Reason 8B
A parent may apply for a change to a child support assessment because of Reason 8B and the earning capacity of the other parent. In particular, Reason 8B may apply when a parent could reasonably be earning more than they currently do.
Reason 8B is often raised where a parent has become unemployed, reduced working hours, or moved into lower-paid work. The focus is on intentionally unrealised earning capacity.
Definition
There may be a reason for changing the assessment if, in the special circumstances of the case, the assessment of child support results in an unjust and inequitable level of financial support to be provided for the child because of either parent’s earning capacity.
Definition source: Guides to Social Policy Law, Child Support Guide, Version 4.97, released 20 March 2026, 5.2.9 Reason 8B – a parent’s earning capacity.
Role in the formula
The child support formula is based on each parent’s adjusted taxable income (ATI). Reason 8B allows that figure to be replaced where it does not reflect the parent’s unrealised earning capacity.
If established, the decision-maker sets an ATI for the parent for the relevant year. That ATI is based on what the parent could reasonably earn, rather than what they currently report.
The ATI set under Reason 8B can be applied across multiple years. It is commonly projected forward with indexed growth for future periods covered by the decision.
What Reason 8B commonly covers
Reason 8B applies where a parent’s earning capacity is not properly reflected in their current income. Common situations include:
- Not working despite ample opportunity to work
- Working reduced hours below the usual full-time standard
- Changing industry, occupation, or working pattern and earning less
- Voluntary unemployment or underemployment
- Leaving work or reducing work without an adequate justification
- Undertaking study that reduces income
The three criteria for Reason 8B
The decision-maker must be satisfied that three compulsory criteria are met before the assessment can be based on earning capacity rather than actual income. If only one or two criteria are met, a Reason 8B decision cannot be made.
2. Not justified by caring responsibilities or health
3. Affecting child support was not shown to be outside the parent’s major purposes
The decision-maker must also be satisfied that work is realistically available to the parent and that the parent has the qualifications or experience needed to do it.
Ability and opportunity to earn
Where earning capacity is in issue, the decision-maker looks at whether the parent has the ability and opportunity to earn more. This can include qualifications, skills, age, employment history, and local job opportunities. A parent who is qualified in an occupation in demand may be viewed very differently from a parent returning to the workforce after many years away.
The decision-maker may also consider the circumstances in which the parent became unemployed or lost income, the efforts made to obtain work, and any property or financial resources reasonably available to them.
Caring responsibilities and health
A parent will not automatically have an earning capacity attributed to them just because they are earning less. Reason 8B does not apply if the parent’s work decision is justified by their caring responsibilities or state of health.
The decision-maker can look at matters such as the age and number of children being cared for, the availability and cost of child care, medical evidence, treatment, and whether the parent could still work in some restricted or part-time capacity.
Purpose of the parent’s work decision
Reason 8B also looks at why the parent reduced their income. The starting point is a rebuttable presumption that affecting the child support assessment was a major purpose of the parent’s decision about work arrangements. The parent can rebut that presumption, but if they cannot, the assessment may be based on earning capacity instead of actual income.
This does not mean every career change will trigger Reason 8B. The policy allows parents to make ordinary life decisions. But where income has been voluntarily reduced and the parent cannot show that child support was not one of the major purposes, Reason 8B may succeed.
Reason 8B is used about a quarter of the time
In the 2008–09 Change of Assessment figures, earning capacity accounted for 24% of applications by reason. That made Reason 8B one of the main Change of Assessment grounds, behind only Reason 8A at 30%.
Difference between 8A and 8B
Change of Assessment Reason 8, consisting of Reasons 8A and 8B, is broadly concerned with a parent’s true financial capacity. A successful application will usually result in the parent’s ATI being set by the decision-maker.
The key difference is what is being assessed. Reason 8B is concerned with unrealised earning capacity. On the other hand, Reason 8A looks at existing financial resources such as assets, business structures, retained profits, and other sources of value already available.