What is child support?
The breakdown of a family is a very difficult time for everyone involved. However, it is a particularly difficult time for children. As a result, when you separate, suitable arrangements need to be made for their ongoing financial, physical and emotional care.
Under Australian law, the primary carer of a child or children can make a claim for child support from the other parent. The idea behind this is to maintain the welfare and the best interest of the child or children.
Child support is payable for all children (up to the age of 18) living in Australia whose parents have separated, whether or not the parents were married to each other.
What is the Chid Support Scheme?
The Child Support Scheme is to ensure objectively that children receive an adequate level of financial support from both parents following separation.
The Child Support Agency (CSA) was set up in 1988 to administer the assessment and collection of child support under the Australian Government’s Support Scheme.
Child Support is now a service delivery brand within the Department of Human Services and is responsible for administering the Child Support Scheme.
Child Support helps parents take joint responsibility for the financial support of their children by:
- assisting to calculate how much child support should be paid, based on the parents’ financial ability to do so and also the percentage of care each parent is providing.
- facilitating the collection and transfer of child support payments.
In Australia, there are two pieces of legislation that cover child support. They are:
- the Child Support (Assessment) Act 1989 (Cth), which deals with the assessment process
- the Child Support (Registration and Collection) Act 1988 (Cth), which deals with collection and enforcement issues.
How does the Child Support Scheme (CSS) work?
A separated family may have child support assessed under:
- a formula assessment
- an agreement
- a court order registered with Child Support.
What are the different categories of child support payments?
There are three different categories of child support:
1. periodic payments
2. non-periodic payments
3. lump sum provision.
What are periodic payments?
Periodic payments are payments of a regular amount on a recurring or cyclical basis.
What are non-periodic payments?
In cases where a court of agreement makes an order for non-periodic payments (for example, payment of school fees to third parties), it must state whether or not these will reduce the annual rate of child support payable.
What is a lump sum provision?
A lump sum provision is a payment made to the other parent as a ‘credit balance’ to be used to meet ongoing liabilities. When such a sum is paid, the court or agreement must specify the percentage of these liabilities to be met by drawing on the lump sum.
What are the two types of child support agreement?
There are two types of child support agreement:
- limited agreements for child support
- binding agreements for child support.
What are limited agreements for child support?
Limited agreements for child support are formal agreements that are in writing and signed by both parents.
You do not need to seek legal advice before entering into a limited agreement.
A limited agreement must be lodged for acceptance with the Department of Human Services and accepted by the department before it can have any affect.
Before Child Support can accept a limited child support agreement:
- there must be a child support assessment in place
- the annual rate payable in the agreements must be equal to, or more than, the annual rate of the child support assessment.
A limited agreement cannot be varied but can be ended by a binding agreement or a court order.
One of the parties can give notice to the registrar after three years to terminate the agreement.
At any time, a party can obtain a notional assessment of child support, and if the notional child assessment changes by more than 15 per cent from the provision of periodic child support in the agreement, then the agreement can be unilaterally terminated.
What are binding agreements for child support?
Binding agreements for child support are signed by both parents. Before signing a binding agreement, you must get advice from a legal practitioner who has been admitted by the Supreme Court of an Australia state or territory and holds a current practising certificate.
The legal practitioner must provide a statement they have provided the parent with independent legal advice and the agreement must include an acknowledgement of this advice.
A binding child support agreement can be made and accepted even if a child support assessment has not been conducted. The agreement can be made for any amount that both parents agree to.
A binding agreement cannot be varied and can only be terminated. Under the Child Support (Assessment) Act, the grounds for terminating a binding agreement are limited. This means that when you draft a binding agreement, you need to ‘think ahead’. Specifically, you need to consider the contingencies, such as changes in the financial circumstances of the parties, unemployment or changes in care arrangements.
A binding agreement can be ended by:
- another binding child support agreement
- a court order.
How do Monardo Solicitors approach child support?
At Monardo Solicitors, we understand that the issues surrounding child support, particularly the formula used to calculate child support payments, can be confusing and difficult to understand. We have a great deal of experience in not only guiding clients through the child support application process but in objecting to decisions. Most importantly, we pride ourselves on being able to explain this complex area of law in clear and plain language.
Have you just separated? Do you need to apply for child support? Have you received a decision in relation to child support that you would like to challenge? Would you like to talk to a lawyer? Call Vince Monardo on 02 8006 5244.
Child Support FAQs
What is the child support formula?
The child support formula is the formula used to calculate your child support payments.
The formula is flexible and attempts to take into account many different family circumstances. In this way, it aims to provide a balanced way of working out child support payments.
The key principles are:
- Both parents’ incomes are considered equally.
- A self-support amount is deducted from each parent’s income before child support is worked out.
- The percentage of care each parent is providing is taken into account.
- Children from first and subsequent families are treated in a similar way.
