Need help with child support

Child Support Agreements – How do they work?

A common mistake we see is that people talk about having agreements but what they really have are private arrangements that break down and cause grief. Parents can enter Agreements and formalize these legally with the CSA. This Fact Sheet will outline the types of agreements and link to deeper CSA resources and forms. Where parents can communicate or are going through settlement, or otherwise engage legal advice they may consider a Binding agreement, or without advice it must be limited. So, let’s look at each type and how they can be used.

Binding Agreements – Need legal Advice

A binding agreement (not Lump Sum binding) is an agreement where parents can set their own Child Support terms for less than a CSA assessment, the same as more than a CSA assessment.  it is also the only agreement that can be an initiating document meaning no case is needed prior to its registration and if completed correctly cannot be refused.

So how do you have a binding agreement?

  1. Certificate from Legal advisor with each parent
  2. Must have started and end date
  3. The agreement must reach CSA within 28 days of signing or starts from when they get it.
  4. The payments must be measurable e.g., $100 per week.
  5. Clauses must be measurable and evidence able e.g.  If your business stops trading the agreement is cancelled.  E.g.  The payment increases by $20 per week on 1 July each year.  (Clauses can be for anything to increase or decrease- new kids, income up, care up, care down, unemployed etc.)
  6. Ending the agreement
    1. A binding child support agreement can be terminated by the items listed in 80D of the Child Support (Assessment) Act 1989 as follows from the Act:
      1. (1)  A binding child support agreement (the previous agreement) may be terminated only by:

                             (a)  a provision being included in a new binding child support agreement made by the parties to the previous agreement to the effect that the previous agreement is terminated; or

                             (b)  the parties to the previous agreement making a written agreement (a termination agreement):

                                      (i)  that is binding on the parties in accordance with subsection (2); and

                                     (ii)  to the effect that the agreement is terminated; or

                             (c)  a court order setting aside the previous agreement under section 136.

        (You can write in a way that the agreement flips if this occurs)

What can be considered in an agreement?

Agreements can be for cash payment (what CSA call Part A Periodic Payments), they may be for third party payments like to school and sports, they can modify the formula components like income and care (As discussed in for your legal advisor) and below we have some examples on CSA for form (Child support agreement form (CS1666) – Services Australia) of these.

Periodic Payment meaning cash from one parent to another.

Third party payments or Part B payments in the form, and note the CSA cannot enforce these. By signing an agreement this way it also prevents a CoA application to collect these or credit these**.

Formula Modification or Part D payments in CSA form.  Here is the ability to lock a care %, disregard tax impacts from settlement, allow for OT or some additional wages to be disregarded or set the income to use in the assessment, or modify and create your own Costs of Children. Really is a write your own adventure. Note three different ones written in image.

 

So as you can see there really see that during settlement or any time there is no reason to disregard the intent of you orders and CSA really has given the tools you need to use them.

 

Lump Sum Binding Agreements

Another type of agreement under the binding class is Lump Sum Binding.  This is essentially is where a parent via financial settlement gives the RP a lump sum payment up front.  This payment acts as a credit and CSA do normal assessment (or you sign a Binding/limited agreement for periodic amount and that is used).

  • Assessment each year is taken away from lump sum
  • Remaining Credit as inflation applied and then it repeats until credit consumed
  • If Credit consumed before end of case normal assessment/agreement amount kicks in
  • If credit is not consumed or Payer becomes custodial receiver than no refund is made via CSA as money was paid privately.

You find this in the Part C of CSA agreement form above.

Limited Agreements

A limited agreement is very similar to a Binding Agreement except it must be equal to the CSA assessment on the day you apply for the annual value, it it is easier to end then a Binding and thus Legal Advice is not needed.  It can have all the same components as above except cannot be lump sum.  

So what makes limited agreement?

  1. Must have started and end date
  2. The agreement must reach CSA within 28 days of signing or starts from when they get it
  3. The payments must be measurable e.g., $100 per week
  4. Clauses must be measureable and evidence able e.g.  If your business stops trading the agreement is cancelled.  E.g.  The payment increases by $20 per week on 1 July each year.  (Clauses can be for anything to increase or decrease- new kids, income up, care up, care down, unemployed etc.)
  5. Ending the agreement
    1. You both sign a new one, so subsequent agreement can end the previous one.
    2. Like a Binding agreement a court can set aside the Limited
    3. There is a change in the Notional Assessment of 15% for an event not foreseen in the agreement.  A notional assessment is generally 3 years long and based on incomes etc. like a normal CSA assessment and goes to Centrelink for FTB A calc. 
  6. After three years if agreement still running either parent can end.

Agreements and FTB A – Notional Assessments

Notional assessment and Provisional notional assessments are not well understood and often seen as complex. This section of the fact sheet will try to simplify what these are and how they work, of course below will be links for all to detailed descriptions from the CSA Guide.

Since 2008 when Scheme reforms occurred the Notional assessment came in as prior all agreements had to be equal to what CSA was assessing.  In order to give parent more opportunity to agree to less than CSA Binding agreements came in and Notional Assessments also that sit under all agreements (except lump sum).

Essentially these work like a normal Child Support Agency Assessment using parent income and care for the children so it is still needed for this to be kept up to date and is still shared between each parent.

A Notional assessment starts off being what is called Provisional Notional Assessment, allowing parents to update their care or income details in the same way they can on a normal assessment, and once this has happened after 28 days it becomes Notional.  

It in no way effects the physical agreement parents have signed but does issue to Centrelink to set FTB A payments.

What does this mean?

  • Not matter the value of the agreement total the FTB is based on Notional assessment. So the Receiver may be assessed for FTB on a value greater or lower than agreement
  • Parents still need to update care and income and cannot ignore this
  • CoA and Estimates and so on can occur on Notional Assessment and impact Centrelink but not agreement.
  • Changes to a Notional can mean termination of a limited agreement as above.

So please when entering agreements make sure all details that inform it are accurate and know personal information is still shared due this.  

 

Clauses

One of the most important things parents can do is consider if they want clauses to end/modify an agreement while it runs for such things as (not limited to)

  • Unemployment
  • Care changes
  • New Children
  • Ill health/Injury
  • Changes in value of one notional to another 
  • Third party payment effect on Periodic amounts (Third party payment generally is not enforceable by CSA so neither parent can be compelled by them to follow the agreement)
So how to write a good clause.

It must have a value impact and be measurable.

  • Where either parent becomes unemployed with evidence of, Centrelink, Separation certificate etc. then all payments to third parties will become 100% annually payable by the other parent during that period.
    • Or if it was a periodic payment – Where “Payer” becomes unemployed with evidence of, Centrelink, Separation certificate etc. then the annual assessment shall be “$X” per annum.  

Child Support and Debt Collection

Child Support Debt is a difficult journey for all parents paying or receiving and can be very confusing and stressful. The below fact sheet outlines how CSA should approach debt collection and what a parent can do to support it as a payer of CS of Receiver of CS

You're Owed a debt

Both Payers and Receivers may be owed a debt through the child agency one being child support and the other overpayment that is collectable under Section 69B of Registration and Collection Act 1988.

