To determine which parent is required to make child support payments, how much they are required to pay, and its effect on Family Tax Benefit, an assessment is conducted based on both parents’ circumstances.
Determining the paying parent
Determining who the paying parent is for child support payments is based on the income of both parents.
Incomes from both parents are first totalled to determine the combined income.
Generally, the parent whose percentage of care for the children is lower than their share of the combined income is the paying parent.
This means that the parent whose percentage of care is higher than their share of the combined income is the receiving parent.
Determining the child support amount
Child support amounts are based on 3 factors:
- The income of the parents – separately and combined;
- The percentage of care each parent has for the child; and
- Age of children
If the parents only have 1 child, there is an 8-step formula that the Department of Human Services follows to assist in determining the child support amount.
Step 1 – Work out each parent’s child support income.
- It is calculated as the parent’s adjusted taxable income less a self-supported amount less any relevant dependent allowance.
Step 2 – Work out the parents’ combined income.
- Both parent’s separate child support income calculated in step 1 are added to work out their combined income.
Step 3 – Work out each parent’s income percentage.
- Each parent’s child support income (step 1) is divided by the combined income (step 2).
Step 4 – Work out each parent’s percentage of care.
Step 5 – Work out each parent’s cost percentage.
- Each parent’s cost percentage is determined using the ‘care and cost table’ provided by the Department of Human Services.
Step 6 – Work out each parent’s child support percentage.
- The cost percentage less each parent’s child support percentage.
- The parent will receive payments if their child support percentage is negative.
- The parent will make payments if their child support percentage is positive.
Step 7 – Work out the costs of children.
- This step only applies to the paying parent.
- The cost of each child is determined using the ‘costs of children’ table provided by the Department of Human Services.
Step 8 – Work out the child support amount.
- The final amount of child support payment is determined by multiplying the positive child support percentage (step 6) by the costs of the child (step 7).
Family Tax Benefit
Family Tax Benefit Part A and child support payments have an inverse relationship.
- The more child support a parent receives, the less Family Tax Benefit that parent will receive; and
- The less child support a parent receives, the more Family Tax Benefit the parent will receive
Paying child support
There are 3 ways to handle the payment of child support.
- Self management: This occurs when both parents of the child(ren) arrange child support payments without the assistance of the Department of Human Services. Both parents make decisions and agree on the amount of child support, when payments are due, how payments are made, and how the payments are managed.
- ‘Private Collect’: The Court decides how much one parent is required to pay in child support. However, it is the parents’ responsibilities to decide how and when the payments are made.
- ‘Child Support Collect’: The Department of Human Services handles all factors relating to child support. This includes setting the amount of child support payment, how and when payments are to be made, collecting payments from the paying parent and transferring them to the receiving parent.
For self management and ‘Private Collect’, the methods of payment include:
- Bank transfer;
- Cheque; or
- Money order or financial institution cheque.
For ‘Child Support Collect’, the methods of payments include:
- Bank transfer;
- Credit or debt card;
- Centrelink Express Plus Child Support mobile ap;
- Mail; or
- Income support payments.
Non-direct payments that may be considered child support
There are payments a parent can make that can be considered child support, although it is not directly in the form of child support payments.
These payments can only be credited when both parents agree to accept these as an alternative to direct child support payments.
These are called ‘third party payments’.
These include payments that assist in the care and day-to-day living for the child(ren), such as:
- Household goods;
- Mortgage payments;
- Health insurance;
- Essential medical and dental payments;
- School fees;
- Child care expenses;
- Credit card repayments;
- Travel or holiday expenses;
- Household bills (e.g. gas, electricity, phone or council rates);
- Motor vehicle expenses;
- Sporting expenses;
- Transfer of property; and
- Household repairs.
Prescribed non-agency payments
If the receiving parent does not agree that the above payments should be considered a form of child support, the Department of Human Services may allow the paying parent to credit up to 30% of child support under ‘prescribed non-agency payments’.
However, these payments will only be credited if the paying parent has less than 14% care for the children.
Payments that may be considered ‘prescribed non-agency payments’ include:
- Child care expenses;
- School fees;
- School uniform and stationery fees;
- Essential medical and dental items;
- The receiving parent’s share of rent or mortgage repayments;
- The receiving parent’s share of utilities and rates; and
- Some motor vehicle costs.