What is Child Support?
In Australia, child support refers to the financial contributions made by divorced or separated parents towards their children’s upbringing, and this is different from spousal maintenance.
It’s also possible for individuals who aren’t biological parents, such as grandparents, extended family members, or legal guardians, to seek child support. To qualify for this support, a non-parent guardian must be responsible for at least 35% of the time for the child’s care and must not be romantically involved with either of the child’s biological parents.
Child Support Agreements
Under the Child Support (Assessment) Act, parents can choose between two types of agreements to decide the amount and conditions of child support: a Binding Child Support Agreement and a Limited Child Support Agreement.
Binding Child Support Agreement
A binding child support agreement is a private agreement between parents or guardians that outlines how child support will be handled, including the amount and type of payments. This agreement can be established before or after a separation and may encompass regular and one-time financial contributions.
A binding child support agreement can be a valuable way for parents or caregivers to formalize the terms of child support without involving the Child Support Agency. To be considered legally binding, both parties should write the document by hand, sign it, and ensure it complies with the legal requirements.
Key Aspects of a Binding Child Support Agreement
- Flexibility: Unlike fixed prescribed expenses, these private agreements allow for a high degree of adaptability and certainty for both parties involved; it is not necessarily adjusted by each spouse’s income that year or other factors that they cannot control.
- Addressing Specific Concerns: These agreements can be designed to manage unique circumstances, like delays in property settlements by an ex-spouse. With appropriate legal advice, typically from specialized family lawyers, these agreements can address all relevant issues.
- Legal Expertise: Consulting de facto or family lawyers is essential while signing a binding agreement. Their expertise ensures that the agreement is fair, legally valid, and serves the best interest of the child.
Limited Child Support Agreement
A Limited Child Support Agreement is a written arrangement that may encompass both monetary payments and non-monetary contributions, such as coverage for health insurance and expenses for private education. It is suitable for short-term scenarios that do not exceed three years. Writing this agreement does not necessitate legal advice for any parties involved.
Child Support Payments
Prescribed Payments
In circumstances where the paying parent has under 14% childcare responsibility, certain payments are mandated. According to the Child Support (Registration and Collection) Act 1988, section 71C, as much as 30% of the child support owed can be accounted for through these payments, regardless of the other parent’s consent. The expenses covered under this include:
- Costs related to school uniforms and textbooks
- School tuition fees
- Expenses for medical and dental care
- Living costs, including mortgage payments or rent
- Costs associated with vehicle use and upkeep
- Expenses for childcare
Non-Agency Payments
A non-agency payment is a child support payment made directly from one parent to the other parent or to a third party on behalf of the child. This means that the payment doesn’t go through a government agency like Services Australia. Non-agency payments can include monetary transactions, the transfer of property ownership, or the provision of services.
The Department of Human Services must be convinced that there was a mutual agreement between both parents regarding this payment as a contribution towards child support.
What Does Child Support Cover?
Child support payments are aimed at covering the essential expenses involved in raising a child, encompassing:
- Nutritional needs of the child, such as food purchases and dining
- Accommodation costs for the child, including expenses like rent or mortgage, utilities, and upkeep
- Expenses related to the child’s clothing and shoes
- Educational expenses, including tuition, textbooks, and uniforms
- Medical expenses, like visits to the healthcare provider, prescription drugs, and health insurance costs
What Does Child Support Not Cover?
These are some expenses that are not covered by child support payments. These expenses may include:
- Tuition for private institutions: Expenses related to attending a private school are not included in child support payments, except when the parents mutually agree to split the cost.
- Activities beyond the classroom: The costs associated with extracurricular activities, including sports, music instruction, or dance lessons, typically fall outside child support payments. Such expenses are often borne by the parent initiating the enrollment, with agreements usually made to share these costs equally or in proportion to each parent’s income.
- Healthcare costs: Although child support may cover certain healthcare needs, such as prescriptions, it does not extend to significant medical costs, including dental procedures or surgery. Both parents are expected to agree on how these expenses are handled and shared.
- Expenses for travel: Travel costs, including airline tickets or fuel, are not covered by child support unless the parents agree to share these expenses.
- Personal belongings: The cost of personal items for the child, like toys, books, or electronic gadgets, is not covered by child support. It is typically up to the parent to purchase these items to cover the cost.
Factors Affecting Child Support
The process of determining child support payments is designed to guarantee that children are provided with sufficient financial support from both parents following a separation or divorce. Below is a summary of the crucial elements and procedures used in this calculation:
Understanding the Child Support Formula
Basic Principles
The Australian government’s formula takes into account the following factors when calculating child support:
- Number of Children: The more children there are, the higher the support payment.
- Age of Children: Payments may vary based on the age of the children, with higher amounts often required for older children.
- Parental Income: Income levels for both parents are considered while determining child support. Higher-income parents pay more support.
- Level of Care: The payment is influenced by the amount of time each parent dedicates to the child(ren), with the parent who spends less time being required to make higher payments.
Care Percentage Levels and Their Implications
- Below Regular Care (0-14%): This means the child is with you for less than 52 nights per year or two nights per fortnight. The paying parent will not receive Family Tax Benefits (FTB) or other family payments.
