Child support is financial support paid from one carer to another for the benefit of the child. A person must pay child support if they are the legal parent and either a resident of Australia or a resident in a prescribed overseas jurisdiction.
It is the responsibility of both parents to financially support their children irrespective of whether:
- they spend time with them; or
- they were planned.
Payments can be made periodically, in lump sums or when required, such as for school fees. If a child is over the age of 18, married or in a de facto relationship, they will not be eligible to receive child support.
The Child Support Formula
Step 1: Work out your taxable income less the self support amount.
The self-support amount, as determined by the Child Support Agency, refers to the minimum amount of money a parent would need for living expenses. As at September 2017 the self-support amount is $24,154. Deducting this from your taxable income will be your child support income.
Step 2: Combine your child support income.
Add both parents’ income together to get a combined child support income.
Step 3: Work out your income percentage.
To do this you would need to divide each parent’s income by their combined total.
Step 4: Work out each parent’s percentage of care.
This is based on the number of nights in a year that the child spends with each parent.
Step 5: Work out each parent’s cost percentage.
You can do this by using the Child Support Agency’s care and cost table.
Step 6: Work out the child support percentage.
To do this you would subtract the cost percentage from the income percentage (step 3 minus step 5). The result determines whether child support will be paid or received.
A negative percentage means that a parent will receive child support. A positive percentage means that a parent will pay child support.
Step 7: Work out the costs of the child.
This is based on the Child Support Agency’s cost of each child table.
Step 8: Work out the annual rate of child support payable.
The positive percentage in step 6 is then multiplied by the cost of each child.
John earns an annual salary of $65,000 and has one 10 year old child who is in his care on weekends. The child lives with his former partner who earns an annual salary of $70,000
Step 1 John deducts the self-support amount from his income to determine his child support income.
$65,000 – $24,154 = $40,846
Step 2 Both parents’ child support incomes are then combined.
$40,846 + $45,846 = $86,692
Step 3 Each parent’s child support income is divided by the combined total.
$40,846 ÷ $87,094 = 47%
You can also calculate an estimate of your child support by using the online estimator.
Arranging Child Support
Child support can be arranged and collected through the Child Support Agency, which is part of the Department of Human Services. Alternatively, the parents can come to their own arrangement by entering into one of the following:
Binding child support agreement
This is a formal financial agreement that allows the parties to arrange their child support payments. A child support assessment is optional and the final amount and how it is paid can be determined by both parties.
The agreement cannot be entered into without first obtaining legal advice. Your legal practitioner will need to provide you with a certificate and a statement confirming that you have received independent advice prior to signing the agreement.
When drafting an agreement, it is important to provide for any changes that may occur as it is not possible to vary the document and there are limited circumstances where it can be terminated.
Limited child support agreements
This is also a formal financial agreement that will need to be in writing and signed by the parties. Legal advice is not required for this type of agreement however; a child support assessment is mandatory and the amount agreed on must equal or be more than the assessment.
It is not possible to vary the agreement but it can be terminated by entering into a new agreement or by obtaining a court order.
Objecting to a Decision
You can object a decision made by the Child Support Agency by outlining the reasons for the objection in a statement. This would then need to be lodged within 28 days of the original decision. The other party will have an opportunity to respond and the registrar will either allow or disallow the objection within 60 days of lodgement.
Varying a Child Support Assessment
If your circumstances have changed, you may be able to apply to have your assessment varied. You will need to contact the Child Support Agency if this was how the assessment was made. If it was made through the courts, you would need to obtain legal advice.
If you wish to end a support assessment, you would need to complete the ending a child support assessment form.
Enforcement of Child Support Payments
If a party is failing to make the necessary payments, The Child Support Agency can collect payments in a number of ways:
- Intercepting a tax refund
- 3rd party collection such as employer deductions
- Deductions from benefits
- Issuing a Departure Prohibition Order to prevent a party from leaving Australia until payment has been made