In determining child support payments, the Child Support Agency (CSA) will have to make an assessment based on the child support income. In order to derive the child support income, a self-support amount and any relevant dependent child amount and/or a multi-case allowance amount, if applicable, will be deducted from the adjusted taxable income of the parent.
The income of both parents will be treated in the same way, meaning they will have the same self-support amount set aside. The child support income of both parents will then be combined to compute the costs of raising the children. Once the costs is determined it will then be divided between the parents according to each parent’s shared of the total combined income. This is called the income percentage.
Hence, the first step for the CSA is to take into account the adjusted taxable income of both parents. The adjusted taxable income is based on the last completed financial year of income of the parents and comprises the following income amounts:
Taxable income is the income shown on the tax return. In computing the costs of raising the children the impact of tax on the disposable income is taken into account.
A fringe benefit is one that is provided by the employer in the course of the employment of the parent. The gross reportable fringe benefits total pertains to the income year which is reported on the parent’s payment summary.
Target foreign income is foreign income that is received by a parent which is not taxable income or a fringe benefit.
Net investment loss pertains to the amount of allowable deductions claimed for a financial investment and rental property wherein the costs are more than the income. This amount will be added back to the taxable income for child support purposes.
This pertains to super contributions or extra contributions made by the employer to the super fund in behalf of the parent and also includes personal contributions to the super fund that can be claimed as income tax deduction on the tax return.