Parents have a primary duty to financially provide for their children. A child support assessment works out the amount of money to be paid to the parent with primary care of the child by the other parent. Child support agreements can be worked out between the parents.
The Child Support Scheme is mainly covered by the Child Support (Registration and Collection) Act 1988 (Cth) (“Collection Act“) and the Assessment Act. There are also court rules and regulations.
Parents have the primary duty to maintain their children. This applies even if the parents have never lived together. In cases where the parents were not married or did not live together, Commonwealth Department of Human Services (Child Support or “CS“)Â can make a child support assessment if there is evidence of who the child’s parents are.
The presumptions of paternity are set out in sectionÂ 29(2) of the Assessment Act. If there is disagreement about parentage and the parents are not willing to have parentage testing, then it may be necessary to go to court (see “Application to court“).
This primary duty of parents continues until a child reaches the age of 18 years, unless the child is able to support themself before then, marries or is adopted. In some circumstances, maintenance can be paid for children over the age of 18 years (see “Adult child maintenance“).
Separated parents may apply to CS for an assessment of child support. This is assessed on the basis of a child support formula.
The child support formula calculates each parent’s contribution towards the costs of raising a child based on the combined incomes of both parents and the care arrangements for the child. The “Costs of Children Table” sets out how much children cost by reference to both parents’ combined income, the age and number of children (sÂ 5, sch 1 Assessment Act).
Parents will be required to notify CS about the care arrangements for the children. This may be in the form of an agreement (written or verbal), parenting plan or court order. At times, parents may not agree on the level of care. In these instances CS will make a determination as to the actual level of care.
“Regular care” is defined as having between 14% and 35% care of a child, and “shared care” is defined as having between 35% and 65% care of a child (sÂ 5).
An amount for self-support of each parent and the costs of children from new families are also taken into account. The Costs of Children Table and the online Estimator can be found on the CS website at humanservices.gov.au.
Parents in same-sex relationships can apply for child support.
If a parent is on low income, for example Centrelink benefits, minimum child support of $7.67 per week to each family is payable (up to a maximum of three families). This amount is subject to indexation (sÂ 66 Assessment Act) and the parent will be advised in writing of the new amount. The minimum rate will not apply if there is a departure determination, court order or agreement in place (sÂ 66(8)) or if a parent has at least regular care of one or more of the children (sÂ 66(1)).
Further, a parent who declares a low income but is not on an income support payment may be assessed to pay a fixed rate of $25.42 per child per week (subject to indexation) up to a maximum of three children. This is called a “fixed assessment” and may apply to parents who minimise income to avoid child support.
The maximum child support payable is also known as the “cap”. The maximum child support is applied to the combined income of both parents up to 2.5 times the annual equivalent of all Male Total Average Weekly Earnings (MTAWE) and calculated using the Costs of Children Table.
In 2014, the MTAWE is $70,569. For 2014, the combined income of both parents is capped at approximately $176,423 per year. For example, on the maximum income of $176,423 per year, the costs of three children over 13 years of age are capped at $50,104 per year.
Parents may make a child support agreement and can choose to organise collection themselves or collection by CS. Parents can make agreements regarding the way in which child support is paid, for example through periodic cash payments, non-cash payments (see “Collecting child support“) or a lump sum payment (including by way of property settlement).
There are two types of agreements: binding child support agreements and limited child support agreements. The main difference between them is that parents are not required to obtain legal advice before entering into a limited child support agreement. The amount of child support payable in a limited child support agreement must not be less than the amount calculated in the CS assessment.
Agreements must be in writing and signed by the parties (ssÂ 80C, 80E Assessment Act).
If a parent is in receipt of Family Tax Benefit A, the amount of Centrelink benefits the parent will receive is based on the child support formula amount as though the child support agreement was not in place. This is called a “notional” assessment and is worked out by CS.
A binding child support agreement can only be terminated if both parents agree to do so after getting independent legal advice or by a court order (sÂ 80D).
A limited child support agreement can be terminated:
- if both parties agree to do so;
- by either party after three years;
- by either party if the notional assessment changes by more than 15%; or
- by a court order. (s80G).