This will outline briefly how CSA should approach debt and the different levels of action, as a subscribed member you can hit “contact us” and get one on one support or join our regular Zoom information sessions for support.

There are some key areas of CSA debt collection.  and below I will talk about them and some myths or misconceptions about what they face

  • Child Support is the same as Tax debt and is what is known as Consolidate revenue debt.
  •  Lots of people are getting away with not paying.
  • What can CSA tell me about what is happening?
  • Why do they ask me what I know about?
  • What can they do?
Child Support is the same as Tax debt and is what is known as Consolidated revenue debt.

Often you will see people promote a sense that if CS debt was owed to the government they would do more.  Well, it is owed to the government, and it is treated this way under law and all the powers they have are like ATO from which CSA was actually born.  It was originally a team within ATO when it started.

Lots of people are getting away with not paying.

So, the program gets 76% of all collect case which is about half of all cases pay every month with no debt.  From the remaining 24%, half of those pay and address debt each month.

Why is this of value?  Well, this means the best approach is to find out that success is happening to support your case.  That is not hopeless and with knowledge you can have outcomes.  Is it hard when someone actively avoids or has nothing to take? Yes, it is but CSA is required to continue until it is not possible. 

What can CSA tell me about what is happening?

So, one of the greatest barriers I see, or frustrations is staff not really knowing the difference between privacy and secrecy and talking about clandestine third parties leaving a parent unable to ask more or hold CSA accountable.

So, CSA can keep a parent reasonable informed about what they are doing, and this uses Secrecy provision not privacy.  So, section 113(2) of the registration act essentially says the CSA must keep you reasonable informed which is about saying employer link sent, or bank written to but not the name of the employer or bank given.  

Section 113(2) reads this way. 

” (2) The Registrar may take such steps as the Registrar considers appropriate to keep the payee of a registered maintenance liability informed of action taken by the Registrar to recover debts due to the Commonwealth under this Act in relation to the liability.”

To understand what CSA currently lists at “appropriate” you can read their guide and their view here 6.3.3 Secrecy provisions | Child Support Guide (dss.gov.au). This will empower before every call.

Why do they ask me what I know about?

This is just good practice as they cannot fish, they cannot write to all employers or banks and must have a lead be it from you or ATO or elsewhere to act on.

What can they do?

So below this I will link their guide as it is a great for detailed reading and you as a member can use “Contact Us” to get detailed one on help but below is a summary of what they can do

  • Write to a business or third party to collect details to assess collection avenues using an s120 notice.  This may be to last employer to get bank or contact details, other government departments or someone who holds info that material to debt collection.
  • They can link to wages or redirect money from a third party who holds that money to pay to the parent who owes the debt. 
  • They can litigate for a case where there is assets, or other structures or people being used to protect their income from normal steps. You can also do this if appropriate.
  • Take available tax refunds.
  • Take FTB A that is for the child for whom CS is owed.
  • Take money from banks and third parties.
  • Access some Superannuation when the parent accesses it.
  • This link is a detailed guide on this and should be read prior to calling CSA and if you need help for next steps please reach out. Keyword index | Child Support Guide (dss.gov.au)

Other links of interest. 

Child Support Program Information – Dataset – data.gov.au

Child Support statistics – Services Australia

You want to sort a debt

Being on the wrong of the debt is stressful and can often begin to invade all life’s financial decisions.  The reality of Child Support Debt is that pay it now or later they must keep chasing so understanding no matter how big the debt is to get it worked out is key.

This will outline some key areas but as a member we can support you through the negotiation process to correct where possible and pay off debt in a way that you can meet and have penalties waived.

  • Debt Correction
  • Penalties
  • What can be faced if debt is ignored
Debt Correction

This is a key step before collection that where possible all avenues to assure debt is as low or high as required before payments are planned out. This puts a real picture forward and stops future changes that make you feel stuck in a loop.

So as noted in the income section How income works in Child Support Assessments late tax can often mean debt only for a payer.  When there was tax that was lower than CSA had provisional for there is some limited circumstances where this can be used when lodged late and reduce debt (this will also top up RP FTB A for same periods potentially). If you want some more support on this, please hit “Contact Us“. If you want to go it alone essentially, they can use these where.

  • You met ATO requirements i.e., you did not have to lodge.
  • There was a special reason you couldn’t lodge on time like natural disaster or ill health.

For this after you do tax you can ask CSA manually to adjust and put your case forward.  See this link for CSA detail information 2.4.4.60 New information about adjusted taxable income | Child Support Guide (dss.gov.au).

Penalties

So, these are huge points of stress for most parents with a debt.  The CSA can waive these where a parent participates in working through their debt even after a long time.  There is no value cap on this.  If they have to enforce without a parent’s participation, then they must collect these.  They have since 2010 had a written offer to guarantee the waiving if you enter an arrangement see link below from them to have this conversation. As a member if you need support on the call or to work out, we are here to help. 5.1.6 Late payment penalties | Child Support Guide (dss.gov.au).

What can be faced if debt is ignored

So, this is the topic that gives that me sick feeling as CSA when they do not have a suitable arrangement in place MUST try and take it, so please do not leave it to any of these actions.

  • Wage deductions (Default under act where possible but payers can ask to pay manually, and this is often better)
  • Banks of accounts for the individual including sole trader accounts.
  • Departure Prohibition orders
  • Third part money redirect from S72A from banks, property sales other money coming to you they identify.
  • Litigation and please do not get to this place.  They can take hidden assets and apply for banks and structures not under the normal powers. This also comes with applications for Court costs and all penalties. 

Hardship

I see many misleading “Advocate” posts on Hardship and what and when CSA can do it, designed to make you angrier and extract money from you.  Hardship may be considered for the arrears amount only and yes CSA can negotiate low payment arrangements when true hardship is established.  For help on this please reach out to us now.

Statement of financial details for debt repayment form (CS4645) – Services Australia

See links below on these powers and links from the CSA to the act so you are aware and again it is not too late to correct and address ever until they have taken it.

Keyword index | Child Support Guide (dss.gov.au)

Please note if you are wanting to dispute a debt we can help, if that needs court escalation then you can get a Stay Order from the court which CSA can then stop collection while the court appeal is underway.  

Bottom of this link for your legal advisor or self-representation

4.3.6 Appealing AAT decisions in court | Child Support Guide (dss.gov.au)

 

How income works in Child Support Assessments

One of the most Significant Parts of the Formula This fact sheet will outline how your income is used, how you can modify it and if you should as well as associated risk and applications relating to child support Adjusted taxable income. First lets talk a little about the role of income in the assessment. Income is not just used to set how much you pay but also limit it, so a parent cannot pay more than their income allows them to except where a CoA is involved to increase the liability under special circumstances. This is why income understanding is so important to managing your way through the child support system and reducing debt and over-payment risks.

One of the most Significant Parts of the Formula

This fact sheet will outline how your income is used, how you can modify it and if you should as well as associated risk and applications relating to child support Adjusted taxable income. 

First lets talk a little about the role of income in the assessment.  

