The amount of Child Support to be paid is now calculated based on a formula that relates to the costs of raising children
On 1 July 2008 major changes were made to the calculation of Child Support and the way parents enter into binding Child Support Agreements. The amount of Child Support to be paid is now calculated based on a formula that relates to the costs of raising children rather than the income of the paying parent.
During 2004 and 2005 a Ministerial Taskforce on Child Support reviewed the Child Support Scheme taking into consideration the costs of children and other factors such as households with different incomes, the differences in the number of children and children of different ages.
The Taskforce released a report which found that there was a need for greater emphasis to be placed on shared parental responsibility and both parents remaining involved with their children post separation and recommendations were made for extensive change including replacing the fixed percentage of income as a basis of calculating child support payments and instead calculating payments based upon the costs of children.
The old formula was based on fixed percentages of income without considering the different costs of raising children of different ages, the care arrangements for paying parents who shared the care of the children 2 to 3 nights per fortnight or the effect of income tax.
As a result of the report, extensive changes were made to the child support scheme. These changes commenced on 1 July 2008.
The new formula:
- Is based upon the costs of raising children.
- Takes into account both parents’ incomes and treats them equally.
- Deducts the same self support amount from each parents’ income.
- Takes into account paying parents sharing care of the children.
- Treats children from 1st and subsequent families similarly.
Costs of Children
The costs of children are calculated according to the combined income of both parents after the self support amount is deducted. The costs are then divided between the parents according to their percentage of the combined income. The paying parent’s care of the children is taken into account to partially meet their share of the costs of the children with the balance payable by way of child support.
The Costs of Children 2008 Table can be found at:
- Care and Family Assistance
- The most significant changes to Family Tax Benefit (FTB) under the new scheme are:
- Parents may now enter into a child support agreement to receive less child support than assessed; and
- If parents have less than 35% care of their children, they are no longer entitled to receive a proportion of the FTB.
FTB payments are calculated in accordance with child support assessments. If parents enter into a child support agreement, the payments will be calculated in accordance with how much FTB would be payable if the agreement had not been entered into, regardless of whether the agreement provides for greater or lesser amounts of child support than the assessment.
The old Scheme did not recognise the costs that the paying parent incurs if they have less than 30% care of the children but sometimes these parents were entitled to receive a share of Family Tax Benefit.
The new child support formula takes into account the costs a paying parent incurs when they have at least 14 % care; however parents with 14% to 30% care no longer receive a share of Family Tax Benefit.
The Child Support Care and Cost and Family Tax Benefit Care Tables can be found at:
- Increase in Minimum Payment
The minimum payment has been increased to:
- $6 per week per family where the paying parent is receiving income support; and
- $20 per week per family where the paying parent is receiving an income that is less than the maximum level of Parenting Payment –Single (currently about $14,600) but does not receive income support.
Stepchildren and Second Families
An amount for the support of parent’s biological or adopted child with a new partner that live with them will be deducted from that parent’s income when calculating child support.
In special circumstances, parents with the responsibility of financially supporting stepchildren may apply for a change of assessment to take this responsibility into account.
If parents earn extra income (for example from a second job or overtime) to re-establish themselves after separation, they can ask that the extra income not be included in the child support assessment subject to the following limits:
Extra income can only be excluded for 3 years after separation; and
The extra income to be excluded must be less than 30% of a parent’s adjusted taxable income.
Applying the Basic Formula
Step 1 - Work out each parent’s child support income
Step 2 - Work out the parents’ combined child support income for a child
Step 3 - Work out each parent’s income percentage for the child
Step 4 - Work out each parent’s percentage of care for the child
Step 5 - Work out each parent’s cost percentage for the child
Step 6 - Work out each parent’s child support percentage for the child
Step 7 - Work out the costs of the child
Step 8 - Work out child support payable
The Child Support Agency has an online estimator to assist with calculating child support assessments at , we recommend that you obtain advice specific to your particular circumstances.
Disclaimer : This article provides basic information only and is not a substitute for a professional or legal advice. It is prudent to obtain legal advice from a family lawyer.