Could someone help me understand why a person paying child support has their taxable income deducted on the personal income tax return? I fund the majority of my childrens costs which far exceed what I receive in child support but my contribution is not recognised as child support.
Hello @Storm1978
There are two different terms that need to be understood here.
The first is taxable income which is what you pay tax on. It's your gross income less any eligible deductions. Child support payments are not eligible deductions for this purpose.
So someone paying you child support is paying that from after-tax earnings. They've already paid income tax on it.
Adjusted taxable income (ATI) is used to work out a person's eligibility for various tax offsets. It is worked out by taking the taxable income, adding various other payments and benefits like super, and fringe benefits, and then deducting any child support payments the person has made. These are deducted because they've already paid tax on them as explained.
ATI takes into account a person's dependants as well.
Hello @Storm1978
There are two different terms that need to be understood here.
The first is taxable income which is what you pay tax on. It's your gross income less any eligible deductions. Child support payments are not eligible deductions for this purpose.
So someone paying you child support is paying that from after-tax earnings. They've already paid income tax on it.
Adjusted taxable income (ATI) is used to work out a person's eligibility for various tax offsets. It is worked out by taking the taxable income, adding various other payments and benefits like super, and fringe benefits, and then deducting any child support payments the person has made. These are deducted because they've already paid tax on them as explained.
ATI takes into account a person's dependants as well.
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