Income is not just used to set how much you pay but also limit it, so a parent cannot pay more than their income allows them to except where a CoA is involved to increase the liability under special circumstances. This is why income understanding is so important to managing your way through the child support system and reducing debt and overpayment risks.

The income types used

ATO Taxable Income Adjusted to be CS Income

 

Perhaps the simplest to understand income (if any are) is that CSA gets your tax assessment from the ATO and then makes some additional adjustments to it to get what you see in your letters as the Adjusted Taxable Income.  What are those Adjustments?

So in addition to what you see on your tax return as your Gross income they also add,

  • Reportable fringe benefits.  These comes from salary sacrifice arrangements and where the employer provides something in your salary package like Health Insurance, for a detailed summary of what these are and of you have them you should seek professional advice, CSA does not define these they are told them.  
  • Target Foreign income, so if you have overseas employment please speak with your accountant about this or how that income appears in your tax assessment
  • Total net investment losses, which is total investment costs minus income, and the overall loss (of course net profit is part of normal tax)
  • Specified tax free pension and benefits like unemployment, single parenting and so on. 
  • Reportable superannuation contributions so where you have an arrangement above the required amount please seek advice on if yours are by ATO definition reportable.

Detailed info is here 2.4.4.10 Adjusted taxable income | Child Support Guide (dss.gov.au)

This is what makes this up.  

 

Provisional Income

So when the parent has not done tax then these come into play and they are done by the CSA based on Legislative rules or finding income information and are nothing more than a place holder.

Parents should know this income in place for you never ends well, and mostly result in debt or overpayment to you when tax is done.

When Tax is Lodged, what happens?

If by definition of the ATO your income is lodged on time, then a higher or lower income actually the provisional will be used from Day 1 of the Child Support Period.

So say you letter says 1 Sep 2022 to 30 Nov 2023, and you Lodge Feb 2023, if on time by ATP a lower income or higher will take effect from 1 Sept and adjust 5 MThs of payments.

If your tax is late by ATO requirements then only a higher income will backdate to start of the Child Support Period which in our example is 1 Sept 2022 and give 5 MThs debt or overpayment to you and can end in tax refunds taken with no warning.

Can CSA Update this without tax being done?

Yes the CSA under Section 58 of the Assessment act can do searches of payment summaries on the ATO system and if available they can use these to get a more accurate provisional. In practice they do this when tax is overdue but there is no rule defining they must wait for this time. 

The other parents income comes in really low when they work

There us not to much automation with income search system but one place the CS system does have this is with Centrelink.  So when a provisional is used it may default to 2/3 MATWE but with a link to Centrelink where that information is available for a customer a very low deemed provisional income comes back. This doesn’t mean the parent with the low deemed has taken any steps to avoid and this income will correctly when tax is done or as above manual searches find PAYG income to add to it. If this is your income you need to updated it as soon as possible or you will be left overpaid or in debt when correction happens not matter how far in the future that is.

What if I cannot lodge yet but they have it wrong?

CSA allows for a customer to five a Client Provided tax declaration of which they may do tax searches or ask for some evidence to support.  This means there is never a reason to have incorrect incomes used and risk the fall out later from these. 

 Income declaration form (CS1668) – Services Australia

 

Income Amount Orders

So an income amount order simply means that income has been set by a court or CSA usually through and Change of assessment application (Departure order)

When these are in place normal income rules no longer apply as through application the decision has been made to depart from tax. This means that;

  • When your income is set this way you cannot estimate if you lose income like you can normally
  • If your actual tax is higher or lower then there is no change to the CS payable for the period in which the income amount order is set
  • A new application where something new happened to effect income would be needed Change of Assessment in special circumstance

 

Estimates of Income

These are readily used but poorly understood.  The lack of knowledge leads parents to dive into these and often end up with significant debts and lost tax refunds.

So what is an estimate?

An estimate is where a parent has had an income drop in comparison to the last years tax assessment.  The drop does not need to be for a full current tax year, just an ongoing drop.  The drop as an annual value must be at least 15% less than previous tax assessment used to assess Child Support.

So what does this mean.  Let’s use an example of Parent named “Penny Pincher”

So Penny is assessed in her current CS assessment to pay “Dilbert Dad” based on her tax assessment of 21/22 for $130,000.

Penny has now lost hours and the change is ongoing and this happened on Feb 1 St 2023.  Up until this day the income was slightly more as she had pay increase 1 July 2022.

So Penny needs to understand her YTD income and how to make sure the assessment is based on a good estimate.

Penny Gets Paid on Thursday and Fortnightly.  

  • So her last pay slip was for pay period ending 31st January and paid on 2nd February $5384.62 Gross
  • Now as noted her decrease in wage to $110,000 per year is on Feb 1st 2023. Now this is where errors happen.
    • From Feb 1st to 30 June there is 150 days. In this time there is 12 Thursday that will be pay days.  So Penny will get $50,769 pays gross from Feb 1st to 30 June.
    • If we divide that by 150 days it is in the estimate period $338.46154 per day income. So CSA would make this annually (this by 365) $123,538
    • Now Penny is confused as she gets $110,000 per year and thinks the math is broken and the system is bad BUT,
    • If she waited until Friday the 3rd February this will be 148 days and 11 pays in the estimate period being $46,538. If we divide this by 148 days we get $314.4491 and annualised is $114,773. Now we are much closer to the $110,000 which will not get unless spot on with pay Cycle and above on the Friday we are few days in so
    • So first common error
  • Next one is YTD and above again would show that if Penny waited to get nore accurate pay to days here YTD income would also be more accurate being $80,769 which covers all the old 140K rate.
    • Parents often do the estimate before they have been paid all the YTD income which often happens after the loss event.  When this is wrong at end of year it reconcile incorrectly
  • So if Penny had this incorrect by say 5K when they check her estimate at tax it will appear she earned more in the period than she did and her annualisation will blow out
  • Another issue where parents estimate and the get a Capital gain, one off bonus or other lump sum in the period their esitmate blows out. Say Penny Pincher need an operation and took 25K out of super in April 2023 that would be across the 148 days and annualized period income of $61,655 and make her income $170k for CS higher than $130k she started with paying more CS than would have been assessed.

So if you need some help to guide you through not making estimate errors and or have big payments that may happen in the estimate period as a member we can review and give you tailored sums to understand what to do and when just hit “contact us” or call.

Child Support Periods and Tax lodgments

Child Support is based on using the previous years income, and that income triggers a 15mths Child Support Period (CSP)

When a period is running it uses the taxable income from the past year until one of the following happens;

  • The parent lodges their following years tax (either parent)
  • The period ends as neither has lodged a new income
  • One parent does an estimate to alter their income from a point in time until June 30th. July 1st the income that was use will again be used unless a new estimate is done or a new Child Support is triggered by tax.

I am asked often “When should I do tax” well this is not accounting advice and you should always listen to them for tax compliance but I can explain when and how CSA need it and what happens.