You should be aware that child support payments and the Family Tax Benefit (FTB) are closely linked. You may need to apply for a child support assessment in order to receive more than the base rate of the FTB Part A, and the amount of child support payable may affect how much FTB you receive. In short, the more child support you receive, the less FTB you may receive. Likewise, the less child support you receive, the more FTB you may receive.
The basic formula used by the Department of Human Services (which applies to parents with one child support assessment and no other dependent children) has eight steps:
Calculate each parent’s child support income (a parent’s adjusted taxable income minus a self-support amount).
Add both parents’ child support incomes to get a combined child support income.
Divide each parent’s individual child support income by the combined child support income to get an income percentage for each parent.
Work out each parent’s care percentage of the child (using the care and cost table).
Work out each parent’s cost percentage of the child (using the care and cost table).
Subtract the cost percentage from the income percentage for each parent. The result is called the child support percentage.
If it is a negative percentage, that parent is assessed to receive child support because their share of the costs of raising the children is more than met by the amount of care they are providing.
If it is a positive percentage, that parent is assessed to provide support because they are not meeting the entire share of the costs of the child directly through care.
Work out the cost of each child based on the parents’ combined child support income (using the care and cost table).
The final child support payable is calculated by multiplying the positive child support percentage by the costs of the child. The final figure is the child support amount the paying parent needs to transfer to the other parent.
What is the ‘child support period’?
A child support period is the length of time a child support period applies. It can last up to 15 months or can be shorter. It depends on the circumstances of your case.
At the end of a child support period, the Department of Human Services will start a new assessment for the next period, taking into account changes in income and the cost of living.
Can non-parent carers be entitled to child support?
In certain situations, people other than the parents care for children. In these cases, you may be able to receive child support from both the child’s parents.
You can apply for a non-parent carer child support assessment if all of the following conditions apply:
- you care for the child 128 nights or more a year (35 per cent or more of the care)
- you are not in a domestic relationship with either of the child’s parents
- you do not have care jointly with a parent of the child
- you are seeking payment from a person who is a parent of the child and resident in Australia, or a reciprocating jurisdiction, on the day you apply
- the child’s parents have consented to you caring for the child, unless it would be unreasonable for the parents to care for the child.
Can you object to a decision made in relation to your child support?
Yes, you can object to a decision made about your child support.
If you wish to object to a child support decision, you can lodge a request in writing that the Department of Human Services formally review the decision.
At this point, the department undertakes an internal review of the decision.
The Child Support Guide has a full list of decisions to which you can object and appeal.
How long do you have to object?
You have 28 days to object from the date you received the decision letter from the Department of Human Services.
If you live overseas, you have 90 days to object.
Can you appeal a decision regarding your objection?
Yes, you can appeal an objection decision by lodging an appeal with the Social Security Appeals Tribunal (SSAT).
If you do not agree with the SSAT decision, you may be able to appeal to the Administrative Appeals Tribunal (AAT).
Before you appeal to the SSAT or the AAT, you should seek legal advice.
Can Child Support enforce its decisions?
Yes, Child Support will enforce the payment of outstanding child support payments in the following situations:
- where there is little or no evidence of a parent’s commitment to meeting their child support responsibilities
- there is evidence of fraud.
What methods does Child Support use to enforce its decisions?
Child Support uses a number of methods to enforce child support decisions.
Employer deductions of arrears
If you are a paying parent and you refuse to pay child support or enter into a satisfactory payment arrangement, Child Support can ask your employer to make child support deductions from your pay.
Deductions from social security pensions and other benefits
Child Support can also arrange for deductions to be made from social security pensions and other benefits.
Enforcing tax return lodgement
In order to ensure the incomes Child Support uses to calculate assessment, it works closely with the Australian Taxation Office (ATO) to improve the rate and timeliness of parents’ tax return lodgements.
Intercepting tax refunds
The ATO advises Child Support when a tax refund is available to a child support parent and is about to be paid. Child Support may take the refund and apply it to meet an outstanding child support payment.
Intensive debt collection
Child Support may use intensive debt collection activities to manage parents who have outstanding payments that have proven difficult to collect.
Issuing overseas travel bans
If a paying parent plans to travel overseas, has overdue child support and refuses to work with Child Support to pay the overdue amount, it can prevent the parent from travelling overseas by issuing a departure prohibition order.
In cases where other enforcement methods have not worked and where an asset or income stream is identified in the parent’s name, Child Support will take the parent to court to collect outstanding child support payments.
Can you apply to have your child support assessment changed?
If your circumstances have changed and you believe your child assessment does not reflect your current situation, you may be able to ask Child Support to review your assessment in special circumstances.
What happens if your partner or spouse lives overseas?
If one parent lives overseas, Child Support may still be able to collect and transfer child support payments for their children’s benefit.
Child Support can also help separated parents set up child support arrangements for their children when one parent lives in another country.
Australia has arrangements for child support with a number of countries. These are known as reciprocating jurisdictions.
What is the end date for child support assessments in Australia?
In Australia, the end date for child support assessments occurs when the child turns 18. However, it may be extended where a parent has applied for child support to continue until the end of the school year in which the child turns 18.