- Regular care (14-35%): This means the child is with you for 52-127 nights per year or 2-4 nights per fortnight. The paying parent will pay less child support but may not be eligible for FTB payments. They may be eligible for other benefits like Child Care Subsidy, Rent Assistance, and a Health Care Card.
- Shared Care (35-65%): This means the child is with you for 128-237 nights per year or 5-9 nights per fortnight. Both parents may be eligible for FTB payments.
- Primary Care (65-86%): This means the child is with you for 238-313 nights per year or 10-12 nights per fortnight. The primary caregiver does not need to pay child support.
- More Than Primary Care (86%+): This means the child is with you for more than 86% of the year. The primary caregiver does not need to pay child support and may receive 100% of any FTB.
How is Child Support Collected?
- Direct payment: The parent without custody may directly transfer funds to the parent with custody through bank transfers or cash payments. However, this method is not highly recommended due to challenges in tracking and enforcement.
- Child Support Agency (CSA) collection: The Child Support Agency (CSA) has the authority to collect child support on behalf of the custodial parent and ensure its transfer. It is also equipped to enforce the payments if needed.
- Private collection: Non-custodial parents have the option to send their child support payments to a private agency, which then forwards these funds to the custodial parent.
- Salary deduction: The CSA is empowered to deduct child support payments directly from the non-custodial parent’s wages or salary through a process, even without their approval.
- Interception of Tax Refunds: The CSA can seize the tax refund of a non-custodial parent and apply it towards overdue child support payments.
- Lump sum payment: A non-custodial parent can pay a lump sum in child support, either voluntarily or as mandated by a court decision.
Objections to Child Support Decisions
There are 10 valid reasons, according to Services Australia, to request a change to your child support assessment:
- High Costs of Spending Time with the Child: If the expenses related to travel, accommodation, or communication with the child exceed 5% of your adjusted taxable income, you may be eligible for a change.
- Child’s Special Needs: If the child has special needs that significantly increase the cost of raising them, you can request a change.
- Child’s Education or Training: If the child attends a private school or receives specialized training as agreed upon by both parents, you can apply for a change.
- Child’s Financial Resources: If the child has sufficient income, assets, or earning capacity to reduce the need for parental support, a change may be warranted.
- Prior Payments or Transfers: If you have already made substantial payments or transfers for the child’s benefit, you can request a change.
- Childcare Costs: If you or the non-parent carer incur significant childcare costs for a child under 12, you may be eligible for a change.
- Personal Financial Hardship: If your necessary expenses significantly limit your ability to support the child, you can apply for a change.
- Parent’s Income or Financial Resources: If there has been a significant change in your or the other parent’s income, earning capacity, property, or financial resources, you can request a change.
- Support of Another Child or Person: If you are supporting another child or person, and this significantly reduces your ability to support the child in question, you can apply for a change.
- Support of a Resident Child: If you are supporting a resident child who is not legally your child, and this significantly reduces your ability to support another child, you can apply for a change.
Important Notes:
Simply being unhappy with your current child support assessment is not a valid reason for a change. You must provide evidence to support your claim for a change.
How Should Child Support Be Spent?
In Australia, it’s rare for parents to control how the other parent spends child support money. The parent receiving these funds is free to use them as they see fit, for either the child’s direct needs or other household expenses, without any mandated guidelines.
It’s considered inappropriate for the recipient of child support to then request the other parent to split every expense equally. This would unfairly require the contributing parent to pay more than their share.
On the other hand, the parent making the payments should not expect their contributions alone to fulfill all financial responsibilities towards their child, including the costs incurred during their stay with them or significant expenses like healthcare and clothing.
Legalities and Agreements
The specifics of child support can vary depending on the agreement between the parents. A legal guardian may work with the other parent to create a personalized agreement that reflects their unique situation. In such cases, seeking advice from family law attorneys is essential to ensure the agreement is both lawful and equitable.
FAQs
Does superannuation impact child support calculations?
Superannuation contributions made from after-tax income are typically excluded from taxable income for child support calculations.
What specific expenses are typically covered by child support payments?
Child support typically covers ordinary living expenses related to raising a child, including food, education, clothing, medical care, and housing costs.
Are there any common child-raising expenses that are not typically covered by child support in Australia?
Generally, private health insurance and private tuition fees are not included in standard child support calculations. However, these expenses can be addressed through a private child support agreement.
How long is a parent generally required to pay child support?
Child support payments typically continue until the child reaches 18 years of age. However, in cases where the child requires ongoing financial support due to a disability or illness, adult child maintenance may be required.
Can the terms of a private child support agreement be changed?
Yes, a private child support agreement can be modified with the mutual consent of both parties. If disagreements arise, mediation or legal intervention may be necessary.
What happens if one parent relocates with the child?
Relocating with children without the other parent’s consent can lead to legal complications. It is crucial to consult with a child custody lawyer before making such a decision. If both parents agree to the relocation, the child support agreement should be updated to reflect any changes in care arrangements or related expenses.