We will use a Child Support Period of 1 Sept 2022 until 30 November 2023 (15mths long triggered by tax done by at least parent Mid to Late July 2022 to early to Mid August 2022)

Now if the following year neither parent lodged until Late October early November then the new Child Support Period would be 1 Dec 2023 until 28 Feb 2025.  This would be using income earned July 2022 to June 30th 2023 but not used for 18mths after the start of the earning pattern.  That’s right the rumoour CSA just come and take all increases or CS drops immediately for and RP is just not true.  So if the parent here got a Payrise Jul1 2022 they would keep all that until Dec 2023 and by then may have had a July 2023 rise and be well ahead of the assessment.

The table below shows this pattern where parents lodge only at end of each Period and what happens to a financial year as time rolls on that is completely not used.

Note in this table if this happened 25/26, so June 30th 2026 is not the last year ended prior to any start so that tax year no matter how high or low will not be used or shared.

CSP Start DateCSP End DateEnd date of Last Relevant Year of TaxLatest New Tax Can be lodged for CSA needsYear being usedNew Tax year neded next
1-Sep-2230-Nov-2230-Jun-221-Nov-2221/2222/23
1-Dec-2328-Feb-2530-Jun-231-Feb-2522/2323/24
1-Mar-2531-May-2630-Jun-241-May-2623/2424/25
1-Jun-2631-Aug-2730-Jun-251-Aug-2724/2526/27
01-Sep-2730-Nov-2830-Jun-2701-Nov-2826/2727/28

So discuss your lodging dates with accountant. Please note with above table if one parent lodges it resets the CSP and changes the dates. 

Newly Split – Your Crash guide of important things to know

Newly Split is a difficult time Recently split parents are undergoing one of the most difficult times of their lives and this fact sheet is designed along with our service, to reduce that stress by being your on-call support person for child support issues. This fact sheet will outline decisions and options you have. Where you are unable to handle this system, please note we have a representation membership where we can take the calls. Please make sure you are taking care of yourself. Below are must know things to know to get you through the start if this journey and make informed decisions.

Newly Split is a difficult time

 

Recently split parents are undergoing one of the most difficult times of their lives and this fact sheet is designed along with our service, to reduce that stress by being your on-call support person for child support issues. This fact sheet will outline decisions and options you have.  Where you are unable to handle this system, please note we have a representation membership where we can take the calls.  Please make sure you are taking care of yourself.

Below are must know things to know to get you through the start if this journey and make informed decisions.

 

Post Separation Income Application

Throughout my journey providing support in this space, I continue to hear that no one knew about this so this is to ensure that you do.

There is a detailed link at the bottom of this page. However, Post Separation income is the ability for a parent after they split to take new steps to earn more money to re-establish themselves.  

To be eligible, the parent must show that after their relationship break up date, they started doing a new working pattern and that this pattern was not likely to have happened if they stayed in a couple. Below are some examples and a template to write this on the CSA application form;

  • Able to start overtime or a new role as you do not have the kids to pick up anymore.
  • Starting a role or more hours as after splitting you can no longer be a stay-at-home parent.
  • Simply taking on a new job
  • Taking a job with travel you could not before as you have been left without care.

I am often asked how to put this forward or what would be considered and mostly it is being honest about your life situation and the recent change, so the following is a good base.

“During our relationship my working arrangements were [XYZ} because we managed work and care of the children in the following way {how you did it picks ups, cooking, sport whatever]. Since our split I have now taken on [new work pattern] which would not have happened if were together because [reason for this]”

Now really important these need to be applied for within the three years and cannot be done after.  If you feel on a matter of law this should not apply to you then please seek legal advice.  The application in special conditions can be back dated to start of the Child Support Period in which you apply (see this link for what a Child Support Period is How income works in Child Support Assessments)

The application allows up to 30% of your total tax to be excluded and the amount will depend on how much you have earned from the new pattern.  

This means more income than year of income prior to split.

You can apply for this if you lose a job and then gain one and as part of an estimate which to apply for it, so please hit ‘contact me‘ for more detailed support on this as a subscribed member.

Important Links for this

 

 

Care levels with Child Support

Most Parent are aware that overnight care in used Child Support to assess what costs a parent meets in care, however care is a little more complex and this will try to make as simple as possible with some deep dive links attached.  

What does it mean to have care? 

For many it is simple to understand if you have the child in your physical care, you have care. However, there is a broader definition where a child can be with someone else, and a parent still be the caregiver.  To understand what is care we need to look at the following definition.  Now it is important this definition is what the CSA say they consider as per their Guidelines in the Child Support Guide 2.2.1 as the act itself does not clearly define this and therefore beyond the below definition you need to seek legal advice for a challenge.

So, what CSA asks its workers to consider which is based on social expectations of what care is (direct reference from CSA Guide Determining whether care exists 2.2.1 Basics of care | Child Support Guide (dss.gov.au) ;

  •  To what extent the person has control of the child, including having overall responsibility for the child and making major decisions relating to who the child spends time with and the child’s health, education, discipline, recreational and/or social activities, and
  • arrangements for others to meet the needs of the child (delegated care).
  • To what extent the person meets the needs of the child by providing the child with accommodation, clothing, food, child care, education, health care, emotional support, supervision, transport and extra-curricular activities.
  • To what extent the person pays for the costs of meeting the needs of the child.
  • To what extent the person otherwise provides financial support for the child.
  • To what extent the child provides for his or her own needs or has those needs met from another source.
  • To what extent the child is financially independent or financially supported from another source.

So when applying for care I would expect you use this criteria in your application and as a basis in mediation when discussing.

What the Formula Assumes

The child support formula assumes that parents meet ordinary costs based on their care and this is very important to know when discussing care arrangements and financial support in mediation.  CS reduces for a paying parent as they gain more care based on the premise they are now meeting costs (CS costs in care) See Things to discuss with your Legal Advisor for more detailed information however below is a brief summary for you.

Only with 50/50 care does CS assume that parents split all the children’s ordinary costs after CS is paid, so where the expectation may be the parents split school, sport, day to day medical and so on 50/50 it is reasonable to ask for the matching care level.  

Care other than nights

For many parents they do not understand that they can where daytime care is substantial, but they do not have overnight care consider this time.  Back to our definition above it is easy to understand when daytime care becomes substantial.  If you feel you that you should have this, please read this link from CSA in detail or reach out to us as a member and we can give feedback on how to apply or as a Represented member support you to write the full application to CSA

2.2.1 Basics of care | Child Support Guide (dss.gov.au)

When written plans and Court Orders are breached

Perhaps one of the most difficult areas if child support is a sense that people feel someone is rewarded financially when the keep care as in most cases the CSA is under a direction of law to use actual care to assess the liability.

This direction comes from the history of the system where up until 2006 CSA did use court orders over actual care but sadly this did not result in returned care but did result in less actual support for kids which contravened the one job CSA has being financial support of the child.

So interim since 2006 is the new way to try and balance the parent’s court ordered or written intent against the terms of reference for CSA which is financial support of the child.  The CSA has absolutely no ability outside of interim care to use written or court ordered care and they have no discretion in this matter.

So when can interim apply?

When the parents have been following a written plan (note if the parents already together have breached their order or plan then interim cannot apply as they have agreed to not use that plan) and one parents stops access against it then CSA can for a period of 14 to 26 weeks, use the plan or court order to assess CS while the aggrieved parent is taking steps to recover their care.

