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Calculating Child Support
The Child Support (Assessment) Act 1989 (Cth) imposes a duty on a parent to maintain their children in the form of child support payments.
Child support is sometimes referred to as child maintenance and is an ongoing payment made by one parent / guardian to another to assist in caring for and supporting the child. The payment is for the financial benefit of the child.
Once a relationship has ended, an agreement for child support can be made to benefit the child of the relationship. Such agreements are often part of divorce proceedings, separation, spousal support agreements, or parenting arrangements. A decision for child support is usually based on each parent’s income, the number of children they have, and the child’s living arrangements.
Child support agreements
A child support agreement must meet certain requirements. Once these requirements are met either parent can apply to the Registrar to have the agreement accepted.
Requirements for a binding child support agreement are:
- The agreement must specify the child with respect to whom an assessment can be made;
- An agreement must be between two parents of the child, a parent and carer, or a carer and both parents;
- The agreement must be in writing and signed by both parties;
- A statement confirming that each party has sought independent legal advice is included; and
- A certificate completed by a legal practitioner confirming legal advice was given is also included.
There is also an option for a limited child support agreement to be made where the parties are not required to seek legal advice before entering the agreement.
A child support order can also be made by the Court. You can read more about child support basics in our Child Support: the basics article.
How are child support payments made?
Child support payments can be made directly or indirectly to the other parent / guardian in a variety of forms, including:
- Periodic payments;
- Non-periodic payments;
- Lump sum payments; and
- Non-agency payments.
Periodic payments are made directly to the other parent or carer on a regular basis and can be adjusted to reflect the changes in the costs of living.
Non-periodic payments are indirect payments made to third parties. For example, a payment to the child’s school for school fees. An agreement containing non-periodic payments must state whether these will reduce the annual rate of child support payable. For example, if the school fees are $3,000 for the year the agreement needs to say whether the annual rate of child support is reduced by that $3,000 or a percentage of it.
The Child Support (Assessment) Act 1989 (Cth) also allows an order for child support in the form of a lump sum payment when a binding child support agreement has been made. Any payment made as a lump sum must be credited from the total amount payable under the assessment for child support. This is to ensure the parent receiving the payments does not receive double the money of which they are entitled. The lump sum payment must be equal to or exceed the current calculated rate of child support the parent is entitled to receive.
There are also non-agency payments that can be paid directly to the parent or carer, or to a third party. These types of payments cannot be enforced against a third party and will not affect your entitlements to the child support payable in the assessment. These payments can include:
- Paying a debt owed by either party;
- Paying for services; and
- Paying for goods.
How much child support will I get?
In deciding how much child support is to be paid the following formula used to work out the monetary amount a parent would be entitled to receive:
- Assess each parent’s income;
- Calculate the parents’ combined income;
- To calculate each parent’s income percentage, divide each parent’s income by their combined total;
- Assess each parent’s percentage of care for the child;
- Calculate each parent’s cost percentage for the child;
- Determine the child support percentage by subtracting the cost percentage from the income percentage for each parent;
- Assess the costs of the child based on the parents’ combined total income;
- To calculate the total amount of child support payable, multiply the costs of the child by the positive child support percentage.
The amount determined by following the above formula represents how much child support you would be entitled to receive.
Further information relating to the assessment of child support can be found on the Centrelink website.