How Much Child Support Should I Pay?

Either parent can apply for a child support assessment. Child Support issues an assessment setting out the amount of child support payable by one parent to the other. The assessment is based on a formula.

The level of child support varies depending on such factors as:

• the number of children of the relationship;
• the amount of time each parent spends with the child;
• the ages of the children;
• whether the care of the children is shared;
• the extent to which the care of the children is shared;
• the incomes of the parents;
• whether the parent has other legally dependent children.

What is child support?

Child support is financial support paid by parents towards the day-to-day expenses of a child. It is calculated on a formula by Child Support Services Australia.

The child must not be married or living in a de facto relationship.

What happens when a child turns 18?

Child support is payable for children who are either under 18 or if turning 18 in a year in which the child is in full-time secondary education, until the last day of that secondary school year.

 After support payments stop, a court order for child maintenance can be made which takes into account the proper needs of the child and the ability of each party and the child to contribute to those needs. Child maintenance may be sought by or for children who are:

• over 18 who are still studying;
• over 18 who have a disability or medical condition which restricts them from becoming fully independent.

When do I stop paying child support in Australia? – What age does child support stop?

Child support is payable for children who are either under 18 or if turning 18 in a year in which the child is in full-time secondary education, until the last day of that secondary school year. The last day of secondary education is the later of the following:

• if the child is not required to sit an examination, the last day of classes for the school year (as determined by the school); or
• if the child is required to sit an examination, the later of the last day of the period of examination for the child’s year level and the last day of classes for the school year (as determined by the school).

Child Support Estimator – How much child support do I pay?

A formula is used to calculate the annual rate of child support. The easiest way to work it out is to use this child support calculator. 

When the ATO issues an income tax assessment that requires Child Support to make a new assessment, a new child support period starts. The new income tax assessment will usually relate to the parent’s taxable income for the last relevant year of income in relation to the new child support period. 

There are 8 steps to calculate child support for each child:

1. Calculate each parent’s child support income.
2. Add both parents’ child support incomes together to obtain a combined child support income.
3. Divide each parent’s individual child support income by the combined child support income to get an income percentage.
4. Work out each parent’s care percentage of the child.
5. Work out the cost percentage of the child.
6. Subtract the cost percentage from the income percentage for each parent. The result is called the child support income.

• If it is a negative percentage, that parent may receive child support because their share of the costs of children is being more than met by the amount of care they are providing.
• If it is a positive percentage, the parent needs to pay child support because they are not meeting their entire share of the costs of the child directly through care. Steps 7 and 8 are done using only the positive child support percentage.

Different care arrangements for various children, might mean different child support percentages for each child.

1. Work out the costs for each child.
2. Obtain the final child support payable by multiplying the positive child support percentage by the costs of the child. This final figure is the child support amount the paying parent needs to transfer to the other parent.

At the beginning of each calendar year, the basic values used in calculating child support arrangements change.

What does child support cover?

Child support covers food, clothes, housing, medical expenses, school costs and other expenses. The formula may not result in a figure which is high enough to cover all the expenses so some families agree to share medical costs, school fees and expenses and extra-curricular activities or one parent may pay them all.

What if child support isn’t used for my children’s expenses?

It isn’t necessary for a parent who receives child support to show that the child support has been used to pay for expenses for the children. Child support is usually dealt with as part of the household budget.

What income is used to calculate child support?

Child support income is the total of taxable income and supplementary income for the year of the last lodged tax return less the deductions for self-support, any relevant dependent child amount and/or a multi-case allowance amount. Taxable income is income before payment of tax and the Medicare levy.

The definition of “income” includes salary-sacrificed superannuation contributions and net losses from financial investments.

Supplementary income is the total of any exempt foreign income, net rental property losses and reportable fringe benefits. Some tax-free pensions or benefits are included such as disability support pensions, wife pensions, carer payments, invalidity service pensions, partner service pensions, income support supplements and Defence Force Income support allowance.

Some of each parent’s income is excluded from the calculation and set aside as an allowance for basic living expenses. This is called the self-support amount. For child support periods starting on or after 1 January 2021, the self-support amount is: $26,319. This figure is increased for relevant dependent children.

If Child Support cannot easily discover a parent’s current taxable income, it can nominate a “default income”. For periods commencing on or after 1 January 2023, it is the greater of:

• taxable income for an earlier year adjusted by an indexing factor; and
• $55,016 which is 2/3 of annualised male total average weekly earnings.