If no action is being taken, then CSA must use actual care.  As this timer starts from the care breach it is important you call immediately and advise it has happened and steps being taken

When a brand new court order is made and less than 52 weeks and one parent still refuses to follow it this timeline can be up to 52 weeks in this unique case

For detailed help again you can reach out to us or read more in-depth information from CSA on the following links.

2.2.4 Disputed care arrangements | Child Support Guide (dss.gov.au)

Child support payments and care arrangements – Child support assessment – Services Australia

Keeping Evidence of Care

This is seemingly one of the hardest parts of Child Support when parent’s do not agree on care that will happen or has happened.

First and foremost all new care arrangements should be agreed in writing with parents, even if it was a chat on the weekend it should have a follow up email or text between parents. 

As per our conversation on the weekend the “child/ren” will now come to/ stop coming on “pattern” and that means from “date” the annual nights care will be.  The pick up and drop off arrangements will be….”

Where there is disagreement it is important to think how can I show past care to support my claim or future pattern so did I;

  • Take to kids to dentist on day other parent says they have them
  • do they have a public transport card I can show travel patterns from our homes
  • Did I take them to GP
  • Did they tell their counsellor their care pattern so can I ask them for a statement
  • Do I drive through tolls for drop off and pick up between the homes or points of change over
  • Do I use a change over center

Ultimately how do you show a person who will never come look and has no idea what you or your children look like that you have them in your care?  Think of this as you go and be prepared for the future and it both parents do disputes are really hard to have.

 

Your income

There is a detailed section on Child Support income but this is a brief overview of what you need to do and links for more information across the site.

Tax Lodgment

It is really important to make sure CSA has up to date information, and not doing tax can prevent Post Sep income applications, estimates if you lose work and lead to large debts in the future when not done.  For learning how the income cycle works please see the link How income works in Child Support Assessments

Self Employment

You may already be self-employed or considering it (your ex is considering it) as someone has told you that it reduces/increases CS payments based on your role.  Well what they may not tell you is about Change of Assessment in Special Circumstances.  Yes, if a person is self-employed their personal tax immediately used may be lower than if they worked for a boss as PAYG however there is an entire application that allows the personal benefits of the business to be added back to the CS assessment and can unpick the use of these structure to assess CS.  This process is a high conflict difficult process, so please make sure you consider big picture before going down this path. Change of Assessment in special circumstance

Hopefully this gives you some core information and remember as a member you can call or write and we have a chat to help you get improved clarity and or representation.

 Loss of Income Or Tax effects from Settlement

A difficult area is what to do when income drops from past tax, or one off payments that blow tax out.  With CSA you can estimate when the ongoing income drops by 15% from tax used but really need to look into this option and it’s risk carefully How income works in Child Support Assessments

If in settlement you need to sell items that attract capital gains then you also need to look at estimates or better yet, use agreements to remove this effect see information Things to discuss with your Legal Advisor or look at our agreements page Child Support Agreements – How do they work?

How to read you letter and see what is used.

How to make private collection work!

Many parents do not want CSA to be the administrator of their account but unknowingly make easy errors that lead to future disputes and breakdowns. This fact sheet is a how to guide to get private collection correct and understand all the risk and benefits

Many parents do not want CSA to be the administrator of their account but unknowingly make easy errors that lead to future disputes and breakdowns. This fact sheet is a how to guide to get private collection correct and understand all the risk and benefits

Core Elements you need before Private collection is a good idea.

For parents to have a good private arrangements they must be willing to Co-Parent first and foremost and both be focused on the best financial support of their children with respect to each other situation.  To enable that there are some key things to have correct with CSA;

  • Tax up to date.  When parents have not done their tax and a case is private, when tax is done that will mean either too much or too little has been assessed.  For a parent receiving CS who gets FTB A they may get a overpayment bill from Centrelink when the payers tax was higher than the one CSA had used.  This leads to collection applications and can have ripples into co-parenting and contact, and most commonly the payer doing late tax does not understand this implication.
  • Trust and ability to discuss money.  There may occasions a payment is late and both parents need to understand the impact on each other of this.

 

Clarity in the Arrangement

A common issue that I have experienced across 20 years is neither parent being on same page as to when money is actually for, so you need to write it down. Write what period each payment is for and when it will be paid.

Some parents have other debts when first splitting or agree that a payment can be less or more than the CS assessment that CSA has issued. For a payer paying less, this can be a risk as the receiver can go to CSA at any time and ask for 3 months arrears and the payer cannot usually stop this. So, documenting that a payment discharges 100% of the CSA assessment is also important and for which period.

Private Arrangement Template for Clarity or examples to use;

Payer Name” will Pay Child Support to “RP Name” each Friday for the previous 7 days (anytime monthly whatever), meaning the payment on the Friday will be for the preceding Friday – Thursday (7 days) and will be paid into BSB 000 000 AC 1234567.  The amount paid will be $XXX and this will discharge 100% of the weekly liability CSA has assessed on the Child Support Period 1 Sept 2022 to 30 November 2023.  The parents agree that they will accept that the payment of $XX is amount intended by both the payer and the payee to be paid in complete satisfaction of an amount payable under the liability in relation to the child support period and that only where less than $XX is paid is the payer in default and amount below should be considered in the event of a collection application under 39B.”

 

 

Keeping track of the Arrangement

Child Support, despite it being from one parent to another for the support of a child, is financial transaction and is best done privately with receipts and some private statement system.  It is recommended payers ask on this path that the Receiver send even a text or email confirming when payment is received that it is done arrears exist or that they do exist.

I would recommend something like the following be used.

Thanks for payment of $XX and I recognise this address CS for the period of DD/MM/YYYY and discharges 100% of the liability for the above time”

When things go Wrong

The Act CSA uses for this allows usually a 3 month period for people to address their collection issues before they call CSA and then CSA can cover the gaps for this time.  They can extend this up to 9 months and for that I recommend messaging page admin for some detailed help.

Where the parent will not pay the private amount you simply call the agency and ask for collection again, and if the above has been followed the amount they should collect will be very clear and easy to substantiate by both parent reducing conflict.

The Formulas and How to work them out

There are six Child Support formulas for different case occurrences and online only a calculator can be found to action the main one, as a subscribed member you will get this fact sheet to understand them and can reach out for your own detailed calculations of the other 5 as needed, so you know what to expect.

There are six Child Support formulas for different case occurrences and online only a calculator can be found to action the main one, as a subscribed member you will get this fact sheet to understand them and can reach out for your own detailed calculations of the other 5 as needed, so you know what to expect.

Most of the assessments CSA do are based on these formulas, and for parents who wish to get support from Centrelink through FTB A they need a formula assessment done and this may be a normal one or a Notional Assessment Child Support Agreements – How do they work?.  So, these are very important to understand and as a subscribed member if you need a complex one calculates we do it for you just hit the ‘contact us‘ header and we can organise this for you.

 

Formula One

This is commonly referred to as the basic formula, and many people mistakenly talk about it as the only formula.  

