Child support in Australia is complex, and the formula used to calculate payments can be confusing. To help explain how it works, let’s go through the key elements of the system, including who is liable, how payments are calculated, and the rules parents need to know.
Overview
A child support case can be initiated by a parent in circumstances where a child has two parents who are not in a relationship. After an assessment is made, typically one parent is required to make regular child support payments to the other.
The national Child Support scheme has been designed to ensure every parent contributes to raising their children, either through direct care or financial contributions. It binds parents together financially so children are less disadvantaged by separation and divorce.
What Is Child Support?
Child support in Australia is financial assistance provided by a parent to help cover the costs of raising their child or children. The paying parent typically makes a monthly cash transfer to the receiving parent. The money can be spent on anything but is intended to improve the child’s living standards.
To receive child support, a parent must apply to Services Australia for an assessment. You are usually the receiving parent if you are the primary carer. However, income is a key factor in how child support is calculated. Some parents pay child support despite having their child or children most of the time.
Who Pays?
Both parents are responsible for the financial needs of their child, regardless of relationship status. The parent who does not have primary care of the child is typically liable to pay child support. However, liability can vary depending on each parent’s income and time spent with the child.
Child support obligations apply whether the parents were married, in a de facto relationship, or never in a formal relationship. Even parents with equal custody can be subject to significant payments.
Fathers typically pay child support to mothers, as mothers are often the primary carers and fathers tend to earn more. However, the scheme is technically gender-neutral, and some mothers with majority care make payments to low-income ex-partners.
How Much Is Child Support?
In Australia, the amount of child support is highly sensitive to the care split and the incomes of the parents, especially the income of the payer. It can range anywhere from $0 to around $56k, though a typical assessment is around $10k per year ($833 per month).
Payments are not closely tied to the cost of living. Instead, the formula determines how much parents might have been spending if they were living together and pooling their incomes. High-income parents with little visitation time pay the most.
To quickly find out how much you would pay or receive, you can use the child support calculator here at Learning Lab.
13 Rules Parents Need to Know
Here are a key rules for parents caught up in this system.
- Child support is an untied cash transfer, with the receiver being able spend it how they want.
- Income for child support purposes is based on your “adjusted taxable income,” which is your income from the previous financial year minus a self-support amount (around $30k).
- Your care percentage is calculated by the number of overnights you have with your child per fortnight, divided by 14.
- Failure to pay child support can result in penalties and debt, which will be recorded and chased up.
- Child support debts can be recovered by Services Australia intercepting your tax refunds.
- Services Australia has access to your tax records and uses them to update assessments.
- Reducing income through strategies like negative gearing or extra super contributions won’t improve your assessment, as these amounts will be added back onto your income.
- Payers with significant debt can be prevented from leaving Australia until payments are made.
- If your income drops by more than 15%, you should submit an income estimate as soon as possible for relief.
- Deliberately reducing your income by quitting or changing jobs can lead to a Change of Assessment (COA), potentially setting your income to a higher level if the other parent applies for it.
- You can apply for a COA to force the other parent to help pay for unusual, large expenses such as dental braces and private school fees.
- Having more children with a new partner will slightly reduce your child support obligations.
- Payments continue until a child turns 18 but can be extended until the end of Year 12 in some cases.
How Is Child Support Calculated?
Child support in Australia is calculated using a formula that takes into account care percentages, parent incomes (less a self-support amount), and the number and ages of the children. The costs of children is calculated based on the combined income of the parents and the number of children.
Each parent is responsible for a share of the costs of children in proportion to their income. You contribute by either providing care or paying support. Higher-income parents with less care pay more, while lower-income parents or those with more care may receive payments.
Payments are calculated using a standard formula. However, certain situations can trigger a Change of Assessment (COA), adjusting the amount. Certain large expenses that are necessary (e.g. dental braces) or agreed to (e.g. private school fees) are often handled separately, with each parent required to pay half.
Child Support Australia
Child Support Australia is an independent service provider for parents. It is privately funded and not affiliated with government or legal institutions.
The platform offers insights, resources, and tools to help parents understand and manage the Australian child support system. It also aims to promote system reform through informed community engagement.
One of Child Support Australia’s standout features is the child support calculator, which gives parents a quick estimate of payments based on income and care levels. There is also an online complaints forum where Dr Andrew Lancaster provides expert advice to parents dealing with challenges in the system.
Related: Unicurve brand page of Child Support Australia
Child Support Agency (CSA)
Services Australia has taken over the role of the Child Support Agency (CSA). They run the child support scheme at a national level, guided by legislation. They provide assessments once an application is made, using the formula to determine annual and monthly payments.
Services Australia will also collect payments on a parent’s behalf unless the receiving parent opts to collect it privately. Other activities include debt collection, reviewing assessments, and responding to applications for a Change of Assessment in special circumstances.
The government agency has been accused of favouring mothers over fathers. However, it is often more a case of internal policies and legal interpretations favouring recipients over payers. If you find yourself frustrated by how your case is handled, avoiding phone communication might help.