An assessment based on default income can be amended later if Child Support receives better information.

The child support cost percentage depends on the amount of care undertaken by the payer for whom child support is paid. 

What is the child support cost percentage?

The child support cost percentage varies depending upon the number of nights the children spend with each parent. The levels of care are set out below.

Shared or divided care

A parent or non-parent carer’s percentage of care for a day in a child support period is the percentage of care that the person is likely to have of the child during the 12-month care period. 

Generally, care is calculated by looking at the likely future arrangements rather than based on the past. Care is worked out based on the number of nights that the child is likely to be in the care of the person during the care period. The care percentage determination can be made on the basis of hours of care if a determination on the basis of nights is inappropriate.

“Care” does not mean where the child lives or stays overnight. A parent can provide care to a child who is at boarding school or in hospital; a supervisor of the child (eg a baby sitter, a grandparent or a schoolteacher) does not provide care. 

Child Support gives weight to statements from both parents to determine what the care arrangements are in place between the parties.

Levels of care

The following table sets out the percentage of a child’s costs a parent is considered to meet through directly caring for a child:

Is there a maximum cap on child support?

Yes, there is.

The maximum child support is based on the combined incomes of the parties. For periods commencing on or after 1 January 2023, if the parties’ combined income is over $206,310 the maximum amount of child support to be shared between the parties for children aged 12 years and under is:

• $25,169 for 1 child;
• $39,198 for 2 children;
• $49,515 for 3 children.

For children aged 13 and over, the child support shared between the parents is:

• $31,359 for 1 child;
• $47,451 for 2 children;
• $58,592 for 3 children.

For children of mixed ages, the maximum child support shared between the parents is:

• $44,325 for 2 children;
• $54,053 for 3 children.

If the children have greater needs, and a parent has the capacity to pay more, the parties can either:

• negotiate a higher amount and enter into a child support agreement; or
• one parent can apply to change the assessment.

How can I change the amount of Child Support I pay?

There are several ways to change the amount payable under a child support assessment. The main ways, which are discussed in more detail below are:

• Estimate of taxable income. A parent estimates their adjusted taxable income for a child support period, or the remainder of a child support period. There is a special form for this, “Estimate of income for use in a child support assessment”. An estimate penalty may be charged when Child Support reconciles the estimate with actual income and a parent’s actual income for an estimate period is 110% or more, of estimated income. The penalty is 10% of the difference between the liability based on the original estimate and the actual liability;
• Crediting of lump sum payments. A payer can pay part or all of the obligation for periodic (regular) child support by way of a lump sum or transfer of property;
• Non-agency payments;
• Change of assessment;
• Court order for departure from a child support assessment;
• Child support agreement – this is a written agreement between the parties;
• Change in care arrangements for the child.

What is a non-agency payment?

If payments made to a carer or a third party are intended to be part of the child support liability rather than in addition to the liability, Child Support can credit the payments against the child support liability. These are called “non-agency payments” (NAPs). A “Non-Agency Payment details” form should be completed. Prescribed payments can be credited towards up to 30% of the liability.

A NAP is credited to a child support liability in one of the following events:

1. Both parties agree that it was intended to be credited.
2. It was a prescribed payment regardless of intention. Up to 30% of the liability each period can be credited in certain circumstances including that the payer has less than 14% care of any of the children to whom the relevant administrative assessment relates. Prescribed payments include:

1. childcare costs, school fees, uniforms and books;
2. essential medical and dental costs of a child;
3. carer’s share of utilities, rates or body corporate expenses and loans secured on the carer’s home;
4. carer’s costs of obtaining and running a motor vehicle.

1. A carer advises that it was intended as child support.
2. The parents cannot agree but Child Support decides the parents intended it to be credited.

A NAP may not be credited if, for example:

the carer’s consent was obtained by coercion or harassment;

the payer regularly pays the expense (eg school fees) and this was taken into account in a change of assessment decision;

the payment is required by a court order.

How do I end a Child Support agreement?

The court can sometimes set aside child support agreements and make other arrangements. There are two types of child support agreements.

A limited child support agreement may be changed or ended more easily than a Binding Child Support Agreement.

Both types of child support agreement can be varied by the parents making a later agreement or by a court order. 