This formula addresses where parents are split and one of them pays the other, and they have no other child support cases or third-party carers. A key callout for all the formulas is child Support Costs are capped at three children in total always, as through the studies they found the costs from 3 to 4 and so on was not significant so it would not have been equitable to a payer to charge for more than three kids in total.

It works by taking your Adjusted Taxable income <CS income link> and removing the self-support amount as defined by the act.  

Then it adds the value of each parents’ income to determine how much of the child costs they can pay.  A common misconception is that CSA thinks get more expensive as income grows, when in fact what it does is recognise parents who earn more spend more on meeting their kids costs through ability and need less government support (potentially charity support).  It also uses this approach as it recognises that parents are genuinely capped at their ability to support a child irrespective of the full costs, so uses income to assess how much people can contribute to the costs. 

This formula also looks at how much of these costs are assumed to be met in care with the Care Costs % and then has a final value for transfer.

All the CS formula’s are based on research that people use and income shares approach to meeting costs of their children, i.e. the person with more money meets more of the total costs by %.  This was shown through multiple surveys of Australian spending behavior and is the core principle of the formula.  It DOES NOT reflect keeping the child’s lifestyle as if the parents were together but reflects the income shares approach if they were.  Child Support during Parkinson review created this formula as well as reviewed separated parents and calls out that the overall ability to support is reduced after split, so the entire premise CS supports old lifestyle is in fact incorrect and not what this formula tries to do.  

This is the only formula you can work out online and this is the only calculator you should use Child Support Estimator (csa.gov.au), if you have problems, we are only too happy to do it for you.

Formula Two - Where there is one Child Support case but there is a carer who is not a parent

This formula is used where one parent or both parents and a non-parent carer have care of the child.  The no parent carer would need 35% care or more for this to occur.

Like formula one, this case uses both parent’s incomes, removes self-support and works out who needs to pay who.  The non-parent carer must apply for child Support against both parents.  This can mean that a parent has both the role of the receiver and the payer in this formula, and that one parent pays two people to cover the child’s support.

As a member if you need to understand how this may look for you hit the ‘contact us‘ button and we can manually work this out for you as there is no reliable online tool for this. (yet)

 

 

Formula Three & Four Multi Cases

The multi case formula is probably the next most common after Formula one.  This formula has built in financial protections for payers to not over assess them beyond a reasonable affordability, by applying the multi case cap.

So, the formula in essence works like formula one with a relevant dependent allowance be replaced with a multi case allowances but changes with the Multi case cap.

For a payer these formulas use only the payer income to work out their cap and calculate as if all the children were to one other parent essentially.  

Once this Cap is worked out the formula one is applied to each to case they pay (with Multi case allowance used) and then the payer is assessed to pay the lower of the Cap or the Formula.

Effects of the formula;

  • The first case the payer was supporting before their new one will usually get lower CS once this case is added.
  • If the Cap is being used and the receivers get work there will be no change to the assessment paid, as the receiver is not used when Cap applied meaning the payer already is on the lower value before their income was added. This is important for you to know when thinking about CoA against RP or expectations when they start new work or earn more.
  • Like all cases, payers are capped also at paying only ever for total costs of three kids. So where they have more than three kids across cases, the total for three will be divided the number of children. i.e., if they have 5 kids, they will pay costs for three and each child will be costed at 1/5 of the three costs.  So, their total would reflect them only having the three older children.

 

Formula Five and Six, when a non-parent carer and only one parents income is available.

This formula is where there is a non-parent carer with the child and for some reason only one parents income can be used.  The two-core reason here are one parent is deceased (formula 6) or one is in a non-reciprocating jurisdiction meaning CSA cannot get information or make them pay (formula 5).  If you are non-parent carer and need some help crunching these numbers, please hit ‘Contact Us‘ header and we will work this out for you.

Example of Multi Case Cap
Step One Multi case Allowance & Multi Case Cap
The multi case allowance and multi case cap, use the age of the children and only Payer income and works as if the kids were 100% with them to calculate first. To make the example easy we will use a 100% care level to each RP and Nil to the Payer.

So we take the Payer income minus Self support and away we go see below;

Payer Income 2020

$107,000

Self Support

$25,575

CS Income

$81,425

Step One A – Mutli Case Cap 

Case One For Payer 

One child Age 5 so 0-12 costs Group

Care Nil to Payer 

 

Payer Income

$107,000

RP Income

$29,000

Self Support

$25,575 (add multi case allowance for payer)

Payer CS income

$71,940 (so this is less now due to allowance for one child in other case) 

RP CS Income

$3425

Combined Income for Costs

$75,365 (Payer is 95% of combined income so owns 95% of children’s costs using incomes shares)

Costs of child from Table is 

$6522 plus 15 Cents dollar over $38,364 = $5550

So Child CS total costs Assessed is

$12,072 and Payer owns 95% so $11,468

As Payer has nil care and this is more than Cap CS Multi case Cap would apply here to prevent payer being over assessed

$9485  So in case one the formula reduces payer liability to to this as the full formula designed for one split would be financially inequitable and must consider payer ability to support the child

Case Two for the Payer

One child aged 9 so 0-12 Costs Group

Care Nil to Payer 

 

Payer Income

$107,000

RP Income

$64,000

Self Support

$25,575 (add multi case allowance for payer)

Payer CS income

$71,940 (so this is less now due to allowance for one child in other case) 

RP CS Income

$38,425

Combined Income for Costs

$110,365 (Payer is 65% of combined income so owns 65% of children’s costs using incomes shares)

Costs of child from Table is 

$12,276 plus 12 Cents dollar over $76,726 = $4036

So Child CS total costs Assessed is

$16312 and Payer owns 65% so $10,602

As Payer has nil care and this is more than Cap CS Multi case Cap would apply here to prevent payer being over assessed

$9485 so here again the payer is capped from being over assessed based on ability to pay CS, even though the RPs earn differently the cap applies in both cases.

So in both cases Payer would pay cap recognising that around 3k based on the formula in built protection from over assessment due to being split and support across three homes.

To consider with a care level the cap and payments are reduced for each by costs in care % i.e 24% for regular care so case 1 

Cap would be $7208 and CS would be $8571 so again pays cap but less for having regular care.

Things to discuss with your Legal Advisor

Over the years I have witnessed the dis-connection and anger between family law financial settlements and the Child Support system as there is a better way. This fact sheet outlines things to ask and show your legal advisor, so you get the best support possible.

Over the years I have witnessed the dis-connection and anger between family law financial settlements and the Child Support system as there is a better way. This fact sheet outlines things to ask and show your legal advisor, so you get the best support possible.

Child Support Agreements

These agreements are an absolute must to understand for all newly separated parents and below is a brief summary as you can read a full Fact sheet on these at Child Support Agreements – How do they work?

So the key points;

  • You pay a lump amount at settlement and have it a registered protected credit
  • You can lock in an income or care level for a defined period
  • You can set your own payment amount
  • You can exclude capital gains and other settlement tax effects and not be assessed for CS on them

Money for Children In Financial Settlement and Having CSA understand purpose.

