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.
Child Support Scheme
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, CS 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 section 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.
The assessment is based on a child support formula. This 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 the parents’ combined income, the age and number of children (s 5, sch 1 Assessment Act).
Parents must notify CS about the care arrangements for the children. This may be in the form of an agreement (written or verbal), a 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 14–35 per cent care of a child; “shared care” is defined as having 35–65 per cent care of a child (s 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 www.humanservices.gov.au.
Parents in same-sex relationships can apply for child support.
If a parent is on a low income (e.g. Centrelink benefits), minimum child support of $8.08 per week to each family is payable (up to a maximum of three families). This amount is subject to indexation (s 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 (s 66(8)) or if a parent has at least regular care of one or more of the children (s 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 $26.73 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.
At the time of writing (30 June 2017), the MTAWE is $72,462. For 2017, the combined income of both parents is capped at approximately $181,155 per year. For example, on the maximum income of $181,155 per year, the costs of three children over 13 years of age are capped at $51,448 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 (ss 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 (s 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 per cent; or
• by a court order (s 80G).
Lodge a tax return
If a parent has not lodged a tax return or provided income information to CS, CS may determine an appropriate income to be used in making a child support assessment (known as “default income”). CS may change the income used in an assessment if the parent provides information about their income or if they lodge a tax return (s 58 Assessment Act). Adjustments to a parent’s income, in some instances, are not able to be backdated by CS (s 58A).
In some circumstances, if a parent’s income is expected to or has reduced by at least 15 per cent, they may give CS an estimate of their current income (s 60). If the estimate is accepted, CS may change the rate of child support. A penalty may be imposed if a parent underestimates their income (s 64AF).
Errors If there are any mistakes in the assessment (whether or not made by CS or due to false or incorrect information provided to CS), notify CS so that the assessment may be changed (s 75).
A parent’s change of circumstances may affect an assessment of child support. Examples include birth of another dependent child, unemployment, or change to the arrangements for spending time with a child. You should let CS know as soon as changes occur as some changes may not be backdated.
If separated parents reconcile, CS will suspend child support liability under an assessment (s 150E) for six months. CS will amend the administrative assessment depending on when they are notified/become aware of the change in care arrangements.
Following separation and in some circumstances, either parent may apply to CS to exclude additional income earned to meet post-separation costs. To apply, the requirements in section 44 of the Assessment Act must be met.
Either parent may apply to CS for an assessment to be changed (s 98B Assessment Act). CS may also initiate a change of assessment (s 98K).
A change of assessment may not go back in time (more than 18 months and less than seven years from the date of lodgment), except with the court’s permission (see “Application to court”).
An application for a change of assessment should be lodged as soon as possible as time limits may apply.
To apply to change an assessment, you must show that one of the reasons below apply, that there are special circumstances, and that it is just, equitable and proper to change the assessment (s 117(1)).
The reasons to apply for a change include:
• the costs of helping the parent spend time or communicate with the child;
• the special needs of the child;
• costs of the child being cared for, educated or trained in the manner the parents intended;
• income, earning capacity, property or financial resources of the child;
• money, goods or property received by the child, payee or other person for the benefit of the child;
• high childcare costs;
• either parents’ necessary expenses for supporting themselves;
• income, earning capacity, property or financial resources of either parent;
• legal duty to maintain another person or other child; and
• additional income earned for the benefit of a resident child (see s 117(10) for definition of “resident child”).
An objection may only be lodged against some decisions made by CS (including some change of assessment decisions). These decisions are listed in section 80 of the Collection Act.
An objection must be made within 28 days of receiving the notice from CS or longer by seeking an extension of time (ss 81, 82). The other parent is provided with a copy of the objection together with any attached documents. They may respond by opposing or agreeing to it.
CS will make a decision on the objection in writing usually within 60 days.
The Administrative Appeals Tribunal (AAT) (the Social Services and Child Support Division) can review certain objection decisions made by CS (s 89 Collection Act). An application may be made to the AAT within 28 days of receiving the letter or notice of objection decision (or longer, by seeking an extension of time). Contact AAT on 1800 228 333 or visit www.aat.gov.au. Get legal advice to help you apply to the AAT. If your application is incorrect it may be dismissed.
An application to court can be made in the following circumstances:
• if a person disputes CS’s acceptance or refusal of an application for assessment on the basis of paternity issues. The court will decide the parentage dispute and declare if a person should or should not be assessed in respect of the costs of a child (ss 106A, 107 Assessment Act);
• if a person is found to not be the father, the court will decide if an order should be made for repayment of the child support wrongly paid (s 143). The amount ordered to be repaid is able to be registered for collection by CS (s 17A Collection Act);
• if a parent seeks an order for child support to be paid in a lump sum or other non-periodic amount (s 123 Assessment Act);
• to set aside a child support agreement where parents cannot agree to change or end a child support agreement (s 136);
• to depart from a child support assessment if CS or AAT says the case is too complex or both parents have another application in court and the court is satisfied that it would be in their interest to consider both matters together, and there are special circumstances (s 116(1));
• to obtain the court’s permission to extend the time to change an assessment beyond 18 months and up to seven years (s 111);
• to appeal an AAT decision on a question of law (s 44(1) Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”)),
• to appeal to the Federal Court or the Federal Circuit Court against the making of a DPO (s 72Q Collection Act) (see “Departure prohibition order”);
• to temporarily stop an assessment, collection or payment of child support (also known as a “stay order”). This can happen where there is an application to CS, AAT or the court, which has not yet been decided. The court is able to make a stay order if it considers that it should do so, taking into account the interests of those who may be affected (s 111C Collection Act; s 44A(2) AAT Act).