A court can vary either type of child support agreement on the following grounds:

1. a party’s agreement was obtained by fraud or a failure to disclose material information;
2. a party to the agreement, or someone acting for that party:

1. exerted undue influence or duress in obtaining that agreement; or
2. engaged in unconscionable or other conduct;

to such an extent that it would be unjust not to set aside the agreement; or

The grounds that apply only to a limited child support agreement are:

1. because of a significant change in the circumstances of one of the parties to the agreement, or a child in respect of whom the agreement is made, it would be unjust not to set aside the agreement; or
2. the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all the circumstances of the case (including the financial circumstances of the parties to the agreement); or

The ground that applies only to a Binding Child Support agreement is that because of exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.

Does Child Support change if my child spends more time with me?

Maybe.

Parties can seek that the assessment be changed when there is a change in the care arrangements. The level of care is set out in the following table. 

The following table sets out the percentage of a child’s costs a parent is considered to meet through directly caring for a child:

The position is more difficult and complex when there is a Binding Child Support Agreement. 

The Child Support Registrar can terminate a Binding Child Support Agreement where the party receiving child support ceases to be an “eligible carer”.

The Registrar can administratively terminate a Binding Child Support Agreement without a court order where:

• The payee has less than 35% care of the child; and
• The period in which the payee has less than 35% care of the child is at least 28 days; and
• The child support agreement has not been suspended; and
• The payee would otherwise continue to be entitled to child support in accordance with the child support agreement.

How do I enforce child support?

Child Support encourages child support to be paid directly by the payer to the carer. 

Child support which Child Support is responsible to collect is a debt due to the Commonwealth not the carer. The carer cannot privately enforce it. A carer can, however, privately enforce:

• arrears which arose when Child Support was not responsible for collection;
• a liability not registered with Child Support for collection;
• a liability which is not for periodical payments, eg medical expenses.

In some circumstances, Child Support can collect some arrears which arose before Child Support became responsible for collection. This “safety net” encourages parents to collect privately. If private collection does not work, the carer can ask Child Support to start collecting. Under the safety net Child Support can collect up to 3 months of arrears. Sometimes it can collect up to 9 months of arrears.

If Child Support is responsible for collecting child support and has not been able to, there are no restrictions on how old the arrears can be. For child maintenance, the situation is different. Child maintenance arrears which are over 12 months old may not be enforceable if there has been no attempt to enforce the liability for 12 months and there are no special circumstances.

Child Support has statutory powers to obtain information for the purpose of making and varying child support assessment and collecting child support. Child Support can give notice to a person requiring them to notify Child Support within 14 days, and in the manner specified in the notice, if:

• a specified event or change of circumstances happens; or
• the person becomes aware that a specified event or change of circumstances is likely to happen.

Child Support can also require a person to:

• provide information;
• attend and answer questions; and
• produce documents.

The main enforcement methods used by Child Support are to:

• issue a demand for payment of child support and impose a late penalty;
• collect payments directly from the employer (garnish wages). Employers cannot deduct the full specified periodic deduction from a payer’s salary or wages if that would leave the employee with less than the “protected earnings amount”. The protected earnings amount for 2021 is $383.10 per week;
• seize a tax refund;
• issue a notice of intended legal action;
• require the payer to attend an interview. This gives Child Support the opportunity to find out more information about the payer’s financial position and negotiate directly;
• issue a notice to a third party who owes money to the payer or holds money for the payer, eg regular consultancy fees, bank savings;
• initiate court proceedings. Child Support will not usually issue proceedings unless it believes the payer can pay;
• if an employer is required to deduct child support from a payer’s wages but does not do so, require the employer to pay the child support plus a penalty of 20%;

The carer, not Child Support, is responsible for enforcing non-periodic payments. If the carer expects the payer to be reluctant to pay, it is probably better to negotiate a dollar figure to cover non-periodic expenses so Child support can collect all the liability.

Child maintenance and child support debts receive special treatment under the Bankruptcy Act 1966 (Cth). They can be enforced despite the bankruptcy. Child Support may still negotiate voluntary payment arrangements, collect arrears and ongoing liabilities (except for penalties) and intercept tax refunds to apply against the debt. Child Support can take legal action to enforce a remedy against the non-divisible property of a bankrupt.

A bankrupt is not automatically released from child maintenance and child support arrears on discharge from bankruptcy. Liability for arrears which arose before the bankruptcy will continue despite a bankrupt’s release from bankruptcy unless the bankrupt successfully applies to the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) for discharge from the child support or child maintenance debt.

Some of the above information was included in a chapter written by Jacky Campbell in the former Thomson-Reuters Australian Financial Planning Guide which is no longer published. It has been expanded and updated.