Worked Examples and Checklists
Bankruptcy income contribution examples: five households worked through for 2026
Five illustrative Australian households showing how bankruptcy income contributions are calculated with AFSA's thresholds from 20 September 2026, including pay rises, bonuses and dependants.
Bankruptcy income contributions are half of your assessed after-tax income above the threshold for your number of dependants. With AFSA's thresholds from 20 September 2026, a single bankrupt with $85,000 of assessed income pays about $3,557 for the year; a bankrupt with two dependants earning the same pays nothing, because the threshold is $98,916.36; and a single bankrupt who receives a $10,000 after-tax bonus on top of $85,000 pays an extra $5,000 — half the bonus. The five households below show the arithmetic, including what happens when income changes during a contribution year. All households are illustrative.
This guide is part of the debt option decision checklist. The rules are explained in income contributions in bankruptcy.
The thresholds used
| Dependants | Threshold from 20 September 2026 |
|---|---|
| 0 | $77,886.90 |
| 1 | $91,906.54 |
| 2 | $98,916.36 |
| 3 | $102,810.71 |
| 4 | $104,368.45 |
| More than 4 | $105,926.18 |
The thresholds apply to the contribution assessment period the trustee is assessing. If a contribution year straddles a re-indexation date, your trustee applies the rules AFSA sets for that; ask how your assessment is worked out.
Household 1: single, steady wage
Lena, a warehouse supervisor in Perth, no dependants. Expected assessed income: $85,000 after tax.
| Step | Calculation |
|---|---|
| Income above threshold | $85,000 − $77,886.90 = $7,113.10 |
| Contribution | $7,113.10 ÷ 2 = $3,556.55 a year |
| Per month | about $296 |
| Over a 3-year bankruptcy, if income stays similar | about $10,670 |
Household 2: same income, two dependants
Jordan in Townsville, $85,000 after tax, with a partner who earns very little and one child, both meeting the dependant definition.
| Step | Calculation |
|---|---|
| Threshold with 2 dependants | $98,916.36 |
| Income above threshold | none |
| Contribution | $0 |
If Jordan's partner started earning above AFSA's dependant income limit, the partner would no longer count, the threshold would fall to $91,906.54 (one dependant), and Jordan would still pay nothing at $85,000.
Household 3: a bonus during the year
Lena (household 1) receives a $10,000 after-tax bonus in month 8.
| Step | Calculation |
|---|---|
| Revised income | $95,000 |
| Income above threshold | $17,113.10 |
| Revised contribution | $8,556.55 |
| Extra contribution | $5,000, half the bonus |
| Payments already made (8 months × $296) | about $2,371 |
| Remaining for the year | about $6,185 over 4 months, or as agreed with the trustee |
The lesson: a bonus or overtime increase can make the final months expensive. Tell the trustee early and ask for a payment schedule that you can meet.
Household 4: high earner
Chris, an engineer in Melbourne, one dependant, $140,000 after tax.
| Step | Calculation |
|---|---|
| Income above threshold | $140,000 − $91,906.54 = $48,093.46 |
| Contribution | $24,046.73 a year, about $2,004 a month |
| Over 3 years | about $72,140 |
For Chris, a personal insolvency agreement offering creditors a fixed sum may compare well with bankruptcy. Chris's income is above the debt agreement limit, so Part IX is not available.
Household 5: income falls mid-bankruptcy
Ana in Hobart, no dependants, starts the year expecting $90,000 and is assessed at ($90,000 − $77,886.90) ÷ 2 = $6,056.55. After 5 months she is made redundant and starts on income support with a few months of casual work; her actual income for the year turns out to be $52,000.
- Actual income is below the threshold, so her contribution for the year falls to $0 when the trustee reassesses.
- Contributions she has already paid above her final liability may be refunded or credited, depending on the trustee's reassessment; ask the trustee.
- She should tell her trustee about the redundancy straight away rather than waiting until the end of the year.
Bankruptcy contributions compared with a debt agreement
| Household | Bankruptcy contributions over 3 years (if income steady) | Debt agreement available? |
|---|---|---|
| 1. Lena, $85,000, single | about $10,670 | Yes, if debts and assets are under the limits |
| 2. Jordan, $85,000, 2 dependants | $0 | Yes |
| 4. Chris, $140,000, 1 dependant | about $72,140 | No — over the after-tax income limit (three-quarters of the $155,773.80 debt limit) |
A debt agreement payment for Lena might be higher or lower than $10,670 depending on her debts and budget, but the agreement avoids trustee control of assets. Compare the totals in the debt agreement cost worked example.
Practical tips
- Keep payslips and bank statements for the whole bankruptcy.
- Report every change in income, job or household promptly.
- If a contribution is unaffordable because of medical, childcare or rental costs, ask about a hardship reduction before you fall behind.
- Unpaid contributions can lead to an objection that extends bankruptcy to 5 or 8 years.
Run your own figures in the income contribution estimator.
Frequently asked questions
Does salary sacrifice reduce my contributions?
Not necessarily. Salary-sacrificed amounts above compulsory super, and certain fringe benefits, can be added back into assessed income.
Are contributions taxed?
Contributions are worked out on after-tax income and are not a tax deduction.
Who receives the contributions?
They go into the bankrupt estate and, after the trustee's costs and the statutory charge, are paid to creditors as dividends.
Sources
- Australian Financial Security Authority — income contributions, indexed amounts, hardship
- National Debt Helpline — free help with budgets and options
- Services Australia — income support if your income falls
