Calculating Child Support
Under the Child Support (Assessment) Act 1989, a parent must pay to maintain a child via child support payments. Child support is a continuing regular payment made by a parent of a child after the end of a relationship. It is usually paid until a child turns 18.
Child support is governed by principles including that each parent is responsible for meeting the costs of children, that costs depend on the number and ages of children, and that parents who earn more must contribute more.
It is administered by Child Support (CS), part of the Federal Government’s Services Australia agency.
CS has an 8-step formula for assessing child support:
- Determine each parent’s income;
- Combine the incomes;
- Calculate each parent’s income percentage;
- Calculate each parent’s percentage of care;
- Calculate each parent’s cost percentage;
- Calculate each parent’s child support percentage (subtract cost percentage from income percentage for each parent);
- Calculate the costs of the child;
- Calculate the child support amount (multiply the costs of the child by the positive child support percentage)
You pay child support if the result is positive and receive child support if it is negative.
The agency provides Costs of Children tables for children aged 12 and under, children aged 13 or older, and children of mixed ages.
Calculations for parents who have two or more child support assessments are also based on the formula but are more complex.
A non-parent carer can apply for child support if they meet certain criteria.
Changes in circumstances
Changes in circumstances can affect the amount of child support payable. For example:
- care arrangements: the percentage of care calculated in the child support assessment will change.
- income: the amount of child support payments will be affected.
- reconciliation: if parents reconcile, child support can be suspended for up to six months. If the parents separate again within the six months, child support can be resumed.
- more children: if a parent has a child with a new partner, and is required to pay child support for this child, existing child support arrangements will likely be affected.
CS should be notified of changes in circumstances to avoid incorrect payments or accumulation of debt.
Child Support Agreements
Many parents can opt to arrange child support without intervention from the courts. A child support agreement can be made between parents and submitted for approval to CS.
There are two types of child support agreements: limited and binding. Each is a written, formal deal signed by both parents. For a limited agreement, legal advice is not required but a child support formula assessment must have been completed and amounts payable under the agreement must be equal or more than amounts generated by the formula. For a binding agreement, parents must seek independent legal advice to enter into or end an agreement, a child support formula assessment is not compulsory (and completed amounts can be less than those generated by the formula), and the agreement can only be ended by a new binding agreement or court order. Also, lump sum payments are allowed under the Act to satisfy child support obligations.
Child support can be paid via self-management, Private Collect or Child Support Collect.
Under this option, parents agree on the amount of child support, and how and when to pay it, then manage the payments between themselves. This allows parents full control of the process.
Under this option, CS advises how much child support needs to be paid then parents transfer between themselves. This offers flexibility and promotes co-operation between parents – they decide how and when payments will be made, and if any payments will be “in kind” or made to third parties.
Child Support Collect
Under this option, CS advises how much child support needs to be paid then collects payment from one parent and transfers it to the other parent. The paying parent chooses the frequency of payments and receives an account statement from CS each month. Receiving parents can receive payments into a bank account or by cheque. Child Support Collect may be useful in circumstances where the parents are in conflict, or to ensure payments are on time and in full.
Other payment options
A non-agency payment can be recognised as child support if both parents agree the payment was made in lieu of child support. Such a payment can be made directly to a parent or to a third party on behalf of the receiving parent. Examples of third party payments are payments for medical treatment, travel expenses, school fees, credit card debt, vehicle registration or sport coaching fees.
A “prescribed payment” can be credited as child support by CS even when the receiving parent does not agree the payment was made in lieu of child support.
For advice or representation in any legal matter, please contact Armstrong Legal.