary course of events that parents will earn additional income through regular pay rises, or seasonal variations in income.

However, income that parents earn outside the ordinary course of events is able to be excluded from their adjusted taxable income. This could include income from overtime or second jobs taken on after separation, promotions or a shift to a higher paying job. However, transitioning from an unemployment benefit to employment is considered within the ordinary course of events. Any income to be excluded must still have been earned in a pattern established after separation.

30% limit for reduction of adjusted taxable income


The exclusion of post separation income can not reduce a parent's adjusted taxable income by more than 30% (section 44(3)(a)). If excluding additional income earned post separation would reduce the adjusted taxable income by more than 30%, CSA can only reduce the adjusted taxable income by 30%.

Example

F has an income of $30,000 at the date of separation from M. After separation F's income increases to $60,000 as F takes on a second job. F's child support liability is assessed on $60,000, as that was F's income for the last relevant year of income. F can apply to have the additional income of $30,000 excluded from their adjusted taxable income of $60,000, the extra $30,000 being additional income earned post separation. If F's application is successful, F's current income used in the assessment, $60,000, can only be reduced by a maximum of 30%. Therefore, F's income would be set at $42,000. F has $18,000 excluded from their income before the self-support component is deducted and F's children receive child support based on an adjusted taxable income for F of $42,000.

Three year limit on excluding additional income

Post separation income can not be excluded for more than three years from the date of separation (Section 44(3)(b)).

When does an application to exclude additional income apply?

If CSA accepts an application to exclude additional income earned after separation this will ordinarily apply from the start of the child support period for which the application is lodged until the end of the child support period. However, it will end sooner if the three year time limit (since separation) expires within the child support period.

A new application can be lodged for the next child support period if the other requirements are met and the three year time limit has not expired.

Further information in the guide can be found here The Guide (2.5.2)

Last edit: by MikeT

1 guest and 0 members have just viewed this.

Recent Tweets