Where the parents choose not to take the nice easy Agreement option.

They can have the judge at the time or the Child Support Agency (CSA) – under Part 6A Departure, consider amounts given in settlement for the benefit of the children as a factor in the child support assessment.

As noted by CSA in their guide they will generally not alter the intent of financial orders, meaning you need to call out that there is a value for the benefit of the child.  So, it is recommended you speak to your legal advisor, that where it is asked, you pay additional money in settlement for the benefit of the child that is clearly called out. So that if the judge does not rule on Departure there and then or no agreement is signed, that you have the following (or better wording by your legal advisor) 

That “name” and “name” understand that the provision of $XXXX in the settlement between is for the direct financial benefit of the children and that “name” shall be able to apply to CSA under Part 6A Departure from a Child Support Administrative Assessment (Change of Assessment) to have the amount considered.

This will leave you with a clear path to either ask for more in settlement or an amount you have for your children to be considered and unlike thousands before you, not miss out and not yell at CSA that they are not listening, as this is how you enable their ears. 

A parent may also apply under Section 123 for a lump sum to paid of Chile Support during settlement or Section 124 to be paid to a third party like a school as child support.  With each of these the order must specify if the payment will reduce the normal CS assessment and how.  

Addressing Change Of Assessment Issue while already in Court

The Court knows the Departure from Administrative Assessment under Part 6A Child Support (Assessment) Act 1989 that CSA call Change of Assessment in Special Circumstances – Change of Assessment in special circumstance usually you need to have applied firstly to CSA and then can be escalated on appeal to AAT and after that a Court on a legal matter.  However, the act allows when a parent is in court on another issue that they can bring these applications directly to the judge.  If you have all the needed information of properties, self employment and so on there in your settlement and everyone has disclosed to the court. This is a great opportunity to sort it directly with your legal advisor and the judge.  CSA must apply this order.

This is noted for your Legal team reference under Section 116 Child Support (Assessment( Act 1989 as follows

“(1)  A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:

                     (b)  both of the following apply:

                              (i)  the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;

                             (ii)  the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or

                     (c)  in the case of a liable parent—the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).it as

Non Agency Payments

When a case is collected by the Child Support Agency Meaning the Paying parent makes payments via them, parents can still have some private payments be considered. There are three core types of payments that can happen and below I will simplify what this means and leave some wording to use to enable this. The three types are; Prescribed Non-Agency Payments Direct Non-Agency Payments that are applied at 100% of their value Direct that can be apportioned over time.

When a case is collected by the Child Support Agency Meaning the Paying parent makes payments via them, parents can still have some private payments be considered.  There are three core types of payments that can happen and below I will simplify what this means and leave some wording to use to enable this. The three types are;

Prescribed Non-Agency Payments

Direct Non-Agency Payments that are applied at 100% of their value

Direct that can be apportioned over time.

Prescribed Non Agency Payments

The Child Support Agency is labelling these “extraordinary Payments” but under the legislation they are call a Prescribed Non-Agency payment.

These types of payments can only be claimed by a Parent with Less than regular care as the formula assumes they meet no costs in care, and these items are core costs for the support of any child.

So where a paying parent pays the following items even without consent from the other parent that they are in lieu of CS the paying parent may claim them and they are;

  • Child care costs for the child they pay Child Support for.
  • School or pre-school fees charged by a school for the child they pay Child Support for.
  • School essential items, books, uniforms etc.
  • Essential medical costs for the child for which they pay Child Support
  • The Receiving parent to whom they pay Child Support Housing Costs, Utilities, Motor Vehicle costs

At the time these items are paid, and the paying parent has less than 14% care and the Child Support Agency is collecting child support these items can be claimed and applied into a credit pool.

This credit pool will reduce the Child Support payable each month by 30% until that pool is consumed or the Paying parent has above regular care for one child at least in the assessment

So this means that credit will only apply while the paying parent has less than regular care of all the children for whom they pay Child Support

Example:

Johnny and Mary have two kids and recently split, while Johnny is looking for a new place he has no overnight care. Johnny wants to make sure the kids are supported and pays the school fees, uniforms and dental appointments but is also asked to pay Child Support at the full rate based on his income.

As Johnny as no care in the formula, it assumes he is not in a position to meet these costs so pays his full ability to contribute in Child Support, and Mary pays all the bills also to the best of he ability.  Now Johnny calls CSA and asks to apply these as credit to his Child Support.  The total he spent on these was $1,000. His ongoing child support is $1000 per month.  So when applied he has $1000 in the credit pool and needs to pay $700 for three months and then $800 for one while he continues to have less than regular care of both kids.

Now two months in Johnny and Mary decide on Johnny having overnight stays.  Now he will have 14% care so his CS will drop down with an assumption he meets these costs in care. When this happens, he still has $600 Prescribed credit that will no longer apply unless in the future he again has both kids less than 52 Nights per year or 14%

 

Direct Credit

So the Child Support system allows parents to even when a case is private collect come to an agreement to have other items paid or given as child support. 

These can be;

  • Money to the receiver
  • Money to a third party like a school or doctor
  • Non Cash goods like property or items for the kids with an agreed amount as the credit.

So often I hear “but the RP never agrees to these”, and the core issue here is that a parent is buying things prior to discussion about it being Child Support.  

So below is direct quote from the Child Support (Registration and Collection) Act 1988 that shows to be a credit to Child Support there must be agreement before the item is paid or money given to receiver.

71  Direct payments to payee

             (1)  Subject to section 71D, if:

                     (a)  the payee of an enforceable maintenance liability receives from the payer an amount intended by both the payer and the payee to be paid in complete or partial satisfaction of an amount payable under the liability in relation to the child support enforcement period; and

                     (b)  the payer or the payee applies to the Registrar to have the amount received by the payee treated as having been paid to the Registrar;

the Registrar shall, in spite of section 30, credit the amount received by the payee against the amount payable under the enforceable maintenance liability.

             (2)  An application must be made in the manner specified by the Registrar.”

Note “intended by” meaning when you pay you know how it will affect Child Support (template below to work this out)

So, these can be applied as noted in two ways at 100% of the decided value or similar to prescribed where parents set the % each month it reduces Child Support.

Example

So, Johnny and Mary again.  Mary comes to Johnny as it is start of School 2023, and show the list for one child into Prep and another High School and the total cost is $3000. Mary asks Johnny for help as she cannot pay that in one hit. 

Johnny says he can help but he also cannot foot the entire bill long term in addition to Child Support as he only budgets for Child Support plus 24% of such costs as he now has regular care of the Children.

So, this means that $2280 is essentially a cost for Mary, that Johnny will pay up front as the rest of the $3,000 is already assumed in the assessment.

Now Johnny and Mary can have it so $2280 applied and Johnny does not pay his $1000 per month CS for two months and pays $280 less in month three.

Or as Mary has said she cannot completely survive for those months with no CS they agree to a % reduction each month of 25% (can be any and childcare levels do not impact) and agree that Johnny pays $750 until the $2280 is credited fully.

Now the next question is “how to you make sure this happens and they don’t deny this”.

Well, we go back to “intended” and writing it down.  

