Join our mailing list to stay informed!
Posted by Revive Financial on Feb 28, 2019 2:00:00 PM

Entering bankruptcy does not normally prevent you from working. However, when you earn as a bankrupt, you may be required to pay income contributions towards your bankrupt estate. Whether you pay, and how much you pay, depends on your income.

What is the Income Contributions Threshold?

Thresholds are set out by the Australian Financial Security Association (AFSA) and are dictated by the number of dependents you have during the assessment period. Dependents include children and other people who rely on you for financial support.

Thresholds amounts are updated by the AFSA twice a year on 20 March and 20 September. The thresholds current as at March 2024 are as follows:

Number of Dependents Income Limit
0 $70,006.30
1 $82,607.43
2 $88,908.00
3 $92,408.32
4 $93,808.44
over 4 $95,208.57

What is Classed as Income?

Importantly, it’s not only wages and salary that can assessed. Under section 139L of the Bankruptcy Act, a number of financial gains may be classed as income. These include:

  • Tax refunds
  • Taxable fringe benefits
  • Salary sacrifice/salary packaging amounts
  • Profits from being a sole trader
  • Benefits provided by associated entities including loans, accommodation, expense payments and motor vehicle use
  • Income earned which is paid to a third party
  • Superannuation contributions in excess of required statutory amounts

How is Income Assessed?

Your bankruptcy trustee will typically make an estimated assessment of your income at the start of each year during bankruptcy. A further assessment based on your actual income will then be conducted at the end of the year. They use information and documents you are required to provide including an income questionnaire, pay-slips, bank statements, payment summaries and tax returns.

Once they have been through the information, they will issue you with an income assessment telling you how much you must pay. You will generally be allowed to pay this amount, known as your income contribution liability, in instalments from your income.

How are Income Contributions Worked Out?

If your after-tax income exceeds the statutory threshold (based on your dependents) then you are liable to pay half of the surplus income above that threshold to your bankruptcy trustee.

For example, if you earned $96,000 after tax and you had two dependents, you would have to pay $3,546 in income contributions i.e. ($96,000 – $88,908.00)/2.


Are There Any Deductions Offered?

When your trustee is assessing your net income, they will automatically deduct child support payments or other payments required through family court.

In addition, in certain circumstances you may apply to your trustee for ‘hardship’. These circumstances are related to you experiencing significant financial pressure and include:

  • Ongoing medical expenses
  • Costs of childcare essential for work
  • Particularly high rent when no alternatives are available
  • Substantial expenses of travelling to and from work
  • Loss of financial contribution, usually as a result of a spouse ceasing employment

If the application is successful, it can result in a reduction of the amount of income contributions you need to make.

What are the Consequences of Non-compliance?

If you don’t provide the required income information when requested, your trustee may lodge an offence referral with the AFSA resulting in possible prosecution. Alternatively, they may object to your discharge from bankruptcy resulting in it being extended for another five years.

If you fail to pay, the trustee may:

  • Arrange to garnishee amounts from your wages payable
  • Object to your discharge from bankruptcy which may result in it being extended by a further five years
  • Obtain a judgment for the amount of the unpaid income contributions and take enforcement action against you
  • Force you to open a supervised bank account into which all income must be paid

What if You Don’t Agree with an Assessment?

If you don’t agree with the income assessment made by your trustee, or the decision regarding ‘hardship’, you can request a review of their decision by the Inspector-General. The request for review must be lodged within 60 days of notification. If you have any further questions regarding bankruptcy income contributions or would like to discuss your current financial situation, get in touch today.

For more information on bankruptcy, check out or bankruptcy page here

Topics: Bankruptcy, Personal Debt

How Can We Assist You Today?

Personal Debt Icon Personal
Business Debt Icon Business
Please select an assistance option to continue.

Types Of Unsecured Debts

Credit Card Icon Credit/Store Cards
Personal Loan Icon Personal Loan
Pay Day Loan Icon Pay Day Loan
Tax Debt Icon Tax Debt
Disconnected Utilities Icon Utility Bill
Other Debts Icon Other
Please select at least one type of unsecured debt.

Your Business Structure

Sole Trader Icon Sole Trader
Partnership Icon Partnership
Company Icon Pty Ltd Company
Tax Debt Icon Trust
Please select at business structure to continue.

Unsecured Debt Amount


Business Debt Amount


Take Back Control Today!

First Name

Last Name


Phone Number

Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678)

Post Code

Post code must be 4-digits long (e.g. 4567)

Some of your details appear incorrect.
Please update the highlighted fields and re-submit.


You’ve taken the first step to steer your business back to viability

Let’s keep the momentum going, take the second step by linking your Xero account now.


You've taken the first step to becoming debt free

Let's keep the momentum going, take the second step now and complete the assessment form.

By submitting this form you acknowledge that you have read and accept our Privacy Policy