A Bankrupt is able to earn a certain amount of income without having to pay any money back to his Bankrupt Estate (his creditors). Any after tax net income earned above this threshold has to be split 50:50, with the bankrupt retaining half the income and the other half being repaid to the Bankrupt Estate.

Currently the income threshold is set at $55,446.30 per annum. This threshold increases if you have more people dependent upon you (i.e. children). See the table below for the relevant increases.

Dependants                       Threshold

0                                              $55,446.30

1                                              $65,426.63

2                                              $70,416.80

3                                              $73,189.12

4                                              $74,298.04

Over 4                                   $75,406.97

Additionally, if you have to pay child support that is registered with the relevant child support agency within your state or territory or pursuant to a Family Court order you receive a deduction from your income for the amount you paid per annum.

Keep in mind this deduction is only available if the child support is paid pursuant to an Australian Act or Court Order. It is not available for informal arrangements made between ex-spouses. Thus, it could be in your interest to register your arrangement with the relevant authorities (currently the Australian Government Department of Human Services).

Recently, I had a matter whereby a bankrupt was paying child support in a neighbouring country to Australia. Under the rules for income contributions, this clearly does not give rise to a deduction. However, in consultation with the appropriate regulating authority, given it would be manifestly unfair that one bankrupt would have to pay significantly more then another bankrupt simply due to the location of care of the child, I allowed the equivalent of a deduction under my discretionary powers pursuant to section 134 of the Bankruptcy Act.

This is just one example of where having the right Trustee substantially advantaged this client. When choosing which Bankruptcy Service to use, speak directly to a Bankruptcy Trustee on 1300 833 183.

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