So, this can be adapted to any scenario, or you can reach out for custom wording but using our couple Johnny could do this.

“Hi Mary as we discussed I will purchase all school items attached in this list for “Schooly McShooly School”. The total cost will be $3000 and we have agreed that $2280 upon sending you and CSA the receipts is for child support as a direct credit under 71A.  We have also agreed that it will be applied as a 25% reduction in Child Support each month of my ongoing liability under 71A(2)”

With something like the above before the spend with the very clear details about;

  • Amount to spend (you can spend more that is not credited)
  • The item and the Vendor

You can have confidence it will be credited by getting other person recognition prior to spending it.

These are a great way to be child Centric and respect each other’s financial situation.

Minimum Assessments for Low income

15 February, 2023 The Minimum Assessments for Low income There are two common assessment associated with low income. One is called the Minimum Annual Rate (MAR) and the other is the Fixed Annual Rate (FAR)

There are two common assessment associated with low income.  One is called the Minimum Annual Rate (MAR) and the other is the Fixed Annual Rate (FAR)

Fixed Annual Rate

This is a rate that applies to parent that earns (taxable income) less than the Parenting Payment Single Rate, and does not collect any Centrelink Benefits

This amount (2023) is $1632 per child up to 3 children (so 3 plus will be 3 times this value).  A parent can apply for this to not be used, and have the MAR rate applied but to do that a broader income definition is used.

The Child Support Agency can take an application to appl it under Act section 65B

So, the broader definition is more focused on access to support versus taxable earnings and consider the following to items.

This income definition is found under  in CSA Act section 66A(4) 

  • any money received, earned or derived for personal use or benefit, or
  • any periodic payment by way of gift or allowance which can be from a spouse or family member.

Income can be any of the following.

  • includes coins and bank notes, cheques and deposits into bank accounts (but not goods, services, or some other benefit, even if you know the value of the goods)
  • is ‘earned’ when it is received in return for labour or service, in compensation or as profit.
  • is taken to be ‘derived’ in accordance with ordinary business and commercial principles. 
  • is taken to be ‘received’ when it comes into a person’s possession.

There are some exclusions for this test and they are.

  • amenity allowances or gratuities (incidental payments for personal items or other minor expenses, but not payments for work, study or participation in approved programs) paid to prisoners
  • disability support pensions, pensions paid to veterans who are totally and permanently incapacitated and Special Rate Disability Pension for veterans, where at least 85% of the pension is paid to another person for the provision of ongoing care to the pension recipient
  • a National Disability Insurance Scheme (NDIS) amount (as defined in the National Disability Insurance Scheme Act 2013), and
  • payments of ‘redress’ within the meaning of the National Redress Scheme for Institutional Child Sexual Abuse Act 2018.

The other parent has objection rights to Child Support Agency Accepting this application and the Parent can object if refused.

2.5.3 Application to have the fixed annual rate of child support not used | Child Support Guide (dss.gov.au)

Application for fixed annual rate not to be used form (CS4119) – Services Australia

Minimum Annual Rate

The minimum annual rate is designed for a parent on benefits with no care of the child so get’s no additional support such as FTB A and B and has a minimum welfare existence.  It is just $9 per week with no care and $0 if the parent has care as they need to meet costs in care but not get any FTB A support until they have 35% care of the child.  

This rate until 2008 Scheme reforms was locked at $260 per year for many years but now goes up each year with other costs.

A parent can apply to have this reduced to nil where they can show they have less money than this rate and usually you find this with Parents in Prison

2.4.12 The minimum annual rate of child support | Child Support Guide (dss.gov.au)

What is Child Support For?

Having a conversation about costs So this is not clearly defined in the Child Support Assessment Act. First why is it not defined? Well ordinary costs are different for us all and to define would in fact create some level of financial control – i.e., CS is 100% for this and then well Payers and Receivers may want to see the evidence from each other and you get this new level of bank info sharing each way across 600K plus cases, as CS is not just what is paid it is also what considered in care.

Having a conversation about costs

So this is not clearly defined in the Child Support Assessment Act.
 
First why is it not defined? 
 
Well ordinary costs are different for us all and to define would in fact create some level of financial control – i.e., CS is 100% for this and then well Payers and Receivers may want to see the evidence from each other and you get this new level of bank info sharing each way across 600K plus cases, as CS is not just what is paid it is also what considered in care. 
 
What is an “Ordinary” cost?
What CS is for is “ordinary” costs which are the absolute costs to live, (that doesn’t mean it covers them) simply it is based on Payer income and Receiver income and their best efforts to contribute to total costs.
So ordinary costs – Well we can get a minimum set from the Child Support Assessment Act under Section 71 by looking at the Prescribed Non agency Payment’s legislation. For a Payer with below regular care who pay these following items, their child support payment gets credited without the Receiving parents’ permission, so we know these are 100% CS costs by this;
  • RP rent house costs – mortgage rates etc. The roof over the child’s head.
  • RP utilities, Children need power and phones to manage them safely.
  • Receivers vehicle, kids needs transport so we can say transport.
  • Medical for a child (Ordinary) as we will talk about Change of Assessment in a minute.
  • School – all costs again we will touch on Private school as special in Change of Assessment
Of course, although food is not a prescribed payment, we can all agree food is an ordinary cost to raise a child.
Beyond these for say discretionary items like sport that really is up to parents, but if a Payer feels or the Receiver feels Child Support is for this remember the formula assumes when payers have care they meet CS costs in care.
So it is not possible to direct to someone that an item they are paying is what Child Support is for then disregard the % discount they get for meeting Child Support Costs in care. 
This table Shows Costs in Care % and assumption from Child Support Guide 2.4.5 Care, cost & child support percentages | Child Support Guide (dss.gov.au)
 
Now Change of Assessment tells us what is not ordinary and is special and can be in addition to the normal assessment or removed from it. 
 
  • So essential substantial costing medical.
  • Private school fees where both parents wanted that style of education – not uniforms, or books or even laptops as all school need these so they are ordinary and as above.
  • Daycare when more than 5% of annual income
  • Sport for kids that is substantial so not local stuff but maybe a child in special talent program or high costs that both parents wanted.
That is about best way to see it and have some understanding how to speak both for custody and costs ownership and have conversations about the kid’s needs.
Noting CSA cannot add these ordinary costs, so it still comes down to a personal dispute.

SERVICES AUSTRALIA

The Child Support Agency (CSA) in Australia is part of Services Australia. You can contact Services Australia by phone or online to get information or assistance with child support matters. To contact CSA by phone, call the Child Support general enquiries line on 131 272 from within Australia, or +61 3 6222 3455 from outside Australia. The line is open Monday to Friday, 8am to 5pm (local time) except for national public holidays. You can also contact CSA online through the myGov website. If you need urgent assistance, you can also visit a Services Australia centre in person. Service centres are located across Australia. You can find your nearest one by using the service centre locator on the Services Australia website.

Negotiated Outcomes

Child Support Advocacy & Advice Ethical and objective support through the complex Child Support System through education and representation, so customer are empowered to make informed decision based on knowledge.