How to Not Pay Child Support in Australia
Separated parents sometimes enquire about how to not pay child support. Child support aims to ensure that children receive appropriate financial care from each parent. All parents are required to provide financial support for their children, including legally adopted children, regardless of whether the parents were married, de facto, or were ever in a relationship with each other. It is not legally or ethically appropriate to attempt to avoid providing financial support for a dependent child. However, knowing how child support obligations are calculated can help a parent ensure that they only pay a fair and equitable amount.
Who Determines How Much Child Support Must be Paid?
Although parents cannot avoid paying child support entirely, the amount of child support will depend, at least partially, on the process used to calculate the support liability.
Where co-parents are able to communicate effectively, they can agree privately regarding the financial support of their children through a Limited Child Support Agreement. These agreements do not require that either parent consult a solicitor, and it allows parents to remain more flexible to changing the agreement over time.
A more formal arrangement can be put in place by signing a Binding Child Support Agreement. In this case, both parties must seek independent legal advice, but the agreement is still cooperative and between the two parties as co-parents. Your agreement may include payment of cash or non-cash items, such as school fees or health insurance. It may specify how irregular expenses, such as sports, camps or dental care, will be paid, or stipulate that it is up to each parent to determine which additional irregular expenses they will fund. In some circumstances, a couple is far better placed themselves to determine how the financial care of their children can be managed in the best interests of the child.
If parents cannot agree privately about how much child support is appropriate, or one parent is intent on not paying child support, the Department of Social Services (DSS) will assess child support liability and enforce the decision according to the Child Support (Assessment) Act 1989 (Cth). It is important to understand that this legislation is gender-neutral: there is no expectation that a father will contribute more than a mother in terms of financial support or that a mother will contribute more daily care.
What Factors are Important to the Calculation of Child Support?
Three factors have the greatest impact on how much child support is levied. The first is how much direct care each parent provides for the child. The second is the income of each parent. The third is how many dependent children the parent is raising.
If a child spends 50% of their time with each parent, the assumption is that each parent bears an equal share of the cost of raising the child. Accordingly, if a child spends a greater proportion of time with one parent, it is assumed that this parent bears a greater percentage of the cost of raising the child, and the other parent is responsible for making a greater financial contribution.
However, even if children spend equal time with each parent, if one parent has a higher gross salary they are expected to contribute a percentage of this salary to the other parent. The logic behind this expectation is that children have the right to benefit from the reasonable material support of both parents at all times.
How is Income Calculated for Child Support?
Child support is calculated based on taxable income from all sources. Minimising taxable income, for instance by making charitable donations, will result in a lower tax obligation and a reduced child support liability. However, it is not possible to reduce child support obligations by salary sacrifice, salary packaging or negative gearing of a property, as these amounts will be included in taxable income for this calculation.
It is important that DSS is informed if a partner’s income decreases by more than 15%. A decrease of this size is likely to result in a reduced child support liability. The onus is on the parent to report the salary decrease as soon as possible as previous overpayments cannot be recouped.
What are the Consequences of Not Paying Child Support in Australia?
If a parent cannot pay the mandated amount, DSS may be willing to make adjustments including accepting payment instalments. If child support is not paid and no attempt is made to reconcile the debt with DSS they will take steps to recover the overdue funds. DSS has the authority to deduct money directly from salaries, bank accounts or income support, and to intercept tax return refunds. They can also prevent delinquent payers from travelling overseas and escalate the matter through litigation and prosecution. A child support debt cannot be discharged through bankruptcy.
If you need advice about paying child support or any other aspect of child custody arrangements, please contact Armstrong Legal on 1300 038 223 or send us an email to make an appointment.