Calculating Child Support
Child support in Australia is calculated using a complex formula that takes into consideration the combined income of both parents, the number of children they have and the ages of the children. Even couples going through the most amicable separation or divorce can hit a bottleneck when issues of calculating child support arise.
How is child support calculated in Australia?
The concept of child support is based on the principle that parents have the obligation to provide monetary assistance for their children. This obligation continues after the breakdown of a relationship. To administer child support, parents can agree to self manage, write a child support agreement or apply to the Department of Human Services (DHS) for a child support assessment.
The information required by DHS to calculate child support includes:
- The taxable income of each parent
- The percentage of nights that each parent has the child with them
- The number of children and ages
- Information about other dependents that each parent has
Self-management of child support
Parents who choose to self-manage their child support make decisions on how much child support to pay, when to pay and how they want to pay it. If you choose to self-manage your child support, you do not need to apply for an assessment. When you and your partner self manage, you are responsible for calculating your child support amount. It is important that you keep records of child support payments if you choose this option.
You can use an online calculator to get an estimate of your child support amount here.
Child support agreement
Australian law allows parents to make a child support agreement where both parents decide on the amount of child support to be paid. There are two types of child support agreement: binding child support agreement and limited child support agreement.
To receive child support under a binding child support agreement, parents do not need to have a child support assessment in place and the child support amount agreed upon does not have to be the same as the amount that will be payable under a child support assessment. Parents who choose to make a binding child support agreement are required to seek independent legal advice for the agreement to be valid.
On the other hand, parents who make a limited child support agreement must have a child support assessment in place and the payments set out in the agreement must be equal to or more than the annual rate in the assessment. Independent legal advice is not required but is advisable for the most appropriate outcomes for your circumstance.
If you and your partner choose to make a child support agreement, it must meet the requirements of the law. For more details on the legal requirements of each type of child support agreement, read our previous article on child support here.
Child support assessment
While it is sometimes easier for parents to decide how much child support is to be paid by having a child support agreement in place, it does not always work out that way. Parents have the option of applying to the Department of Human Services for a child support assessment.
To be eligible for a child support assessment, you are required to be the legal parent or non-parent carer of the child and to meet residency rules. To determine the child support amount, parents are required to provide detailed financial information and care details along with the application for assessment. The amount of child support that you pay or receive may affect your Family Tax Benefit.
You can apply for child support assessment online. To manage your online application, you have the option of setting up an online child support self service account.
How is child support calculated?
To determine the child support amount, the DHS uses a child support assessment formula which examines the situation of both parents. There are six different formulas used for the child support assessment. These six formulas are a variation of one basic formula.
In most cases, the annual rate of child support will be assessed using formula one, the basic formula used for single child support assessments where only the parents provide care for the children and neither parent has another child support assessment case.
To determine the annual rate of child support that will be paid under formula one, these 8 steps are followed:
- Step 1: The child support income of each parent is identified
- Step 2: The combined child support income of each parent is calculated
- Step 3: Each parent’s income percentage is calculated
- Step 4: Each parent’s percentage of care is determined
- Step 5: Cost percentage is determined
- Step 6: Each parent’s child support percentage is calculated
- Step 7: The costs of the child are determined by the parent’s income, number of children and their ages
- Step 8: The annual rate of child support for the child is determined
There are other types of formulas used to determine the annual rate of child support, including in circumstances where a non-parent carer is involved.
Who pays child support?
To determine the parent who pays child support, each parent’s percentage of care of the child is weighed in relation to the share of the parent’s combined income.
Other forms of support
Child support payment is different from other forms of financial support such as spousal maintenance or property settlement. Spousal maintenance is a payment given from one spouse to another as financial support and property settlement is the division of assets and liabilities between a separated couple, whether married or de facto.
Daykin Family Law can guide you through the process of calculating your child support. Contact us today for an overview of your options and how we can help you reach a positive solution.
We give you expert legal advice on the most appropriate and cost-effective course of action for you and your family. Contact us on (07) 3338 5645 to make an appointment for a fixed fee initial consultation today.
The blog published by Daykin Family Law is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult Daykin Family Law on any legal queries concerning a specific situation.