You should get legal advice to make sure you have correctly applied to the court, within the time allowed. If your application is incorrect it may be dismissed and the court may order you to pay the legal costs of the other party.
Parents can arrange private collection where payments – set by an order, assessment or agreement – are paid by one parent directly to the other parent. It is wise to keep receipts or a record of payments.
If private collection arrangements are not working, contact CS to take over the collection of child support payments (s 39 Collection Act) (also see “CS collect”). If you have concerns of violence or threats from the other party, contact CS and/or Centrelink. It may be recommended that your child support case be registered for collection with CS. You are also advised to register your case for collection with CS to avoid overpayment of the Family Tax Benefit (FTB). Centrelink will re-calculate your FTB for past years if the payer’s tax returns show income higher than the assessment as it is assumed that you are entitled to receive more child support.
You can personally take court action to recover any child support that has not been paid (s 113A) (also see “Enforcement order”). However, note that you are responsible for your own legal costs. You must also notify CS within 14 days of any court orders that are made.
If requested, CS can collect periodic child support, adult child and spousal maintenance payments, and repayment of wrongly paid child support. In some instances, overdue payments may also be collected (s 28A Collection Act). CS will need details of the relevant assessment, agreement or court order (ss 23, 25). Methods of CS collection include deduction from salary, wages or Centrelink pensions and benefits, collection from another person who holds money on behalf of a parent or interception of tax refunds. CS can impose a penalty for late payments (s 67). See “Late payment penalties”.
A parent who has less than 14 per cent care of the children (i.e. less than one night per week) is able to make direct payments to the other parent or to a third party for the benefit of the child. These are called “non-agency payments” (NAP). Keep proof of payment to send to CS (e.g. bank deposit stubs, receipts or a bank statement). If CS is not notified, these payments may not be taken into account.
If both parents agree that the payment was meant as child support, CS will credit the amount of the NAP towards child support (ss 71, 71A Collection Act).
If both parents do not agree that the payment was meant as child support, CS can only credit the amount if it falls under a special type of NAP specified in regulation 5D of the Child Support (Registration and Collection) Regulations 1988 (Cth) (known as a prescribed payment) and at the time the payment was made the payer has less than 14 per cent care of the relevant children.
Specified payments in regulation 5D are:
• childcare costs;
• pre-school or school fees;
• uniforms and school books;
• medical and dental services;
• rent or security bond for the payee’s home;
• utilities (e.g. gas, phone, electricity), rates or owners corporation charges for the payee’s home;
• home loan on payee’s home; and
• purchase, running or repair costs of payee’s motor vehicle.
CS will credit specified payments at the rate of 30 per cent of the assessed child support each payment period, if the balance of child support is paid on time.
Payees who receive more than the base rate of FTB need to be aware that when Centrelink is notified of a prescribed payment, this payment will be included in the maintenance income test used to calculate FTB.
It is important to get legal advice as soon as you get behind in making child support payments. You are still required to pay off your child support debt after the assessment has ended or after the child has turned 18. A time limit may apply to certain applications to reduce the debt.
A parent may not be able to pay child support at the rate assessed by CS, causing a child support debt. A parent may be able to apply to pay less. (See “How to change child support”.)
Where late payment penalties have been imposed by CS, you may request that they waive the penalties. This is called “remission of penalty”. CS will consider the circumstances of each case in making a decision (s 68 Collection Act).
If there is a large child support debt and a parent has not made satisfactory arrangements to pay the debt, CS may prevent them from leaving Australia by making a departure prohibition order (s 72D Collection Act).
Where there are outstanding child support payments either CS or a parent can apply to the court for an order for payment of the child support debt. The court can make an enforcement order, such as for seizure and sale of property and attachment of earnings (chapter 20 of the Family Law Rules 2004 (Cth)). (Also see “Private collection”.)
If you are applying for a Centrelink benefit, the Department of Human Services (Centrelink) may ask you to apply for child support within 13 weeks. Parents who do not do this may be paid at the minimum rate of FTB Part A by Centrelink.
The amount of child support payments that a person receives may affect the amount of FTB paid to that person. Contact Centrelink on 13 61 50 for further information. (For more information on the FTB, see Dealing with social security.)
Centrelink accepts that there may be reasons for a person not to apply for child support. These include:
• the other parent is unknown or cannot be located after efforts have been made; or
• the applicant parent fears violence or threats from the other parent.
Discuss these matters with the appropriate Centrelink officer.
Centrelink is not required to approve child support agreements lodged with the CS. Centrelink will calculate a parent’s entitlement to FTB Part A on the basis of a notional assessment of child support made by CS. (Also see “Child support agreements”.)