The taxable income of the parents is taken into account in computing child support. The problem is that if the taxable income does not reflect the real financial capacity of the parent.
Parents are liable for the child support of their children. The assessment is done by the Department of Human Services that follows a formula for the calculation of child support payable by each parent. There are many factors that are involved in the computation and one of this is the taxable income of the parents.
The assessment for child support will be based on the parents’ taxable income, aside from other factors. The problem is that the taxable income might not be indicative of the true financial status of the parent. A parent might actually be wealthier or poorer than what his taxable income shows. It could be that a parent is rich in terms of ownership of assets but income poor in terms of his salary. The parent may not be earning through a salary but may be self-employed or has business interests. So, these are circumstances that might not be reflected in the taxable income of the parents.
If the taxable income does not reflect the real income of the parents then it becomes an insufficient basis for the child support assessment. The child support amount that has not considered the true financial circumstances of the parents may be unfair for all parties considered. If the child’s parents are wealthier than what their taxable incomes let on then the child is entitled to a higher amount of child support.
On the other hand, it is unfair for the parent who submitted his real income for assessment while the other parent who is asset rich but income poor is made to pay lower child support because of his declared taxable income. There are many Australians who are rich because of their numerous properties and business interests but if they have children they will be assessed based only on their taxable income in accordance with the formula.
Ultimately, it is the child that is affected with an unfair assessment. Child support is for the day-to-day maintenance of the child. The amount paid by the parents is to be used for the care, welfare and development of the child.
An objection to the assessment may be filed by the parent who is obligated to pay child support or the parent-carer. The DHS will entertain objections on the ground that the assessment is unfair because it does not reflect the correct information on income, earning capacity, property and financial resources of either or both parents.
If an objection is granted, the assessment may be adjusted to consider the real financial capacity of the parents to provide child support. The objection must be filed within 28 days from receipt of notice of the assessment.